Hillary Clinton to unveil 'exit tax' plan to combat inversion mergers like Pfizer/Allergan
UPDATE: Hillary Clinton released her proposal to combat inversions, including an exit tax, on Wednesday. Biopharma Dive has coverage of the plan's details here.
- Hillary Clinton's campaign will unveil a proposal tomorrow for an exit tax on companies that move their headquarters from the U.S. to foreign countries in order to lower their corporate tax rates.
- This is part of a broader effort to target the practice of inversion deals, which experts say extract about $2 trillion in profits out from under U.S. taxes.
- In contrast to Clinton's proposal, the Republicans have suggested overhauling the entire tax code is the the best way to deal with inversions.
Clinton's exit tax is part of a broader plan which includes boosting infrastructure spending by $275 billion and investing in clean energy and research. Clinton hopes to invest the proceeds of a future exit tax into manufacturing jobs.
Clinton has joined a chorus of critics who argue U.S. businesses relocating abroad hurts the U.S. on many levels. The tenor of this criticism has sharpened since the $160 billion Pfizer-Allergan merger was announced a couple of weeks ago. The planned merger will allow Pfizer to switch its tax domicile to Ireland, thereby lowering its tax rate to around 18 percent. The U.S. corporate tax rate currently stands at 35%, although many firms pay a lower effective rate.
BioPharmaDive will update this post as more details on Clinton's exit tax plan become available on Wednesday.