Durbin 'Appalled' by Taxpayer Subsidized AbbVie's Decision to Renounce It's American Citizenship
Senator announces Senate Committee approval of bill prohibiting federal defense contracts to companies that avoid U.S. taxes through 'inversion'
[WASHINGTON, D.C.] - In a letter to the CEO of the North Chicago-based company AbbVie, U.S. Senator Dick Durbin (D-IL) today expressed his strong opposition to the company’s decision to acquire Dublin-based Shire and use a strategy called “inversion,” to move the company’s headquarters overseas, but only on paper, in order to avoid paying U.S. taxes.
“For decades AbbVie (formerly Abbott Labs) used taxpayer-supported medical research, infrastructure and rule of law to become one of our nation’s most profitable companies. It was our government’s patent office which protected their discoveries and guarded their right to make a profit,” said Durbin. “Now AbbVie is ‘moving’ to an Irish island to escape paying the U.S. taxes it owes.”
Durbin noted the hypocrisy of this tax dodge by pointing out that AbbVie relies on basic medical research conducted at the taxpayer-supported National Institutes of Health (NIH) to develop new profit-making drugs and other products. Additionally, AbbVie’s blockbuster drug Humira is sold through taxpayer-supported programs like Medicare and Medicaid, which helped the company generate nearly $1.2 billion in sales the first quarter of this year alone.
“Given this support for your research, production and sales, I am appalled to learn that AbbVie is prepared to renounce its American corporate citizenship to avoid paying U.S. taxes over the next several years through a corporate inversion. Those are U.S. tax revenues that will not be invested in basic research at the NIH to support the development new drugs, or the highways and airports that serve your company, or the federal system of patent protections from which your company has profited greatly,” wrote Durbin.
Yesterday the Senate Appropriations Committee approved - on a bipartisan basis - a provision authored by Durbin that would ban defense contracts for inverted corporations and improve the definition of inverted corporations to capture more inverted companies. The new, stricter definition would mean that a company would be considered inverted if 50% or more of the domestic shareholders are the same before and after the acquisition (rather than the current 80% requirement) or there is substantial business activity in the U.S. and the management and control is in the U.S.
The provision was included in Durbin’s $549.3 billion FY2015 spending bill for the Department of Defense, intelligence community, and Overseas Contingency Operations, including the war in Afghanistan and other military operations worldwide.
Text of today’s letter is below:
July 18, 2014
Richard A. Gonzalez
Chairman of the Board and Chief Executive Officer
AbbVie Inc.
One North Waukegan Road
North Chicago, Illinois 60064
Dear Mr. Gonzalez:
This morning you and the Board of Directors of AbbVie announced it has reached an agreement on a merger with Shire that will allow the combined company to redomicile abroad to avoid paying U.S. taxes. I urge you and AbbVie’s Board of Directors to reverse your plans to invert and to weigh the long-term consequences this move, known as a corporate inversion, would have on a company that relies on U.S. taxpayers and U.S. taxpayer-funded programs to profit and thrive.
AbbVie products have significantly improved the lives of millions of people. These contributions, however, would not have been possible without the educated workforce, transportation infrastructure, and tax benefits that this country has provided for decades. Your company relies on basic medical research conducted at the taxpayer-supported National Institutes of Health (NIH) to develop new profit-making drugs and other products. AbbVie’s blockbuster drug Humira is sold through taxpayer-supported programs like Medicare and Medicaid, which helped the company generate nearly $1.2 billion in sales the first quarter of this year alone.
Given this support for your research, production and sales, I am appalled to learn that AbbVie is prepared to renounce its American corporate citizenship to avoid paying U.S. taxes over the next several years through a corporate inversion. Those are U.S. tax revenues that will not be invested in basic research at the NIH to support the development new drugs, or the highways and airports that serve your company, or the federal system of patent protections from which your company has profited greatly.
The AbbVie website has an entire section on “responsibility,” discussing at length the people AbbVie serves. If AbbVie inverts, it will have chosen to duck its corporate responsibility and turn its back on the very people it claims to serve.
I strongly urge you and the Board of Directors to reverse your decision to move the company’s domicile overseas to avoid U.S. taxes. Surely, you and the board must recognize that your company’s continued commitment to America would good for AbbVie’s bottom line.
Sincerely,
Dick Durbin
U.S. Senate
Cc: Board of Directors
Robert J. Alpern, M.D., Dean, Yale School of Medicine
Roxanne S. Austin, Austin Investment Advisors
William H.L. Burnside, Boston Consulting Group
Edward M.Liddy, Clayton, Dubilier & Rice, LLC
Edward J. Rapp, Caterpillar, Inc.
Roy S. Roberts, General Motors Corporation
Glenn F. Tilton, JPMorgan Chase & Co.
Frederick H. Waddell, Northern Trust CorporatioPrevious Article Next Article