To prevent corporate ‘inversions,’ the American tax code needs to be fixed

Again, A U.S.-based multinational corporation is merging with a foreign counterpart, with the intent to pay taxes at the other country’s lower rate. By joining forces with Ireland-based Allergan, pharmaceutical-maker Pfizer may reduce its effective tax rate from 26 percent to 17 percent. And once again, U.S. politicians are denouncing the deal as a demonstration of corporate America’s allegiance to profits above its responsibility to help pay for the government that enforces patent rights, among other beneficial services. Last year, Congress’s Joint Committee on Taxation projected that all such tax-driven mergers, known as “inversions,” would erode federal revenue to the tune of $33.6 billion over the next decade.