The Edmond Sun


April 21, 2014

Chicago Tribune: If Walgreen Co. moves its HQ to Europe, blame Washington’s tax failure

CHICAGO — The Walgreen Co. drugstore chain got its start nearly a century ago in downstate Dixon, Ill., before moving its corporate headquarters to Chicago and eventually to north suburban Deerfield, Ill.

Next stop? Could be Bern, Switzerland.

A group of shareholders reportedly is pressuring the giant retail chain for a move to the land of cuckoo clocks. The reason: lower taxes. Much lower taxes.

If Walgreen changes its legal domicile to Switzerland, where it recently acquired a stake in European drugstore chain Alliance Boots, the company could save big bucks on its corporate income-tax bill. The effective U.S. income-tax rate for Walgreen, according to analysts at Swiss Bank UBS: 37 percent. For Alliance Boots: about 20 percent.

We hope Walgreen doesn’t relocate. Would company executives be smart to do so in order to best serve their shareholders? Hmm. We’d rather not say. So we’ll respond to that question with another, broader but similarly urgent question:

How many companies have to turn refugee before Congress and the White House stop their bipartisan talking — but only talking — about the need to reform the federal tax code in general, and the corporate income tax in particular?

Nearly 30 years after the last significant reform, the U.S. tax code is a mess. Both political parties agree that corporate income-tax rates, among the highest in the world, need to be reduced. Practically every other advanced country has taken the step. That has left the U.S. as a conspicuous outlier, with a relatively competitive business-tax burden overall — except for the excessive income-tax rate.

President Barack Obama has said repeatedly that he supports business-tax reform in principle. In his State of the Union address in January, the president said both parties should work together to overhaul a tax regime “riddled with wasteful, complicated loopholes that punish businesses investing here, and reward companies that keep profits abroad.” He urged “lower tax rates for businesses that create jobs here at home.”

In February, House Ways and Means Chairman Dave Camp, R-Mich., proposed a plan for comprehensive tax reform that included slashing the corporate tax rate to 25 percent.

Yet House and Senate leaders won’t take up controversial tax reform in an election year. They simply won’t budge. If only the same could be said for corporate America. As more companies relocate their headquarters for tax purposes, shareholder pressure mounts for others to do the same.

Last month, Deerfield-based Horizon Pharma announced a plan to move its headquarters to Ireland, part of a reverse merger with Dublin-based Vidara Therapeutics International. That’s the latest in a series of transactions by drugmakers structured to take advantage of Ireland’s low corporate tax rates: Horizon follows Actavis, Perrigo and Jazz Pharmaceuticals to the Emerald Isle.

Horizon Chief Executive Tim Walbert estimates that his company’s tax rate will drop into the low-20s percentage range or less, down from the high-30s percentage range in the United States.

But this isn’t just a gambit for pharmaceutical companies. Shareholders of insurance industry behemoth Aon Corp. in March 2012 approved that company’s HQ move to London from Chicago — a move that, yes, lowered Aon’s tax burden.

Walgreen differs from Aon, Horizon and other business-to-business companies because it deals directly with the public. The drugstore chain has to tread carefully to avoid provoking a backlash from its customers if it is perceived as shirking its responsibilities to the United States. Not long ago, computer giant Apple endured a spate of criticism amid reports about its efforts to reduce its U.S. corporate taxes.

The Financial Times, which reported on the meeting in which Walgreen executives and shareholders discussed a headquarters move, noted that the retailer is concerned about “political risks.” That’s understandable, and paradoxical:

If Walgreen moves its headquarters for tax reasons, some of the loudest howls of criticism — who’ll be the first to scream “Walgreed!”? — will come from the very politicians who haven’t fixed our corporate tax code. Remember, you can lead a long life without hearing a president or a member of Congress utter these two sentences: We have only ourselves to blame. If we had offered more than lip service, this wouldn’t have happened.

But if “political risk” truly is what’s keeping an Illinois business icon from relocating, Congress and the president had better not wait until after the November election to plan serious tax reforms. By that time, the new “Corner of Happy & Healthy” could be in downtown Bern.

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    July 29, 2014

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    July 28, 2014

  • Logan County’s disputed zone

    Watchers of “Star Trek” may recall the episode from the original series entitled, “Day of the Dove.” In this episode, Captain Kirk and his crew are forced by a series of circumstances into a confrontation with the Klingons. The conflict eventually resolves after Kirk realizes that the circumstances have been intentionally designed by an alien force which feeds off negative emotions, especially fear and anger. Kirk and his crew communicate this fact to the Klingons and the conflict subsides. No longer feeding upon confrontation, the alien force is weakened and successfully driven away.

    July 28, 2014

  • Russell leads in Sun poll

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    July 28, 2014

  • Healthier and Wealthier? Not in Oklahoma

    Increased copays, decreased coverage, diminished health care access, reduced provider budgets and increased frustration are all the outcomes of the Legislature’s 2014 health care funding decisions. Unlike some years in the past when a languishing state economy forced legislators into making cuts, the undesirable outcomes this year could easily have been avoided.

    July 26, 2014

  • Medicaid reform a necessity

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    July 25, 2014

  • Remembering lessons from 1974

    This week marks the 40th anniversary of an important milestone in America’s constitutional history. On July 24, 1974, the Supreme Court voted 8-0 to order the Nixon White House to turn over audiotapes that would prove the president and his close aides were guilty of criminal violations. This ruling established with crystal clarity that the executive branch could not hide behind the shield of executive privilege to protect itself from the consequences of illegal behavior. It was a triumph for the continued vitality of our constitutional form of government.

    July 25, 2014

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    July 24, 2014

  • Technology that will stimulate journalism’s future is now here

    To say technology has changed the newspaper media industry is understating the obvious. While much discussion focuses on how we read the news, technology is changing the way we report the news. The image of a reporter showing up to a scene with a pen and a pad is iconic but lost to the vestiges of time.
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    July 23, 2014

  • New Orleans features its own “Running of the Bulls”

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    July 22, 2014


The runoff race for the 5th District congressional seat is set for Aug. 26. If the voting were today, which candidate would you support?

Al McAffrey
Tom Guild
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