U.S. politicians condemned Pfizer's deal with Allergan as a tax dodge on Monday, bringing another round of hand-wringing in Washington over the corporate tax code, though legislative action before 2017 is unlikely.
Democrats heaped the most criticism on the New York-based drug maker, with Hillary Clinton accusing Pfizer of using legal loopholes to avoid its "fair share" of taxes in a deal that she said "will leave U.S. taxpayers holding the bag."
The front-runner for the Democratic presidential nomination in the November 2016 election said she will propose steps to prevent more inversions, but she did not provide details. "We cannot delay in cracking down on inversions that erode our tax base," said the ex-U.S. secretary of state and former New York senator in a statement.
Republican front-runner Donald Trump, who has called for a corporate tax overhaul, called the deal "disgusting" in a statement, saying "our politicians should be ashamed."
Pfizer is doing the largest inversion deal of all time. In a $160-billion transaction, it plans to move its tax address from the United States to Ireland, if only on paper, by buying and merging into Allergan, a smaller, Dublin-based competitor.
The combined company will be called Pfizer and will be run by Pfizer's CEO, with executive management staying in New York and extensive operations across the United States, but it will no longer be taxed as a U.S. company.
More than 50 similar deals have been done over three decades by well-known companies such as Medtronic Plc, Fruit of the Loom and Ingersoll-Rand Plc. Congressional researchers have estimated inversions, left unchecked, will cost the U.S. Treasury nearly $20 billion in the next 10 years.