On Wednesday, US pharmaceutical giant Pfizer Inc. and Ireland-based Allergan announced that they are terminating a proposed $160 billion merger because the US Treasury Department will not let the companies use the marriage to dodge billions in US taxes, as had been previously expected.
"Pfizer said the decision was driven by new US Treasury rules aimed at curbing such deals, called inversions," reported Reuters.
The merger’s collapse was heralded by US presidential hopeful Bernie Sanders via Twitter. The self-described Democratic Socialist has repeatedly called on the Treasury Department to crack down on such tax-evasion practices saying that “millionaires and billionaires need to pay their fair share."
Another leading candidate in the US presidential race, Donald Trump, has also lambasted the practice of corporate inversions, noting that it costs the American taxpayers billions of dollars, and saying that the practice must end. Trump often uses corporate inversions as an example of how the American people "are losing," but says that, if he is elected, "we’ll win so much that we’ll get tired of winning."
Corporate inversions allow US businesses to avoid paying domestic taxes by claiming foreign citizenship when they merge with an overseas company. The merger between Viagra-maker Pfizer Inc. and Allergan PLC, which manufactures Botox, would have been "the largest ever inversion" according to market analysts.
The deal met its demise Monday after the US Treasury Department detailed new rules that prohibit the practice.
Just last week, candidate Sanders pointed to the prospective Pfizer-Allergan merger as "nothing less than a tax scam," calling out US Treasury Secretary Jack Lew directly, saying that the latter needed to end inversions.