The record-setting merger between pharmaceutical behemoths Pfizer and Allergan carries a hefty $160 billion price tag. But for Pfizer (NYSE:PFE) -- and for the U.S. government -- the more important numbers are the tax liabilities that the company stands to avoid.

The Viagra manufacturer will avoid a tax bill that could top $20 billion as it relocates from New York City, where it has been headquartered since 1868, to low-tax Ireland.

That bounty may be enough to fund nationwide Head Start programs for low-income preschoolers for two full years. It could have supported the Refugee Assistance and Resettlement Program for seven years. It is enough for twenty F-35 fighter jets.

The total represents a pot of cash Pfizer has set aside for U.S. taxes on profits earned abroad. Repatriating the cash to the U.S. would incur a relatively steep 35 percent corporate tax rate. So Pfizer has joined many other multinational corporations in keeping the profits overseas, where they are technically earned.

For accounting purposes, however, companies must record potential tax liabilities as deferred taxes. Tax expert Robert Willens calculates that the taxes Pfizer owes on overseas profits amount to $21.2 billion.

Now the new company will technically belong to Botox-maker Allergan, but will keep Pfizer’s name and CEO. It will also be able to access the jackpot virtually tax-free. “Pfizer will become in essence a foreign company,” said Willens. “If they want to repatriate those earnings they’ll be able to do it without any taxes.”

“It’s quite a remarkable benefit,” Willens added.

Overseas Profits

The Pfizer-Allergan deal represents a  "corporate inversion"-- which is when a U.S. company combines with a foreign company to relocate its headquarters to a lower-tax jurisdiction abroad. The controversial practice has attracted scrutiny from the Congress and the Treasury Department, which last week implemented new rules designed to limit inversions.

Pfizer booked a 25 percent tax rate on net income of $12.4 billion last year, a tax rate that has held steady for the first 9 months of 2015.

Willens said he expects Pfizer’s effective tax rate to plunge to around 7.5 percent once the company ships off to Ireland, which has become a global hot-spot for multinational corporations looking to ease their tax burdens. The difference between American and Irish corporate tax rates will let Pfizer keep another $2 billion a year on its books.

Unlike some inversions, Pfizer already earns most of its profits overseas. Pfizer books 60 percent of global sales across a complex network of overseas subsidiaries that hold intellectual property rights on drugs like cholesterol medication Lipitor, which is already made in Ireland.

RTS7E7Z Pfizer offices in Dublin, Ireland. Photo: Reuters/Tom Bergin

With most of its profits already originating overseas, Pfizer’s main motivation for the inversion lies in its offshore cash hoard. “They just needed a way to get their hands on their earnings without incurring U.S. taxes," Willens said.

Though taxpayers might be dismayed at the arrangement, shareholders expect to benefit. In addition to the combination, Pfizer announced a $5 billion stock buyback program on Monday and set the stage for further repurchases following the merger.