Corporate Taxes
A week ago, I began my series of posts on the drug business, starting with my perspective on how the business is…aswathdamodaran.blogspot.com
Read this one a few days ago — it’s about the Pfizer/Allergan deal that’s been in the news lately but for me it’s really about the mess that is the US corporate tax system.
There’s two schools of thought on (legal) corporate tax avoidance — blame the company or blame the tax code — and I’m somewhat on the side of blaming the tax code. It’s crazy to me that we set up huge incentives for companies to do things like inversions and we’re still surprised when they actually do them.
Keep in mind that their duty (at least in some sense) is to their shareholders (maximizing profits, etc), not to their country (paying as much tax as possible, etc). You can argue that in the long term you maximize shareholder value by being patriotic, but it’s hard for me to see how that’s so definitive that we should just ignore the billions of dollars of value (legal) tax avoidance can unlock for e.g. Pfizer/Allergan.