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Wednesday October 22, 2014

Washington News

Washington Hotline

Senators Welcome Walgreens’ Decision

Walgreens Co. has recently been under pressure from Washington to keep its corporate headquarters in America. On August 6, Walgreens announced that it will acquire Swiss drug wholesaler Alliance Boots GmbH, but will not “invert” or move its business headquarters to Switzerland. The Walgreens press release stated, “The Walgreens Boots Alliance Holding Company will be headquartered in the Chicago area, while Walgreens operations will remain headquartered in Deerfield, Illinois.”

Senator Dick Durbin (D-IL) had publicly urged Walgreens to keep its tax headquarters in Deerfield. That decision would result in several billion dollars of increased corporate taxes over the next decade. Durbin welcomed the decision and noted, “Earlier this morning, I spoke with the CEO of Walgreens, and am thrilled to say that the corner of happy and healthy is still right here in Illinois. As Walgreens themselves noted, Illinois has been their home for more than 110 years, and locating their global business here in the U.S. was the right decision for their customers, employees and shareholders.”

Senate Finance Committee Chairman Ron Wyden (D-OR) also greeted the decision with approval. He has been planning to introduce major tax reform next year and stated, “I am working to build a bipartisan coalition to pursue immediate legislation to stop the inversion virus while working on a longer term path forward to fix the root problem – our broken tax code.”

Editor’s Note: There is growing bipartisan recognition that corporate tax reform is long overdue. The U.S. top corporate rate of 35% is well above that of other industrial nations. The decision by Walgreens was popular with Washington but did not meet with the approval of the investment world. There was a major drop in the price of Walgreens stock following the announcement. The publicity surrounding Walgreens and other potential inversions may finally lead to bipartisan tax reform in 2015.

Published August 8, 2014


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