Sen. Dick Durbin on Thursday called on Monsanto not to move its headquarters out of the U.S. for tax reasons, responding to reports that the seed company is considering buying a Swiss competitor.
“I strongly urge you and the board of directors to maintain Monsanto Company’s headquarters and its tax address in the United States,” the Illinois Democrat wrote in a letter to Monsanto CEO Hugh Grant.
It has been reported in recent days that Monsanto is considering a takeover of Syngenta, a seed and agrochemicals company headquartered in Basel, Switzerland, worth roughly $35 billion.
Such a deal may allow Monsanto to move its headquarters from St. Louis to Switzerland to take advantage of that country’s advantageous tax corporate tax system, although that has not been specifically cited as a motivation for a deal.
Moving its headquarters could allow Monsanto to avoid U.S. taxes on income earned outside the U.S. Switzerland does not tax companies on income earned outside its jurisdiction.
Doing so would likely stir up protest from congressional Democrats. Monsanto is already viewed with suspicion by many on the Left for its development of genetically modified organisms.
The Obama administration has moved to crack down on similar tax-driven corporate inversions. Although companies are prohibited by law to simply moving their headquarters to tax havens, they can lower their international taxes through inversions by acquiring a smaller company in a low-tax jurisdictions.
In September, following a number of high-profile inversion deals, the Treasury Department announced new rules to further limit inversions.
Congressional Democrats, including Durbin, have introduced legislation setting up further barriers to inversions, which Treasury Secretary Jack Lew has said can be stopped only through legislation and ultimately tax reform.
In the letter sent Thursday, Durbin told Grant that he “must recognize that your company’s continued commitment to America would be good, not only for the country, but also for Monsanto Company’s bottom line.”
Durbin noted that Monsanto’s business has been aided by research funded by the U.S. government, and that the company’s profits depend on strong patent enforcement.
