CHICAGO – The practice of U.S. corporations reorganizing with foreign entities overseas to reduce taxes back home has emerged as an issue in Illinois' gubernatorial race, with Gov. Pat Quinn strongly condemning the growing trend as "unpatriotic" on Wednesday and questioning his Republican challenger's stance on the issue.
Quinn, a Chicago Democrat, remains locked in one of the most competitive governors' races nationwide with a challenge from Bruce Rauner. The venture capitalist says Illinois and the U.S. need to do more to compete for business, but his campaign wouldn't say Wednesday if he supported or rejected the practice of companies reorganizing abroad.
Still, Quinn blasted Rauner Wednesday, a day after Democratic U.S. Sen. Dick Durbin warned Illinois-based Walgreen Co. of consequences for reorganizing abroad.
"For anybody running for public office in Illinois to endorse that kind of bad behavior, loopholes that are really taking advantage of the American taxpayer ... we really have to say that candidate is way wrong, way off base," Quinn told reporters in Chicago. "A corporation renouncing its American citizenship to stash money overseas to avoid paying their fair share of taxes, that shifts the burden onto ... everyday people who play by the rules."
Rauner wants a "comprehensive solution" eliminating abuse of the tax code, according to Rauner campaign spokesman Mike Schrimpf.
"America needs to compete; Illinois needs to compete. The right answer is not to create walls, to block companies and people," Rauner told Chicago's WMAQ-TV this week. "...We should be about freedom, choice and competition."
Nationally, the Obama administration has urged Congress to limit the process – called an inversion. On Wednesday, Republican U.S. senators blocked a bill limiting tax breaks, calling it an election-year stunt.
Much attention has been focused on Walgreen Co., the country's largest drugstore chain. The Deerfield-based company has been considering its option to complete a takeover of Swiss health and beauty retailer Alliance Boots, a move that could involve an overseas reincorporation. In 2012, Walgreen acquired an initial 45 percent stake in Alliance Boots, which runs the largest drugstore chain in the United Kingdom.
Durbin urged Walgreen on Tuesday not to reorganize in Switzerland, saying U.S. customers wouldn't support it. The issue of companies leaving Illinois has been sensitive as some top corporations have threatened to leave and then received controversial tax incentive packages approved by state lawmakers to stay.
Walgreen spokesman Michael Polzin said a decision was expected soon.
"We will do what is in the best long-term interest of our customers, our employees and our shareholders," he said.