Inversion

Floor Speech

Mr. REID. Mr. President, more than a century ago, a small drugstore opened for business in Barrett's Hotel in Chicago, IL. The pharmacist, not yet 30 years old, and a veteran of the Spanish-American War, borrowed $6,000 to open this drugstore. His name was Charles Walgreen. This was his first store but certainly not his last. As his chain grew, the pharmacies became a fixture in American culture--you know, the vintage image of a soda fountain, milk shakes, a drugstore counter. They would mix their own drugs to give pain medication and other products to people who came in that drugstore. This is how Walgreen's started.

Now, 113 years later, the Walgreen family no longer heads the company. But there are over 8,200 Walgreen's drugstores around the country. They still bear the Walgreen name. That company Charles Walgreen started is reportedly strongly considering a renunciation of its American citizenship and a move to Switzerland. Why? To avoid paying their fair share of taxes.

Reestablished as a foreign corporation, Walgreen's would pay a smaller share of taxes. This practice is called ``inversion.'' It is a tax trick, a loophole. Of course, Walgreen's will not actually move to Switzerland. Instead, they plan to acquire a European company and officially make Switzerland home to their new headquarters, but in reality they will stay in Chicago right where they are now. That is because Walgreen's does not want to actually leave America. Why would they? Why would they want to leave America? We have the most sophisticated workforce in the world. Why would they give that up? America has the infrastructure that, although in need of updates, is still the most extensive in the world. It provides Walgreen's with the roads and transportation it needs to supply its stores. Why would Walgreen's give that up?

Why would they give up the fact that we have a legal system we can trust, that enforces business contracts and upholds intellectual property protections they need? They would not turn their heads and walk away from that. America has a Medicare system that pays for seniors to buy pharmaceuticals at Walgreen's. I am sure Walgreen's will not be turning away that cash; that is what it is, cash.

Let's not forget that Americans enjoy a law enforcement apparatus that protects the company's assets. Why would Walgreen's want to give that up? Our military, which is second to none, will continue to protect the country where all of those Walgreen's stores are located. I am sure Walgreen's would not want to give that up. Not to mention the fact that America is a pretty good place to live.

So why would Walgreen's executives ever want to move their families across the world? That would be foolish, would it not? Walgreen's leadership will probably stay right where they are now in their fancy homes in America. While they remain here, Walgreen's will still expect American tax credits, even as it dodges as much as $4 billion over the next 5 years in taxes. That is what inversion is all about.

Essentially what Walgreen's is saying is we love America. We love being in America. But we are not going to pay for it. The dictionary defines the word ``exploitation'' as ``the fact of making use of a situation to gain unfair advantage.'' What a perfect explanation of what Walgreen's is going to do. What the Walgreen's company is doing sure seems like exploitation to me. After all, this is a corporation that made $16.7 billion from Medicare and Medicaid last year--$16.7 billion--and they are going to move overseas.

But, sadly, Walgreen's is not the only corporation jumping ship. Major American companies such as Medtronic and others have already announced plans to give up their corporate citizenship. Who will be next? A decade ago, the senior Senator from Iowa warned of ``unpatriotic companies that dash stash their cash.'' Now we are seeing this dash-and-stash scheme become common practice for corporations that do not want to pay their fair share of taxes.

In fact, the two largest transactions to move American companies overseas in history have taken place within the last month. When these companies reincorporate overseas, it is, simply put, unfair. It is unfair to the American taxpayer, to the American Government, and to many companies that refuse to engage in this deceptive practice.

Why should other American pharmacy chains such as CVS Caremark and Rite Aid be disadvantaged because Walgreen's balks at paying its fair share of taxes? To uphold our free enterprise system and ensure that American businesses are competing on a level playing field, Congress must close this loophole.

We have a new chairman of the Finance Committee. The senior Senator from Oregon is known to be a man who is fair and will make sure that people do not take advantage of others. He has made a commitment to me and anyone who will listen to him that this must change. It is going to start with the Finance Committee and start very soon. I have been encouraged by his statements. He has indicated he will work to close this loophole for these runaway companies.

The chairman of the Permanent Subcommittee on Investigations, the senior Senator from Michigan, has also been leading on this issue. He has been talking about it for a long time. Two strong leaders--the senior Senator from Michigan, the senior Senator from Oregon--have locked arms and are going to do something about this.

Senator Levin's legislation, the Stop Corporate Inversion Act, puts a 2-year moratorium on inversions by U.S. companies. This moratorium will give Congress time to thoroughly and thoughtfully consider the issue. I do not need a lot more thought on it. I am ready to roll on this one. We need to get this done, and quickly. I will settle for the 2 years. I am frankly, though, open to all ideas. What I am not open to is the idea that this corporate exploitation of the American taxpayer is somehow acceptable, because it is not.

Today we are considering legislation that would amend the U.S. Tax Code to fight outsourcing, protect American jobs, and create job creation within our borders. The Bring Jobs Home Act, which ends senseless tax breaks for outsourcers, will offer companies a 20-percent tax credit to help with the cost of moving jobs back to America. Much like the Bring Jobs Home Act, ending this corporate citizenship scam will encourage American companies to pay their fair share. It will also let corporations know that cheating the American people with their tax trick is not a viable business plan.

Benjamin Franklin said this: ``Tricks and treachery are the practice of fools, who have not wits enough to be honest.'' If corporations want to leave America, it is their right. But American taxpayers should not be forced to foot the bill when U.S. companies want all the benefits of commerce in this country without having to pay their fair share.

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