Pharmaceutical giant Pfizer Inc. – the maker of Viagra and Lipitor – is the latest to announce a merger that’s designed at least in part to escape high U.S. corporate tax rates. In a $160 billion deal, it would subsume itself into a smaller foreign rival, Allergan, to create the world’s largest drugmaker – still called Pfizer, still operating out of New York City, but based for tax purposes in Allergan’s home of Ireland.

To many policymakers, these tie-ups are nothing more than tax evasion; the U.S. companies involved often don’t move their operations, they just use accounting techniques to shift what tax authorities consider their home.

The root of the problem is that lawmakers have enacted tax policies seemingly without regard for what the rest of the world does. Not only does the United States have the highest corporate tax rate in the developed world, it’s the last of the major countries to tax a multinational’s foreign profits – a tax it collects when the company puts those profits to use in the U.S. The result is a powerful incentive for companies to plant their headquarters elsewhere, or just not to repatriate any of the money earned outside our borders.

Simply put, Congress needs to make U.S. business taxes more competitive. That includes lowering the rates, preferably by winnowing the thicket of exemptions, deductions and credits so as not to reduce the total amount raised – while stopping the exodus of multinationals to lower-tax locales.

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