Senator Sanders also announced that he would add an amendment to an upcoming Department of Defense funding bill that would bar the federal government from giving contracts to companies that offshore their headquarters in order to avoid paying U.S. taxes.
Walgreen’s, the giant drugstore chain, recently announced that it is considering moving its corporate headquarters from the U.S. to Switzerland to avoid $4 billion in U.S. taxes over the next five years. According to a recent report from Americans for Tax Fairness, nearly a quarter of Walgreen’s $72 billion in sales last year came from Medicare and Medicaid. (Source)
Let that sink in for a minute. Walgreens made about $18 billion last year from taxpayers and they want to move their headquarters to Switzerland so they can pay less taxes? $4 billion over 5 years works out to close to $800 million annually, which is but a tiny fraction of the money they make from federally-funded Medicare and Medicaid. Seriously, that’s like 4% of the money that Walgreens puts in the bank thanks to us, the American taxpayer. Here’s what they stand to gain:
By moving to Switzerland or England, Walgreen could reduce its effective tax rate from 37 percent to 24.2 percent in its 2016 fiscal year, according to one analyst. That would save the company an estimated $783 million in taxes in the first year, according to a report issued this month by Meredith Adler of Barclays, an investment bank.
With the tax savings, Walgreen’s estimated earnings in its 2016 fiscal year would rise to $6.50 per share, from $5.51 per share, an 18 percent increase, Adler estimated. The extra profits could be used to make acquisitions, build new stores and create jobs, or the cash could be returned to shareholders in the form of dividends or stock buybacks. (Source)
This is, in my opinion, one of the greatest problems with Wall Street and publicly traded companies. Stockholders demand strong dividend payouts each quarter and if their demands are not met, the CEO (who made over $13.6 million last year) and the board of directors face a revolt. Some would argue that the public owns stocks, and therefore the profits of these companies trickle down to all of us. However, only about one half of Americans own stocks and really, who actually pays their household bills on dividend payouts?
Will Walgreens take that $783 million and use it to raise the annual wages of their 240,000 employees? If you take $783 million and divide it by 240,000, you get approximately $3,300 per employee annually, or about an average $1.60 hourly wage hike. But would they do that? I highly doubt that.
So what will happen with all of the money they save by moving their corporate headquarters offshore? Walgreens will increase the earnings per share by 18% and their shareholders will applaud their business move. Meanwhile, they will continue taking our federally-funded Medicare and Medicaid unless Congress somehow pulls their heads out of their corpulent backsides and puts a stop to it, which is also highly unlikely.
While Walgreens is most certainly free to pick up and reestablish their headquarters anywhere in the world that they want to, we are also free to not shop there and give our business to local pharmacies instead. After all, most locally-owned pharmacies do accept Medicare and Medicaid along with private insurance, and some will even deliver your prescriptions to you. That is, if Walgreens hasn’t already bought out your local pharmacy, as has happened repeatedly over the past few years throughout the country.
What can you do to make your voice heard? Contact your senators and tell them to support Senator Sanders’ amendment to bar federal contracts from being given to tax evading companies. After you’ve done that, contact Walgreens via email or call their corporate number at (847) 940-2500 and let them know you will take your business elsewhere if they move offshore.
Finally, as I will repeat over and over again until Election Day, get out and vote. If you’re tired of politicians demonizing the poor for being moochers while taking contributions from offshore corporations who make billions of dollars off our taxes, please vote in November.
Just as a reminder, here’s what’s up for grabs:
—All 435 seats of the U.S. House of Representatives
—33 seats in the U.S. Senate
—46 State Legislatures (including Kentucky)
—38 State and Territorial Governorships.
Latest posts by Manny Schewitz (see all)
- It Looks Inevitable, Donald Trump Will Eventually Be The Republican Nominee - January 17, 2016
- Donald Trump Is Now Using Ted Cruz’s Canadian Birth Against Him - January 14, 2016
- Hillary Clinton’s False Statements On Bernie Sanders’ Healthcare Record Are Disgraceful - January 14, 2016