TRENTON — Senator Shirley Turner announced today that she is introducing legislation that would deter companies from reincorporating overseas to avoid paying taxes in the United States. The bills come in response to a growing trend — called corporate inversions — where American companies merge with foreign companies to avoid paying U.S. corporate taxes.
“Multi-billion dollar corporations are exploiting tax loopholes and shifting the financial burden to hard working, middle class American taxpayers who must pay more to the government to offset the loss of billions of dollars,” said Turner (D-Mercer, Hunterdon). “We need to encourage economic patriotism and stop this mass desertion by American corporations.”
Under Turner’s legislation, the state’s pension board would be prohibited from investing in companies that have exploited the tax loophole. New Jersey is among the state government pension funds with investments in companies that have taken advantage of the corporate inversion loophole. New Jersey ranks sixth among public pension funds investing in corporate inverter AbbiVie, holding more than 1.5 million shares of the company’s common stock valued at $81.9 million. New Jersey also ranks tenth among public pensions holding shares in Walgreen Co. — 450,000 shares valued at $30.8 million. Walgreen Co. recently pursued a tax inversion deal with British retailer Alliance Boots.
Turner’s other proposals would make inverted companies ineligible for state economic development grants and contracts, including reimbursement of taxpayer subsidized programs, such as Medicaid. Turner is also seeking a joint resolution urging Washington lawmakers and President Barack Obama to enact the “Stop Corporate Inversions Act of 2014.”
“Congress needs to do more to ensure that multi-billion dollar corporations are paying their fair share to support the very programs that they’re benefitting from,” Turner said. “Taxpayer subsidized programs, such as Medicare, Medicaid, and economic development and business incentive grants allow companies to maximize their profits. These companies want to enjoy all the rights of citizenship, utilize our educated workforce, our roads and infrastructure, and receive tax subsidies and credits, but they want none of the fiduciary responsibility. We cannot afford to have these corporations rip-off taxpayers in order to line their shareholders’ pockets. These corporations need to pay their fair share of taxes.”
A number of inverted corporations have already benefitted from New Jersey taxpayer subsidized business incentive programs, including Tyco International, Inc., which received a $15.4 million Business Employment Incentive Program (BEIP) grant in 2003. Pfizer, which has pursued tax inversion transactions, has received a total of $48.28 million in BEIP and other incentives. Dey Pharma, L.P., Mylan Inc. and Affiliates received a $1.09 million BEIP grant in 2009 and Abbott Laboratories has also benefitted.
According to the congressional Joint Committee on Taxation, the United States could lose $20 billion in taxes over the next 10 years due to inversions.
Turner has long been an advocate for ensuring that state government protects taxpayer interests and New Jersey jobs. Her legislation, signed into law in 2005, requires all services under state contracts or subcontracts to be performed in the United States.