Corporate Taxes

Earlier this week, one of the largest acquisition and biggest-ever instance of corporate inversion was announced when Pfizer Inc (PFE) agreed to acquire Allergan Plc (AGN) for $160B. This has been painted by the politicians and the media as a way of avoiding corporate taxes, but one has to wonder what is really causing companies to take such steps to begin with.¬†For some background, the deal announced between Pfizer and Allergan will result in Pfizer’s corporate headquarters moved to Ireland and will eventually save shareholders anywhere between 8% and 10% in taxes. The company does not really lose any business or marketshare¬†in the US by doing this and simply reduces its taxes by taking this step. This move raises a few eyebrows since a Dow Jones Index-listed stock is now relocating.

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