Who knows exactly why any mammoth conglomerate acts the way it does, beyond the one obvious motive of profit. On the other hand, some evidence speaks for itself.
Just as pharmacy and merchandising giant Walgreen Co. seemed headed out of Deerfield for Europe carpetbagging its multi-million dollar tax savings, something very odd happened.
Walgreen apparently heard its customers warn with an earnest whisper, “You’ll be sorry.”
And so, Walgreen is staying put in Lake County and in fact, will reverse the tax inversion trend and bring its new European partner’s assets to the Chicago area.
Walgreen CEO Greg Wasson acknowledged that the likelihood of “consumer blowback” on the deal caused Walgreen’s board to think twice. The chorus of anger over shifting corporate citizenship to Europe to avoid U.S. taxes had been swelling.
As much as Walgreen might have fretted over lost toothbrush sales, the price could have been far higher.
Even if corporate titans don’t heed popular will, politicians often do. Walgreen receives nearly a quarter of its income from taxpayers through government programs.
Of $72 billion in 2013 sales, an estimated $16.7 billion, or 23 percent, came from Medicare and Medicaid.
Illinois traded Walgreen $46 million in corporate income tax credits over 10 years for a pledge to create 500 jobs and invest in upgrading its offices.
The state also provided $625,000 in training money and $875,000 in other tax incentives.
Plus, the Internal Revenue Service sent clear signals it would fight Walgreen’s tax flight. Walgreen knew it might well lose, and cost itself millions more.
So, Walgreen checked its balance book carefully and chose discretion as the better part of corporate valor.
But the subtle lesson stands undisputed.
The possibility that millions of American customers might have turned their backs on Walgreen for ditching corporate taxes was not an idle or irrelevant threat.
Walgreen listened to many whispers in the wind before deciding to stay put.
It recognized the power of angry customers even if the customers don’t always appreciate the clout.Tags: Editorial