Few, if any, companies undertake mergers and inversions solely for the tax benefits.
The Treasury effectively blocked Pfizer last year from a so-called tax inversion merger with Allergan, a smaller company with Ireland as its tax domicile.
That money would be subject to U.S. taxes if brought home, but might be permanently sheltered under the terms of an inversion merger.
Many American firms with big offshore cash reserves have been experimenting with "corporate inversion" mergers, which involve switching headquarters out of the US.
As evidenced by the Pfizer-Allergan tax inversion driven merger, even the more mundane aspects of tax policy are a factor in where life science innovation occurs.
Clinton has called out specific companies such as Pfizer and Johnson Controls for conducting "corporate inversions" — a merger with a foreign counterpart for tax benefits.
"More companies are currently considering inversions by merger, including mergers involving two or more foreign jurisdictions," said Linda Swartz, chair of Cadwalader's tax group.
Known as a "tax inversion," such mergers have been popular recently among US companies looking to move their headquarters and place of incorporation offshore to minimize their US tax bill.
In the eyes of CEOs, failing to address the corporate tax system is driving the trend of American companies reinvesting (or stashing, if you prefer) profits in overseas subsidiaries -- or, in some cases, becoming foreign-owned companies through mergers and tax inversions.
Yet the government targeted the transaction because Pfizer would have pulled off an inversion through its merger with Allergan, and the parties abandoned the deal when a last-minute rule change by the Obama administration would have prevented any of the tax benefits.
As a high-profile instance of tax inversion, news of the merger was criticized by U.S. politicians, who felt that the move would result in a loss of tax revenue to foreign interests, and could result in further government pressure against inversions (which had, until the Burger King merger, been primarily invoked by pharmaceutical firms).
