Pfizer never tried to hide the fact that its proposed $152 billion merger with Allergan, based in Ireland, would cut its tax bill in the United States. But even as it rushed to complete the biggest tax-avoidance deal in the history of corporate America, it continued to promote the strategic and economic benefits of the merger.

Any pretense to a motivation other than dodging taxes has now been wiped away. On Wednesday, just two days after the Obama administration introduced new rules to narrow the loopholes that the drug companies were exploiting, Pfizer announced that the deal with Allergan was off.

The new Treasury Department rules take aim at “inversions,” in which an American company merges with a foreign company in a low-tax nation to pass itself off as foreign and in that way cut its American taxes. Inverted companies are often described as having “moved abroad” or “renounced their citizenship.” But the only tie that an inverted company really cuts with the United States is the one that binds it to the Internal Revenue Service.

Such companies almost invariably keep their headquarters, officers and much of their business in the United States. Some 40 American companies have become inverted over the past five years, while tax laws have failed to keep pace with tax-avoidance strategies made possible by a complex mix of corporate offshore accounts and global capital flows.