Mylan CEO Bresch defends inversion as protection against takeover
Companies can be more competitive in America if they are based outside the country, said the CEO of a drug manufacturer that is moving its tax address outside the United States.
Heather Bresch, who heads Mylan Inc., described her company’s proposed tax inversion as a shield against a takeover and criticized what she called political rhetoric against the deals.
“What’s patriotic is making this country a place that allows you to thrive, grow your industry versus handcuffing you and making you a sitting target” to be acquired by a company based elsewhere, Bresch said.
If Mylan were acquired by a foreign company, it wouldn’t care as much about employing people in Morgantown, W.Va., as Mylan does, she said.
“Our company in someone else’s hands would not look upon Morgantown as we do,” said Bresch, the daughter of U.S. Sen. Joe Manchin, a West Virginia Democrat.
Bresch, 45, spoke at Bloomberg’s “The Year Ahead: 2015” event in Washington.
Other Democrats, including President Obama and Treasury Secretary Jacob Lew, have said inversions are wrong and that companies should be more patriotic.
Mylan, a Canonsburg-based pharmaceutical company, is purchasing some non-U.S. generic drug operations from Abbott Laboratories and moving the combined company’s tax address to the Netherlands.
The deal was announced this year and has not closed. The combined company will pay a lower tax rate and will still be run from the United States.
Inversions are a tax avoidance strategy and companies are responding to a set of incentives in the tax code, said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities in Washington, a group that advocates for low-income and middle-income families.
Where companies and their advocates go wrong, he said, is talking about the competitiveness of U.S. companies as the problem and using that argument to push for revamping the federal tax code.
“When you hinge this on the competitiveness of American corporations, you’re making both a substantive and a political mistake,” said Bernstein, a former adviser to Vice President Joe Biden who spoke on a panel with Bresch. “Corporate profits are great. But they’re not trickling down. That’s the problem.”
The Treasury Department in September announced rules designed to make inversions less attractive and make it harder for companies to claim the tax benefits.
The government is considering additional restrictions, including rules to limit earnings stripping. That’s the practice by which companies can load up their U.S. operations with deductions for interest and other items and effectively shift their profits outside the United States.
Bresch did not answer directly when asked how Mylan would respond to earnings stripping rules.