Since learning that Walgreens may move its headquarters overseas, we’ve heard most from its shareholders, its executives, and politicians in Illinois and Washington. We haven’t heard much from the general public, much of which is still struggling economically in the wake of the recession and all of which stands to lose out when US corporations dodge taxes.
Walgreens, if we let it, will become the latest in a string of companies to exploit an accounting trick called “inversion,” which will allow the company to move its corporate address to a known tax haven. It will also become inversion’s most shameless exploiter: nearly a quarter of the company’s revenues come from Medicare and Medicaid, and its profits soared by 68 percent when Obamacare brought it new customers last quarter. Yet, Walgreens may decide as soon as August to renounce its “corporate citizenship,” become Swiss only in name, and slash its tax rate from 31 percent to 20 percent.
The push for inversion comes from a minority of Walgreens’s shareholders. This is a minority accustomed to outsize power over shareholders and stakeholders alike: Goldman Sachs, three activist hedge funds, and the executive chairman of Alliance Boots, the Swiss firm that Walgreens must acquire to complete its inversion. The camp pushing to decamp offers tax evasion as a route to shareholder profit. This offer may sway the shareholder majority, but Walgreens’ stakeholders stand to lose big time.
What stakeholders do I mean? In the case of the US’s largest drug retailer, the stakeholders are people in our communities filling prescriptions at the corner Walgreens; our state governments educating, training and certifying every Walgreens employee; and our nation’s largest public health programs subsidizing a fourth of Walgreens’ receipts.
Stakeholders are not shareholders, but they are investors of a certain kind too. We invest our tax dollars in the community’s roadwork, the state’s school systems, and our ambitious new federal health care program. The Illinois General Assembly in 2012 even agreed to give Walgreens $46 million in tax credits over 10 years. Like shareholders, we want a return on our investments and so we want to see more revenues than deficits. Unlike shareholders, however, we want this not for private gain, but for public benefit. It takes money to invest in and meet the needs of our communities. And when companies do well because of our investments, we have a right to expect they invest in us.
Instead, Walgreens is poised to take our money and run, leaving everyday taxpayers holding the bill. According to a study by Americans for Fair Taxes and Change to Win Retail Initiatives, a Walgreens inversion could cost U.S. taxpayers more than $4 billion over the first 5 years. That’s enough to fund 1.5 years’ prescriptions for all VA veterans, 639,000 new Medicaid enrollments, or 3.5 million new youth enrollments under the Children’s Health Insurance Program.
Community stakeholders should refuse to accept these projected losses and demand our value too. Legislation proposed by Sen. Carl Levin (D-MI) and Rep. Sandy Levin (D-MI) could put the brakes on a Walgreens inversion, and we should encourage Congress to pass it. But even as our elected officials consider legislative solutions, community stakeholders must bring our case directly to Walgreens’ executives. On Thursday morning, I will join other Chicagoans in delivering a petition with nearly 20,000 signatures to Walgreens’ flagship store in the Wrigley Building. We’re calling on Walgreens to listen to its stakeholders, not just its shareholders. Let’s hope they do the right thing and listen.
Eugene Lim tutors clients at a homelessness prevention agency. He is a leader with ONE Northside, a Chicago community organizing group, and National People’s Action. He lives in Rogers Park.”