Overview
Case Study Assignment #5 Instructions
The Pfizer-Allergan Tax Inversion
This case highlights the issue of corporate tax avoidance through the tax tool of corporate inversions. While Congress has passed legislation in 2016 in an attempt to restrict corporate inversions followed by a decrease in corporate tax rates during the Trump administration, the practice of corporate inversions still continues. The Biden administration is considering an increase in the corporate tax rate.
The readings also continue to highlight the use of tax legislation to create economic stimulus and improve economic growth.
Read the HBR article: Sticks and Stones? How Companies Respond to Tax Shaming.”
Apply the HBR articles and the assigned readings (attached) and the case facts to answer the following questions raised by the case. Some outside research is also acceptable. Answer all questions and subparts separately.
Questions:
What is a corporate inversion?
Why do corporations engage in the practice?
Given that inversions may be lawful, is it equitable and moral for a company to avoid paying its fair share of taxes? What is their fair share? Explain.