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Tuesday, July 22, 2014         

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Walgreen Co. blasted for its anticipated move to Europe

By McClatchy News Services

POSTED:
LAST UPDATED: 02:16 a.m. HST, Jul 05, 2014


Walgreen Co. is at a crossroads, but it may not be "at the corner of happy and healthy" as its advertising slogan suggests.

The nation's largest drugstore chain is considering a move that would allow it to significantly cut its tax bill and increase profits. But it's being painted by critics as un-American for looking to make money for shareholders through financial engineering at the expense of the communities that it grew up in. Walgreen is considering a so-called corporate tax inversion, in which an American company is able to incorporate abroad by acquiring a foreign company. The buyer, in effect, becomes a subsidiary of a foreign parent.

Walgreen would accomplish an inversion by completing its purchase, which is expected to happen in early 2015, of Swiss-based Alliance Boots and moving its corporate home to Europe's largest pharmacy chain.

The Deerfield, Ill.-based company faces a tough choice, one in which it must balance profits with corporate social responsibility. By going ahead with an inversion, Walgreen would give ammunition to critics who claim the company is essentially renouncing its U.S. citizenship.

The decision could alienate the consumers who put their confidence in the chain since its inception in 1901, making it one of America's trusted brands.

Millions of people depend on Walgreen to dispense their prescription drugs safely and responsibly. Its more than 8,000 pharmacies are everywhere — one-stop convenience stores where you pick up your Lipi­tor as well as your lipstick. The company likes to say that 75 percent of the American population lives within five miles of a Walgreens store.

The average person who pays taxes cannot take advantage of the tax loopholes exploited by corporations, and they don't think it's fair, said Klaus Weber, associate professor of management and organizations at Northwestern University's Kellogg School of Management.

"I do think people now more than before care because of rising issues of income inequality and justice and the fact that large companies have come under more scrutiny," Weber said. "People expect corporations to fulfill their citizen duties as taxpayers like everyone else."

While several U.S. companies have moved to lower-tax countries since 2012, Walgreen has caught the attention of taxpayer groups and unions that have criticized the potential tax maneuver. They have blasted Walgreen for contemplating fleeing the United States even though it benefits from government insurance programs. Nearly one-quarter of Walgreen's $72 billion in sales in its last fiscal year came from Medicaid and Medicare, according to a report by Americans for Tax Fairness and Change to Win Retail Initiatives, a union-backed group.

By Ameet Sachdev, Chicago Tribune






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what wrote:
If Walgreens can pass the savings to the consumer with lower prices, then they are on solid ethical grounds to make the move. Local and Federal governments in the USA are increasingly throwing up barriers to the free capitalist makret that that once made America the greatest economy in the world. All empires eventually end, and with more regulations and socialist regulations, America's economy is on its downward slide.
on July 5,2014 | 01:52AM
nitpikker wrote:
what; you hold shares in walgreens? story only mentioned more profits for shareholders, nothing about lower prices for consumers. just corporate greed.
on July 5,2014 | 02:13AM
what wrote:
Walgreens is in a highly competitive market segment. There have to undercut CVS/Longs, WalMart, CostCo, etc. Capitalism works best for the consumers when there's lots of competitors and the government stays out of the way. They can't afford to get greedy or they will fall to their competitiro. Only government subsidized government bailout market segments like Wall Street banksters and government sponsored monopolies like Hawaiian Electric can reward themselves with the fattest bonuses and multi-million dollars salaries.
on July 5,2014 | 02:41AM
Kawipoo wrote:
what you can't explain it to an uneducated android
on July 5,2014 | 04:12AM
droid wrote:
I take offense to that!
on July 5,2014 | 12:31PM
soundofreason wrote:
Profits are REinvested into the corp AND by the shareholders. Those profits that are just spent, create jobs for those who produce those products.
on July 5,2014 | 07:34AM
richierich wrote:
Anyone can hold shares in Walgreens. NYSE: WAG. If you're jealous, go buy some.
on July 5,2014 | 07:51AM
soundofreason wrote:
Yeah, then there's that. But THAT would take some personal financial discipline. Much easier just to complain.
on July 5,2014 | 08:15AM
cojef wrote:
Some of the major electronic/internet firms are contemplating moving overseas to avoid paying Uncle Sam's high taxes. Currently, Apple and Google??
on July 5,2014 | 08:23AM
AmbienDaze wrote:
why doesn't the the US govt. reduce corporate taxes so there is no incentive for corporations to move overseas? less taxes collected is better than no taxes collected... no make sense.
on July 5,2014 | 10:32AM
2localgirl wrote:
what, be reasonable and smart? Never happen. Tax and spend, repeat...
on July 5,2014 | 11:19AM
96815068 wrote:
Agree.
on July 5,2014 | 02:19AM
krusha wrote:
The only thing that this will do is fatten the paychecks for Walgreens' executives. They get big bonuses for saving the company money and increasing the value of their stock. The only solution to this problem is for congress to pass laws to prevent this from happening. Since many of those politicians are under the payroll of those big companies, many of them are reluctant to pass any laws increasing the taxes for these companies. This is a shame since the average taxpayer has to pick up the slack for these companies who hardly pay their fair share for all the profits they gain from the recent uptick in the economy.
on July 5,2014 | 09:54AM
2localgirl wrote:
The only solution to this problem is for congress to pass laws to prevent this from happening. oh really, pass more laws? THAT is the PROBLEM with this once great country! TOO MUCH LAWMAKING!
on July 5,2014 | 11:20AM
droid wrote:
Exactly! It is the CURRENT law that ENCOURAGES companies to move overseas. Duh!
on July 5,2014 | 12:33PM
what wrote:
You don't understand. If Walgreens gets greedy and rewards themselves with big bonuses and fat paychecks, they will have to raise prices. If they raise prices, their competitors like CVS and WalMart will eat their lunch and put them out of business. Passing laws is just going to hasten the downward spiral of America's economy.
on July 5,2014 | 11:20AM
KaneoheSJ wrote:
You are really naive to think that this maneuver is to save consumers money. It is pure corporate greed. It is not going to save you more money if you think about it. As Walgreens pays less in taxes, the other companies such as CVS will end up having their taxes raised to offset the loss of tax revenue from Walgreen. And it will cost you, the consumer, more, ironically, as government receives less in tax revenues. You see, to offset the cost of services, government tends to raise taxes rather than reducing services. What Walgreens is doing is gaming the system for their profiteering benefit. It is un-American to move your namesake to another foreign company in order to pay less in taxes and still get full benefits from the services paid for by the rest of the Americans.
on July 5,2014 | 10:43AM
Spikette wrote:
Not corp greed, just taking the tax breaks President Bush and congress gave to the big business while he was in office. Surprise not more large corporation are taking this tax break/savings. Why pay taxes to United States when you are not required to by taking advantage of this law.
on July 5,2014 | 04:24PM
serious wrote:
The USA has about the highest corporate tax structure in the world. If a company competes globally it has to reduce expenses. If the Senate would go along with the House taxes could be lowered.
on July 5,2014 | 02:40AM
Kate53 wrote:
And just about as many businesses as individuals do not pay income taxes -- loopholes, tax credits, etc. On the other hand, quite a few very large corporations get refunds from the government, even though they pay $0 in taxes; now that's corporate welfare -- pay no taxes and still get a refund.
on July 5,2014 | 04:32AM
richierich wrote:
I'm not opposed to paying taxes. But I do despise the fact that our taxes are excessive and regressive.
on July 5,2014 | 07:52AM
cojef wrote:
Over 40% of the wage earners do not pay any IRS taxes. Someone said, "when more than half of the taxpayers receives benefits at the expense of those able to pay taxes, the democracy ceases to exist" or something like it.
on July 5,2014 | 08:19AM
droid wrote:
“Men can never be secure from tyranny, if there be no means to escape it till they are perfectly under it: and therefore it is, that they have not only a right to get out of it, but to prevent it.” — John Locke
on July 5,2014 | 01:16PM
DAGR81 wrote:
Kate53, you are oversimplifying the situation. Taxation in America far more complex than you believe.
on July 5,2014 | 11:23AM
waikiicapt wrote:
Name one corporation that pays ZERO corporate taxes. Just one. Tell me ONE person that does NOT pay any income taxes and takes advantage of "loopholes and tax credits, etc."...as I assume you are refering to a 'rich' person, right? I will agree that almost half the people in this country in fact do NOT pay income taxes, but live off government benefits. Clearly you don't understand our tax system. Since California and New York have rasied (again) their personal income taxes, more and more wealthy people have left their state. Businesses do the same thing for the same reason. Should RICH movie stars and pro athletes be forced to pay more? Do they deserve to even be paid the millions of dollars they earn?? Why is a corporation different? Why are hard working business men and women treated differently?
on July 5,2014 | 01:52PM
MrMililani wrote:
waikiicapt...you don't know what you are talking about. There are many corporations that pay no taxes such as Boeing Corp., General Electric, Priceline.com, Verizon, etc.
on July 5,2014 | 04:09PM
whs1966 wrote:
The existence of this tax loophole is the result of our electoral system, which results in corporations getting what they want by buying the best government money can buy. Until our campaign finance laws are drastically revised, which I don't believe will happen because the wealthy will not let it happen, the country will continue down the path of the wealthy unfairly accumulating an ever-greater portion of the nation's wealth while the middle class disappears. In short, most of us can kiss the American Dream good-bye. Our kids and grand-kids will ask how this happened.
on July 5,2014 | 05:56AM
2disgusted2 wrote:
I just said that I love Boots and my comment went for approval! Talk about the misuse of power!
on July 5,2014 | 06:36AM
soundofreason wrote:
"The nation's largest drugstore chain is considering a move that would allow it to significantly cut its tax bill and increase profits">>>> What we have here is "cause and effect". GREEDY govt taxation CAUSED the need for the move. It happens WITHIN our states all the time. Amazon packed up and moved their stuff from one state to another over....taxes. Back east, PEOPLE have moved from one county, 5 miles over to a different county over.....taxes. Government thinks that they can just keep growing expenses and just raise taxes to pay for it and people/business just have to "take it". Not so. There was a large Honolulu LED light company that recently packed up and moved to the mainland over Hawaii's.....taxes. If Walgreens can save money NOT feeding our tax monster and it will ENABLE them to open MORE stores and create even MORE jobs, more power to 'em.
on July 5,2014 | 07:04AM
lokela wrote:
Traitors.
on July 5,2014 | 07:08AM
soundofreason wrote:
"But it's being painted by critics as un-American ....." >>> America's tax policy set the stage for this. Bottom line - Businesses don't HAVE to deal with with it - and the govt better wake up and realize that BEFORE we lose even more businesses. States are starting to learn this lesson as they market corps to come into their state with deals and bring jobs. Feds....not so much.
on July 5,2014 | 07:20AM
HD36 wrote:
My brother who works at Pfizer says they're doing the same thing. We have some of the highest corporate tax rates in the world. Trillions are held offshore because multinationals would have to give it to the government if they brought it back. It also means good jobs have moved abroad and the retail, part-time ones are left. When you have a cash starved government that's $17.5 trillion in debt, they think of confiscating more wealth rather than cutting spending.
on July 5,2014 | 07:28AM
soundofreason wrote:
Headline SHOULD read...."Federal tax rates as a result of spending, chase away MORE US companies"
on July 5,2014 | 07:39AM
richierich wrote:
Can you blame them? The US government is strangeling citizens and business with excessive taxes to support its inefficient bureaucratic bloat.
on July 5,2014 | 07:49AM
KaneoheSJ wrote:
Yes, richierich, but these kinds of actions make it harder and harder for the rest who are playing the game by the rules. This cheap tactic costs you and I in the form of even higher taxes to make up for the activities of of a few companies that go into the gray area. Even though it is legal it is wrong. It should not be allowed. These same companies, if they are in fact becoming foreigners, should live in that country completely. You can't have your cake and eat it, too. They are basically benefiting from the services that Americans pay for through taxes but at the same time paying less for that benefit. Those that play by the rules end up paying more in taxes to compensate for these companies that exploit this tax loophole. It is about time that changes are made to this law. If they are going to play foreigners, then they should become foreigners and move their entire company including CEO's and employees there. Then should not be allowed to game the system.
on July 5,2014 | 10:35AM
saywhatyouthink wrote:
I agree Kaneohe. In addition, allowing Walgreen's to move their US profits off shore would only encourage it's competitors to do the same just to remain competitive. What is needed is complete reform of the tax system. There's no good reason why 40% of the population should be able to get away with paying no tax. A federal sales or consumption tax could ensure that everyone payed at least some federal tax, just as they do state/local taxes.
on July 5,2014 | 09:49PM
AhiPoke wrote:
Americans didn't complain when Europeans were leaving their home countries to come to our country for the same reason. At some point may of us would consider doing the same thing. Our governments at all levels have become disfunctional and expensive and there's no indication that it'll get better.
on July 5,2014 | 08:16AM
soundofreason wrote:
EVERYbody should have some skin in the game.
on July 5,2014 | 09:16AM
saywhatyouthink wrote:
The only way to get everyone to pay is through a federal sales/consumption tax. That's how Hawaii gets most of it's money before giving it away to the unions.
on July 5,2014 | 09:52PM
Surfer_Dude wrote:
Don't count on any savings being passed on to consumer. A $4.00 generic drug will still cost $4.00 no matter where the company is located.
on July 5,2014 | 10:01AM
KaneoheSJ wrote:
It is ironic that we call it un-American for Walgreen to put it's business on foreign soil but when Mitt Romney did something similar we turned a blind eye to it and just considered it a tax shelter. Personally, I think that Walgreen has been making some questionable maneuvers in its strategy against CVS. Placing their stores next to their competitor which is obviously the more successful brand here in the form of Longs is downright foolish. Now, moving their businesses to Europe is downright a cheap maneuver to try and profit from tax loopholes. Whether it be done by Walgreen or Romney, it is wrong. The tax guidelines should be changed to disallow this kind of tom foolery.
on July 5,2014 | 10:28AM
serious wrote:
KaneoheSJ if you ran a corporation and you could get a better deal for your shareholders, what would you do? Shareholders can sue for CEO's that don't have the shareholders interests in mind! It's the tax structure and the lobbyists--period!!
on July 5,2014 | 03:07PM
saywhatyouthink wrote:
Like Mitt said, it's not illegal but alot of people still think it's un-american.
on July 5,2014 | 09:53PM
MrMililani wrote:
KaneoheSJ...Many of us didn't turn a blind eye when the Romney tax dodge was exposed. We voted for President Obama. Of course, there were many others reasons why we chose Obama but this one was probably the icing on the cake.
on July 5,2014 | 04:13PM
glenn57377 wrote:
Can't blame them. The company exists for profit. If the states and nation wants to keep them (hear that, Hawaii?), make this nation business friendly instead of raping businesses and taxes for profit. If I wasn't already thoroughly entrenched in living here in Hawaii, I would uproot and move to where it is safe and the cost of living is very low. I would never give up my citizenship, but I would go dual, if allowed. The politicians of this country have ruined it and until they turn it around, you can expect citizens and the country to adjust out of necessity.
on July 5,2014 | 10:28AM
KaneoheSJ wrote:
No, it is not to save you the consumer money, it is to increase their profit margin at your cost. It is pure corporate greed. It is not going to save you more money if you think about it. As Walgreens pays less in taxes, the other companies such as CVS will end up having their taxes raised to offset the loss of tax revenue from Walgreen. And it will cost you, the consumer, more, ironically, as government receives less in tax revenues. You see, to offset the cost of services, government tends to raise taxes rather than reducing services. What Walgreens is doing is gaming the system for their profiteering benefit. It is un-American to move your namesake to another foreign company in order to pay less in taxes and still get full benefits from the services paid for by the rest of the Americans.
on July 5,2014 | 10:44AM
what wrote:
It's both. Increased profits allow the company to undercut their competitors prices and increase sales, which grows the company, creating more jobs, and makes more money for everybody, including the tax collector. On the other hand, restrictive regulatory laws only serve to strangle companies and create a downward spiral.
on July 5,2014 | 12:16PM
MrMililani wrote:
Un-American? You are living in the 1940's.
on July 5,2014 | 04:15PM
2localgirl wrote:
I'm sick of this country thinking they can trod over us. IF this is a way to show the government that what they are doing to the US citizenry, then so be it. Hope more make that same statement.
on July 5,2014 | 11:20AM
SteveToo wrote:
Coorperations do NOT really pay taxes. They pass the cost of taxes on to the buyers. Reduce taxes and prices will go Down.
on July 5,2014 | 11:36AM
entrkn wrote:
Maybe they will take all their good for nothing rip-off stores with them.
on July 5,2014 | 12:16PM
islandsun wrote:
Boycott Walgreens. They are junk anyway. Poor example of an American started company. Corporate greed. Low wages/benefits and always cutting jobs.
on July 5,2014 | 04:12PM
localguy wrote:
Walgreens can legally do what ever it wants to lower taxes. Sad to say, thanks to our dysfunctional congress, we have the highest corporate tax rate in the world. That said, shoppers may think Walgreens has renounced its USA citizenship and take their business to a pure USA store chain.
on July 5,2014 | 05:43PM
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