Attention, Walgreens shoppers. You may have just witnessed the first time that having a household name actually cost a company money.
Last week, Walgreen Co., the nation's biggest drugstore chain, pulled back from a plan to change its corporate address to Switzerland. The idea was to save on federal taxes by departing the United States through the magic of paperwork; its more than 8,200 stores would remain in place on neighborhood corners.
But Walgreen reversed course on its "tax inversion," saying it feared being hounded by the IRS for tax evasion. I think it dreaded customers' anger even more.
We've stood by as jobs were being outsourced offshore, and now companies are shipping out their tax dollars as well. This is leaving individuals, small businesses and wage earners -- the little guy -- holding the bag. Corporations contributed one-third of federal revenue in 1952, and today it's less than 10 percent.
Forty-four companies have inverted in the last decade, and the pace is picking up. President Barack Obama tried to hold back the tide last month with a call for "economic patriotism."
When Walgreen announced it would remain American, its shares dropped by $9.91, to $59.21. In the week since, Walgreen shares have rebounded slightly to $62.45 at yesterday's market close. Could that be considered a loyalty bonus?
Shopper loyalty is all-important to sellers of shampoo, vitamins and Diet Pepsi. Most of the other American firms incorporating overseas are not so exposed to consumer buying power: a printer manufacturer, a power management firm, several drugmakers. I don't remember the last time my doctor asked which drug company I wanted a pill from.
Shareholders love a company that maximizes profit. But when profit is the only measure by which we judge a company's actions, so much gets left on the warehouse floor: environmental health, worker dignity and safety, good corporate citizenship.
You might argue that companies owe nothing as citizens, especially to a government that, like ours, is willing to charge among the highest corporate tax rates in the world: 35 percent. But governments build roads, educate employees and fight crime. Don't companies benefit from all that? Nothing says gratitude like paying one's taxes.
You could also argue that a more profitable company creates more American jobs. But the deal in America is already sweeter than it seems. The effective corporate tax rate, after the accountants are done finding loopholes and deductions, is closer to 12 percent.
"The Daily Show" recently listed seven separate tax credits received by Mylan pharmaceuticals, for such things as research and development, worth a minimum of $4 million. Mylan, which makes generic versions of Lipitor and Viagra, just reincorporated in the Netherlands. Why send chocolates and flowers to a company that's leaving us for a Dutch beau?
Congress must be up in arms about tax inversions! Nope. On this issue, Washington is yet again gridlocked. The Treasury is talking about rewriting rules to make inversions less profitable -- yet another resort to executive power.
Better would be to find a compromise. One creative avenue proposed by Rep. Steve Israel (D-Huntington) would allow companies to repatriate overseas holdings at a special 15 percent gross rate, and invest it in an infrastructure development fund to build energy, environmental, telecommunications and transportation projects.
We got this far together. I'm for companies like Walgreen that want to share the future.