Senator Durbin Urges Illinois-Based Hospira Not To Turn Its Back On America To Dodge Taxes

Senator warns of another potential corporate inversion at U.S. taxpayer expense

CHICAGO, IL–(ENEWSPF)–August 14, 2014.  In a letter to the CEO of Lake Forest, Illinois-based Hospira, U.S. Senator Dick Durbin (D-IL) today urged the company not to turn its back on American taxpayers and consumers by taking advantage of a tax loophole called “inversion” which allows a company to move its headquarters overseas, but only on paper, in order to avoid paying U.S. taxes. 

“Hospira’s success, including second-quarter profits that more than doubled, depends on the educated workforce, transportation infrastructure, and tax benefits here in the United States.  Your company’s injectable drugs and infusion technologies are purchased through taxpayer-supported programs, such as the Veterans Health Administration and Medicare, which have contributed to Hospira’s corporate success,” Durbin wrote. 

“If your company inverts, the tax dollars you are taking overseas will not be invested in the Veterans Health Administration to provide healthcare benefits to our veterans, basic research to support the development of new drugs, the transportation network that serves your company, or the federal system of patent protections.”

In a July letter to the CEO of Deerfield, Illinois-based Walgreens, Durbin expressed his strong opposition to reports that Walgreens would use a purchase of Swiss-based retailer and wholesaler Alliance Boots in order to “invert.” Last week, Walgreens announced that while it would proceed with the purchase of the remaining stake in Alliance Boots, it will remain headquartered in the United States. 

Durbin has been the leading voice in Congress against these inversion schemes, raising the issue in the face of a growing trend toward U.S. corporate tax avoidance.  Durbin led a letter – also signed by U.S. Senators Jack Reed (D-RI) and Elizabeth Warren (D-MA) – to President Obama urging him to use his executive authority to reduce or eliminate tax breaks for companies that shift their headquarters overseas to avoid paying U.S. taxes. As Congress considers legislative solutions to the problem, the lawmakers emphasized the need for immediate action, considering the growing trend in corporate tax avoidance. 

Text of today’s letter is below:

August 14, 2014

F. Michael Ball
Chief Executive Officer
Hospira, Inc.
275 North Field Drive
Lake Forest, IL 60045

Dear Mr. Ball:

Recent reports indicate that Hospira plans to buy the medical-nutrition unit of the French company Danone so that it can claim domicile abroad and dodge U.S. taxes.  I strongly urge you and the board of directors not to move your company’s headquarters overseas, since a significant portion of Hospira’s revenue comes from U.S. taxpayers and depends on U.S. taxpayer-funded support.

From its pharmaceuticals to its medical delivery systems, Hospira’s products have significantly improved the lives of millions of Americans.  Hospira’s success, including second-quarter profits that more than doubled, depends on the educated workforce, transportation infrastructure, and tax benefits here in the United States.  Your company’s injectable drugs and infusion technologies are purchased through taxpayer-supported programs, such as the Veterans Health Administration and Medicare, which have contributed to Hospira’s corporate success.  Further, Hospira relies on the U.S. Food and Drug Administration to ensure its products are safe for consumers.   

In spite of this broad support, news reports suggest that Hospira is considering renouncing its American corporate citizenship to avoid paying U.S. taxes over the next several years through a corporate inversion.  If your company inverts, the tax dollars you are taking overseas will not be invested in the Veterans Health Administration to provide healthcare benefits to our veterans, basic research to support the development of new drugs, the transportation network that serves your company, or the federal system of patent protections.

According to the Hospira website, your company has an “unwavering commitment to…serving [customers and patients] with integrity.”  If your company moves its domicile overseas to avoid U.S. taxes, it will turn its back on the customers whose tax dollars helped grow your company from a small spinoff of Abbot Laboratories to a $4 billion-a-year company. 

I strongly urge you and the Board of Directors not to duck your corporate responsibility by moving overseas to dodge paying U.S. taxes.  Surely, you and your board must recognize that your company’s continued commitment to America would be good for Hospira’s bottom line.

Sincerely,

RICHARD J. DURBIN
United States Senator                                               

Cc:       Board of Directors

John C. Staley, Chairman
Irving W. Bailey II, Chrysalis Ventures LLC
Barbara L. Bowles, Hospira Inc.
Connie R. Curran, Curran Associates
William G. Dempsey, Hospira Inc.
Dennis M. Fenton, Amgen
Roger W. Hale, Hospira Inc.
Jacque J. Sokolov, SSB Solutions
Heino von Prondzynski, Roche Diagnostics
Mark F. Wheeler, Hospira Inc.

Source: illinois.gov