Treasury Jams Its Foot in Inversion Revolving Door: Opening Line

Photographer: Ty Wright/Bloomberg

Walgreen, the biggest U.S. drugstore chain, won’t asssume the Bern, Switzerland, legal domicile of Alliance Boots Holdings when it finishes buying the pharmacy-retailer, which Walgreen it announced moments ago. It will stay in the Chicago area. Close

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Photographer: Ty Wright/Bloomberg

Walgreen, the biggest U.S. drugstore chain, won’t asssume the Bern, Switzerland, legal domicile of Alliance Boots Holdings when it finishes buying the pharmacy-retailer, which Walgreen it announced moments ago. It will stay in the Chicago area.

Inversions: They’re just like guns.

Amid assumptions that some companies are preparing to load up on as many as they can before the Obama administration limits access to them, Jack Lew says Treasury is studying whether it has the scope to take action on its own, before the rush and before Congress ever got around to doing something about them. As if it ever would.

Stephen Shay, the former top international tax official at Treasury under Obama, said in an article in Tax Notes last month that the administration could limit inverters’ interest deductions against U.S. income or their access to foreign cash without paying U.S. taxes, Richard Rubin reports. These moves wouldn’t prevent inversions, but they could damp some of the incentive for them.

The potential for an overseas land rush is the kind of reaction that must drive Obama back to the Marlboros, but Zach Mider reports today that the president, who has referred to inverters as deserters, may have less room for indignation than he thought.

Delphi (DLPH) Automotive used inversion to keep itself alive as part of Treasury’s rescue of the auto industry in 2009, Mider writes, and the Obama administration still gives $1 billion in contracts every year to more than a dozen companies that decamped for tax-friendlier shores.

It’s unclear whether the president knew every wrinkle in the Delphi move, and we’d assume that if he had to do it again, primarily to save General Motors, while facing the same conditions he faced five years ago, he probably would.

If the word “inversion” presents the right metaphor for the transaction, there’s one company that’s decided to remain upright, if that’s the right antonym.

Walgreen, the biggest U.S. drugstore chain, won’t asssume the Bern, Switzerland, legal domicile of Alliance Boots Holdings when it finishes buying the pharmacy-retailer, which it announced moments ago. It will stay in the Chicago area. The news cost the company about $2.9 billion in market value yesterday and untold billions of tax savings in the years to come, but it’s our family pharmacy and will remain so.

***

Trade balance at 8:30 a.m. EDT is the sole U.S. economic indicator of note today.

But we’ve got earnings. More than 60 companies reporting today, including Time Warner and Twenty-First Century Fox; Dish, Viacom and AOL; Sotheby’s, Symantec, Mondelez, MBIA, Apollo Global and Chesapeake Energy.

Overnight, the Economy Ministry in Berlin said German factory orders fell 3.2 percent, the most in more than 2 1/2 years and counter to forecasts for an increase of 0.9 percent. In the U.K., house prices rose 1.4 percent in July, well above forecasts for a gain of 0.4 percent, while factory production in June rose 0.3 percent, half what economists predicted.

***

- The U.S.-Africa Leadership Summit concludes with a press conference by Obama at 5 p.m. EDT (give or take). Maybe he’ll engage in a little more trash-talk. - Rupert Murdoch pulled 21st Century Fox’s unsolicited $75 billion bid for Time Warner Inc. (TWX), which should probably expect a call from Allergan any moment now. - Sprint has withdrawn from a planned bid for T-Mobile and will replace CEO Dan Hesse. And everyone said the Frenchman was crazy. - Dollar General may be jumping into the pursuit of Family Dollar. - The WHO begins a two-day emergency meeting on the Ebola epidemic, which has now claimed almost 900 lives. - Bats is in settlement talks with the SEC over giving unfair advantage to HFT. - A Wall Street Journal/NBC News poll found three-quarters of Americans think their children have a worse economic life than their own, confirming what we already knew. - Major General Harold J. Greene was the two-star general killed yesterday by a man in an Afghan soldier’s uniform. - The Bangladesh ferry that sank Monday, killing at least 125 passengers, still can’t be found, nor can the boat’s owner, who faces charges along with five staff. - London Mayor Boris Johnson is planning a run for Parliament. - The TV people have another good slate of guests today, including Tiki Barber, Cyrus Vance Jr., John Thain, Neel Kashkari, Tim Armstrong and Spencer Rascoff of Zillow, among others. Must-see BTV. - NYPD union officials lashed out at Mayor de Blasio and other critics, denying one of its members killed Eric Garner with a chokehold, no matter what the videotape and medical examiner’s report say. - Representative Todd Rokita, the Indiana Republican, has raised concern about the flood of migrant children bringing Ebola into the U.S., because Africa is down there around Honduras, right? - Pope Francis, who has described the Internet as a “gift from God,” is telling kids to stay away from it. - No Elmos were injured, however. - As old as we are? Take aspirin. - Never mind our thing about the death penalty yesterday. We didn’t think about guys selling steroids to high-school athletes.

***

Putin is weighing a ban on some airlines’ routes to Asia through Siberia, as well as invading Ukraine again, and it has markets on the defensive again, with stocks down in Europe by about 1 percent, give or take.

In the process of ripping the economic sanctions, he’s complaining that they “contradict all norms and rules,” when they couldn’t be a more conventional tool and when he’s the one who pretty much trashed any notion of rules when annexing part of another country.

“That’s not fair, it’s against the rules” is his response? A guy who likes to go tiger hunting bare-chested with nothing but a ballpoint pen?

***

It’s no fun picking on the home team, because as far as U.S. corporate titans that remain in Philadelphia, there’s Comcast (CMCSA) and then, like, Duke & Duke Commodities Brokers or something. But when you embody Lord Acton’s lament, you’re fair game. Comcast is the No. 1 cable-TV provider in the U.S., and it will remind you in so many ways. Ways you don’t like.

Following the emergence of an audio clip revealing a Comcast customer-service representative haranguing a customer attempting to disconnect his service, the company’s entire playbook may have been revealed, and it’s nothing short of unctuous.

Customers aren’t customers, they’re RGUs -- revenue-generating units -- and for almost every conceivable reason an RGU might want to stop doing business with Kabletown, there’s an infuriating countermeasure. As theverge.com relates, “It’s pretty standard call center stuff, but Comcast throws in some of its own tactics.”

These include pushing an RGU toward an Internet-speed upgrade if they say they’re only watching Netflix, or “asking probing questions” if a customer says he or she is moving and declines to provide a new address. Note that Comcast is asking for the new address, perhaps in an effort to catch you in your lie. Like Hal.

Asking for time to think about a deal being offered, the CAD (customer-alienating delegate) is instructed to apply pressure by reminding the RGU -- remember, this is in an effort to keep a customer happy with the company -- how difficult it is to schedule an appointment with a technician.

Lastly, “Reps are also encouraged to build rapport with customers with lines like, ‘Enjoy Game of Thrones tonight.’”

Never seen that stupid show. Turn it off, turn it all off, now.

***

Ever been in a restaurant -- a restaurant, not a diner -- that does a decent business on a Friday night, and find the waiter giving you the hairy eyeball as you linger over coffee or digestifs, clearly just waiting for you to leave? Maybe he even brings the bill before you’ve asked for it.

That’s the vibe in Kelly Blessing’s story yesterday on MIT’s consideration of shortening the customary four years to earn an undergraduate degree there and at pretty much every U.S. college.

MIT’s internal study found that shortening the degree period would open space in student housing, currently one of the obstacles it faces to increasing the size of the student body while “preserving and enhancing MIT’s exceptional research and educational environment.”

But, c’mon. It’s about the money. If MIT could be a business instead of having to teach all those stupid classes, don’t you think it would? Why shouldn’t it? Why not separate the research operations from the education operations and call them what they are?

“The Task Force encourages MIT to evaluate possibilities to achieve increases in undergraduate class size so that more students can experience the rich magic of an MIT residential education,” so here’s your check.

***

D.C. officials will decide today whether there are enough valid signatures to create a ballot measure allowing limited personal use and home cultivation of marijuana. It wouldn’t allow sales or regulation like the states of Washington and Colorado, but it would permit growing weed and giving it away in small quantities -- what, in our younger days, we heard others refer to as a lid.

Congress will screw this up, of course. It can’t do much anymore, not that it wants to -- inversions, gun control, long-term highway and infrastructure funding, immigration, etc. -- but if there’s one thing it’s still good at it, it’s harshing your buzz.

Pretty much anything passed on the municipal level in the District of Columbia goes before Congress for final approval. While it supposedly represents the will of the people, it won’t matter that 63 percent of district residents told the Washington Post they’re in favor of legal weed, or that 58 percent of Americans nationwide told Gallup the same thing, Bill Selway reports. They can’t allow the seat of federal government to have different laws on a (laughably) Schedule I narcotic than the federal government has itself.

Maybe it’s crazy to dream of clarity in a moment like this one, of honest-to-goodness, down-to-earth honesty from politicians, but we have a dream that one day this nation will rise up -- wait, no. That’s the other dream.

We dream that the president of United States would come out, maybe go hang out in the Capitol somewhere, and say, “You know what? This is silly. I smoked BALES of weed -- look what I became.”

Then a representative or senator might say, “Yeah, so did I.” Then, like, Orrin Hatch or one of the *real* squares would go, “Yup.” And everyone’s heads would spin around and he’d be all, like, giggling, like he had just taken a walk to the parking lot, and then Ted Cruz would go, “Got a fatty right here. Anyone?”

***

The NBA and its fans largely welcomed Jason Collins when, during the 2013-2014 season, he joined the Brooklyn Nets and became the first openly gay, active athlete in major U.S. sports. Then the league gave Donald Sterling, owner of the Los Angeles Clippers, the back of its hand for his insensitive comments about people with black skin.

Now, with the hiring of Becky Hammon as the first female assistant coach in its history, the NBA is stepping up its play for wide appeal. If baseball is still America’s pastime, and football is America’s most popular sport, basketball seems at least to be making the case for most inclusive.

As Amanda Hess writes at slate.com, Hammon isn’t the NBA’s first major female hire. A woman leads the league’s players’ union, and women have coached teams in the NBA’s minor league, the Development League. In the 2000-2001 season, the Cleveland Cavaliers had a female assistant coach, Lisa Boyer -- though she wasn’t paid, which hardly qualifies as a crack in the glass ceiling.

On its latest annual scorecards, the Institute for Diversity and Ethics in Sport gave the NBA a B-plus grade for its “gender-hiring practices,” compared with C-plus for Major League Baseball and C for the NFL.

The institute’s website lists report cards also for Major League Soccer, the Women’s National Basketball Association and college sports, though not for the National Hockey League.

(A brief aside about the institute, which is part of the DeVos Sport Business Management Graduate Program in the University of Central Florida’s College of Business Administration: Guess how many of its four directors, according to its website, are female?)

So a slam-dunk welcome to Hammon, who earned her new NBA job with 16 stellar seasons for the San Antonio Stars of the WNBA. And for a while at least, let’s try not to wince at the inevitable, hopefully unintended, backhanded compliments by the league’s men.

“She’s been perfect,” Spurs coach Gregg Popovich told NBA Inside Stuff in March, when Hammon was spending time with the team’s coaches to learn the ropes. “She knows when to talk and she knows when to shut up.”

***

The NCAA is weighing whether to allow the biggest, richest, most privileged universities in the biggest, richest, most privileged athletic conferences to extend their gap over the rest of college sports.

Under a proposal being voted on tomorrow, the association would allow conferences like the Big 10 and the SEC to pay student-athletes and loosen restrictions on their contact with sports agents and with schools attempting to recruit them, the New York Times reports.

This would basically start creating the bridge between amateurism and professionalism in the top tier of college athletics, and while we have been torn by the debate, it’s hard to imagine getting this more wrong. Although, as the story says, these conferences could bolt and take their billions with them if denied approval, it still sends the wrong message about egalitarianism, or the lack of it, in college sports, of all places.

“Wealthier universities should not be impeded from expanding their benefits, they argue, just because some institutions would struggle to afford them,” the Times reports.

Yes, yes they should. But barring that, let’s at least see a luxury tax.

To contact the reporter on this story: C. Thompson in Wilmington at cthompson1@bloomberg.net

To contact the editor responsible for this story: Marty Schenker at mschenker@bloomberg.net

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