Advocates and consumers release new report showing Walgreens will dodge $4 billion in U.S. taxes over 5 years by renouncing U.S. ‘citizenship.’ In anticipation of the 4th of July holiday when patriotic feelings are strong, local groups released a new report in response to reports that Walgreens is considering renouncing its U.S. “citizenship” and reincorporating in Switzerland, a tax haven, to dramatically reduce what it pays in federal income taxes.
The report, authored by Americans for Tax Fairness and Change to Win Retail Initiatives, estimates that Walgreens could dodge $4 billion in U.S. income taxes over five years if it renounces its American “citizenship” and moves its official address to Switzerland, a tax haven.
Walgreens is the nation’s largest pharmacy retailer with 8,200 stores and locations in all 50 states, including 75 stores in Oregon, which gives it 51 percent of the market. Walgreens profits from its American customers and from U.S. government programs, such as Medicare and Medicaid, which account for one-quarter of the company’s sales.
Despite relying on American customers and taxpayers for its profitability, Walgreens will decide in the next 4 to 6 weeks whether to undertake a so-called “corporate tax inversion,” made possible by a loophole in the tax code that allows American companies to reincorporate in a foreign country when just 20 percent of its stock is owned outside of the United States. Doing so would allow Walgreens to dodge corporate taxes here in the United States and pay a much lower rate in Switzerland.
The report, Offshoring America’s Drugstore: Walgreens May Move its Corporate Address to a Tax Haven to Avoid Paying Billions in U.S. Taxes, finds that Walgreens benefits substantially from U.S. taxpayer dollars:
• Walgreens receives nearly a quarter of its income from taxpayers through government programs. Of its $72 billion in 2013 sales, an estimated $16.7 billion, or 23 percent, came from Medicare and Medicaid.
• It received $46 million in tax breaks over 10 years from the state of Illinois, the current legal location of the Walgreens corporation.
• U.S. taxpayers have spent $11 million subsidizing executive bonuses at Walgreens over the last five years.
“The Walgreens up the street from our shop is plastered with American flags and 4th of July colors, yet the company is contemplating a move that would show very little allegiance to the country and consumers that helped it grow,” said Deborah Field, co-owner of Paperjam Press, NE Portland, “I’m proud to pay my fair share of taxes. Most of us realize that it’s the price of sustaining our public infrastructure and schools, protecting our environment, and other things essential to making America an excellent place to live and to do business.”
The Main Street Alliance of Oregon is a coalition of more than 2,500 small businesses across Oregon who work strategically to provide small businesses a voice on the most pressing public policy issues. Main Street’s advocacy promotes vibrant businesses and healthy communities, and fosters leadership development of socially responsible business leaders.
www.oregon.mainstreetalliance.org
Americans for Tax Fairness is a diverse coalition of 425 national and state organizations that collectively represent tens of millions of members. The organization was formed on the belief that the country needs comprehensive, progressive tax reform that results in greater revenue to meet our growing needs. ATF is playing a central role in Washington and in the states on federal tax-reform issues.
