Baxalta’s fast exit shows need for corporate tax fix
Baxalta, we hardly knew ya.
Just six months after it was spun off from parent Baxter International, Baxalta, a major employer in East Ventura County, is to be sold to Shire, an Irish firm.
The future of some 1,200 employees in Westlake Village and the Newbury Park area of Thousand Oaks is now uncertain, as Shire’s bean counters sharpen their pencils in an effort to generate some $500 million a year in promised cost savings.
A decade ago, the future looked very bright for Baxter and its Southern California-based hemophilia and blood disease treatment units. Baxter announced a big expansion in the Thousand Oaks area as it ramped up these operations and found the Conejo Valley very attractive for its workforce of scientists and technicians. It even took over the former Verizon corporate headquarters along Highway 101.
But these days the world of business is more about tax avoidance and restructuring. In July, Chicago-based Baxter International kept its legacy medical supply business and created Baxalta to unlock the value of its faster-growing blood disease unit.
That spinoff was designed in a way for shareholders to avoid paying taxes on the value created by the spinoff. Within days after Baxalta gained its independence, Shire, which owns a blockbuster drug used to treat ADHD, was in pursuit.
The Shire merger will relocate the Baxalta headquarters from Illinois to Dublin, reducing the company’s tax rate from 24 percent to 16-17 percent. Ireland is a favorite for pharma companies these days because its tax rates are among the lowest in the world.
Wall Street didn’t like this deal very much. Both Baxalta and Shire shares fell as the news was announced. The American taxpayer probably won’t like this deal very much either as all of Baxalta’s corporate income taxes will now be paid to Ireland.
It wouldn’t be too hard to set a corporate income tax rate that would keep companies like Baxalta headquartered in the U.S. but our failed political system won’t allow for the compromises that would allow that to happen.
Meanwhile, another 1,200 really good jobs in our region are suddenly at risk.
Boys & Girls Clubs should consolidate
The retirement of Carolyn Brown as executive director of the Boys & Girls Club of Santa Barbara should set the stage for a consolidation of South Coast clubs.
Today, there are five clubs from Carpinteria to Lompoc — plus the popular Camp Whittier — operating as United Boys & Girls Clubs of Santa Barbara County, plus the Santa Barbara club operating alone.
This is confusing to the market, it creates duplication in management and fundraising and it is not very efficient. Unfortunately, it is all too common in our region, where entrenched nonprofits resist the sort of regional changes that, at least in theory, put more funding directly into the communities they serve.
Girl Scouts, the YMCA and Red Cross have proven that regional models can work. Under new leader Michael Baker, the united clubs have made a lot of progress in recent years. The next step would be to create a truly united Boys & Girls Club effort in Santa Barbara County.