Updated 08/06/14 – 11:07 a.m.
CHICAGO (CBS/AP) — Under pressure from the Obama administration and members of Congress, Walgreen Co. has backed off plans to move its corporate headquarters overseas to cut its federal tax bill.READ MORE: 3 Men Injured In River North Parking Garage Shooting, One Identified In Video As Rapper Lil Reese; Officer's Gun Also Accidentally Discharged
WBBM Newsradio’s Regine Schlesinger reports, with its acquisition of Swiss retailer Alliance Boots, Walgreen Co. had considered moving its corporate headquarters from north suburban Deerfield to Switzerland to save millions in taxes.
Though Walgreens will move forward with acquiring the remaining stake in Alliance Boots that it does not already own, the company confirmed it will not pull off a “corporate inversion,” a move that has become more and more popular with U.S. companies seeking to cut their federal taxes.
“We are excited to move forward with the next important step in becoming a new kind of global health care leader,” Walgreen Co. CEO Greg Wasson said. “Expanding globally with Alliance Boots will make quality health care more affordable and accessible to communities here in America and around the world.
In an inversion a U.S. company reorganizes in country with a lower tax rate by acquiring or merging with a company overseas. Companies are seeking some relief from the U.S. corporate tax rate of 35 percent, which is the highest in the world. Inversions also allow them to avoid paying taxes on income they transfer back the parent company from overseas, and they can reduce the U.S. corporate tax liability in other ways as well.
The company said it is not confident the structure of the deal to complete its acquisition of Alliance Boots would withstand scrutiny from the IRS if it went ahead with the inversion.
U.S. Sen. Dick Durbin led a campaign against corporate inversions. Last month, he introduced the “No Federal Contracts For Corporate Deserters Act,” in an effort to halt corporate inversions.
Wednesday morning, he applauded Walgreen Co. for keeping its headquarters in Deerfield.
“I talked to Mr. Wasson about the obvious challenge we have in rewriting pir tax code. I agree with him. We need to change it. We need to make it better, to not only encourage economic growth in America, but also reward those companies that keep their jobs and their headquarters in this country,” Durbin said. “Those are companies that need to be incentivized by our tax code.”READ MORE: At Least 29 People Wounded In Weekend Gun Violence In Chicago, 5 Killed
Before Walgreens decided against an inversion, Durbin heard plenty of unsolicited remarks from constituents angry about the possibility the company would move its headquarters out of Illinois.
“Senior citizens would come up to me and say, ‘If they move, I’ll never set foot in another Walgreens store.’ It kind of took me aback. I didn’t even know they were following the issue, let alone felt so emotional about it,” Durbin said.
Illinois pharmaceutical giant AbbVie has not yet said if it will move forward with a similar plan to move its corporate headquarters from North Chicago to Enlgand, where it’s buying a specialty pharmaceuticals firm Shire.
There have been 47 U.S. companies that have, through tie-ups with foreign businesses over the past decade, created inversion schemes, according to the Congressional Research Service.
Several others are planning or considering the move.
Last week, President Barack Obama called corporate tax inversions an “unpatriotic tax loophole,” and urged Congress to take action to limit the tactic.
Treasury Secretary Jacob Lew has said the Obama administration also was considering measures to halt tax inversions without needing Congressional action.
U.S. Sen. Mark Kirk has defended tax inversions as a way for American companies to become more profitable and hire more workers.MORE NEWS: MISSING: Kyrin Carter, 12, Has Autism, Last Seen In Hammond, Indiana
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