You’ve probably heard the story: American corporations are forced to pay such high taxes that they can’t possibly create jobs or raise wages. Well, Big Pharma got their tax cut—then turned around and provided all the proof you need that that story is just a very convenient fairy tale.
Big pharmaceutical companies are about to get a lot richer thanks to the Trump-GOP tax scam that Republicans rammed through Congress in December. But they don’t plan to share any of those newfound riches with their sick and often desperate customers by lowering exorbitant drug prices.
They’re also sharing almost nothing with their employees, despite their constant claims that corporate tax cuts trickle down to workers.
By the numbers: Pfizer's $25 billion dollar Trump tax giveaway
- Amount owed in billions
- Amount owed in billions
Pfizer, the maker of Lipitor, Lyrica and Viagra, holds about $199 billion in untaxed offshore profits. They owed an estimated $40 billion on that stash, but thanks to the Trump-GOP tax giveaway, it now owes just $15 billion. That’s a $25 BILLION tax break.
No, the Big Pharma tax cuts are going precisely where you’d expect: into the pockets of wealthy shareholders, including company CEOs and foreign investors.
According to a new Americans for Tax Fairness (ATF) report, just five of America’s 10 biggest drug firms (a/k/a the Pharma Big 10)—will reap over $6 billion in tax-cut savings this year alone. Yet not one company has announced plans to use any of that money to raise wages, add jobs, increase research and development, or cut drug prices for patients—in other words, Big Pharma just proved every single excuse they make for high drug prices is a lie.
Only two firms—Merck and Pfizer—have announced any measurable worker benefits, and in context, they’re pathetic: a total of $169 million in one-time bonuses. That’s 37 times less than the $6 billion in industry tax cuts in 2018, and 266 times less than the $45 billion being showered on rich shareholders through stock buybacks.
Let’s focus for a minute on those stock buybacks. This is how rich corporate executives feather their own nests—and build mansions. Rather than take their tax cuts and higher corporate profits and share them with their workers, they buy back the company’s stock, which jacks up the price and makes those holding the stock that much richer.
And who owns most corporate stock? CEOs and wealthy shareholders. Corporate executives are often paid largely in stock and stock options. And higher stock prices make them look like they’re doing a good job, even when they’re not.
It’s hard to imagine a less deserving recipient of huge tax breaks than already-rich CEOs and investors and the drug industry itself.
Big Pharma has been ripping off patients and public health systems for years with sky-high drug prices, then dodging U.S. taxes by shifting its inflated profits to offshore tax havens. That rampant tax dodging shrinks public revenue, further stressing budgets for Medicare and Medicaid (among other programs), which are of course already straining to pay Big Pharma’s lofty prices.
Between 2011-15, ATF calculates the Pharma Big 10 jacked up prices to the public on some of its most prescribed drugs by an average of 71%. For context, inflation over that period was just 5%. AARP reports that the prices of a larger sample of drugs jumped 15% each year between 2013-15.
The Republican response to this raw greed and the misery that results? Give the drug companies a MASSIVE tax cut!
More stories on the Big Pharma crisis
The most outrageous handout is the steep tax discount the new law applies to Big Pharma’s half trillion dollars in accumulated offshore profits. The Pharma Big 10 owed $134 billion in U.S. taxes on that untaxed overseas stash under the old law, but Trump, Paul Ryan and the rest of the GOP gang in Congress waved their magic money wand and slashed that bill by $76 billion. If only you or I could get that kind of treatment.
Pfizer, the maker of Lipitor, Lyrica and Viagra, was the biggest winner from this scam. It holds about 40% of those untaxed offshore profits—$199 billion. Pfizer owed an estimated $40 billion on that stash, but thanks to the Trump-GOP tax giveaway, it now owes just $15 billion. Look at that return on investment: spend about $12 million lobbying Congress and doling out campaign cash last year, and walk away with a $25 BILLION tax break!
Pfizer announced that its 2018 tax rate will be just 17%, a lower rate than many working families pay.
Wait, there’s more! Pfizer is also getting a tax cut of another $1 billion this year, because the Trump tax scam slashed the corporate tax rate from 35% to 21%. And Pfizer’s not even paying that much—it’s announced that its 2018 tax rate will be just 17%, a lower rate than many working families pay—and a far cry from the 35% figure that the GOP loves to throw around.
What savings do consumers get from Pfizer and all the other drug companies? Nada.
The Trump-GOP tax scam is such bad policy it’s sometimes hard to choose the worst part. Is it the way it’s so heavily skewed to the wealthy and corporations? How the $2 trillion loss of revenue now has Republicans demanding deep cuts to Social Security, Medicare and Medicaid? The fact that it’s basically a political payoff to Republican campaign donors? All the money Trump will make?
All worthy contenders, but for top honors in generating legitimate outrage, I hereby nominate the big tax cuts going to the price-gouging, tax-dodging, CEO-enriching, employee-stiffing drug industry.