Corporate Tax Dodger…Pfizer
This is the fifth in a series on corporate tax dodgers. These summaries are taken directly from the report on Corporate Tax Dodgers by Americans for Tax Fairness and the Institute for Policy Studies
First you use research from the National Institutes of Health and major public universities, funded by average American taxpayers, to help develop your highly profitable prescription drugs. Then you spend millions of dollars on lobbyists to convince legislators to write laws forbidding the U.S. Government to seek competitive bids on drug prices, thus ensuring American citizens – especially the elderly – pay twice as much for prescription medications as citizens in any other industrialized nation. Next you buy even more lobbyists to make certain legislators pass legislation allowing you to “legally” pay no U.S. taxes.
And finally, after bleeding the people of America for all you can possibly drain out of them, your CEO, Ian Read, has the arrogance- the absolutely immoral arrogance – to join with other incredibly rich corporate leaders to suggest raising the Social Security retirement age to 70 in order to “fix” government debt. The hypocrisy is almost breathtaking. How long are “we the people” going to put up with such inequity?
The following summary of Pfizer tax avoidance is from the report by Americans for Tax Fairness and the Institute for policy studies:
Pfizer’s tax avoidance Rx: Hide all your profits offshore
Pfizer has 40% of its sales and 50% of its assets in the United States, the largest and most lucrative drug market in the world. And yet the firm claims to have not made a profit here since 2007. Pfizer reported more than $9 billion in losses in the United States from 2010 to 2012, while earning more than $43 billion in profits in the rest of the world, according to its Securities and Exchange Commission (SEC) filings. It received $2.2 billion in federal tax refunds over the three-year period.
Like many other companies with valuable patents and trademarks, Pfizer takes that intellectual property and registers it in a foreign tax haven that doesn’t tax corporate income. When a customer buys one of Pfizer’s pills in the United States, the company sends a significant portion of the purchase price to the tax haven subsidiary to pay for the use of the patent. The profit from the sale winds up in the tax haven, while the costs of management, research, marketing, and sales remain in the United States, leaving Pfizer’s domestic operations with large losses year after year.
Last year, the SEC launched an inquiry into how Pfizer could generate 40% of its sales here and yet not report any U.S. profits for four straight years. Pfizer responded by promising better disclosure and then, only months later, announced large U.S. losses – for the fifth year in a row.
Pfizer had $73 billion in profits parked offshore at the end of 2012, a $10 billion increase over 2011, on which it paid no U.S. income taxes. In 2004, Pfizer was the biggest beneficiary of the American Jobs Creation Act, a bill that offered corporations a deeply discounted 5.25% tax rate on corporate profits stashed overseas that they brought back (repatriated) to the United States. The idea was that companies would invest the windfalls from this “tax holiday”: in creating new American jobs. Pfizer brought home $37 billion and pocketed more than $10 billion in tax savings. Within two years of the windfall, Pfizer had laid off 10,000 workers. Unashamed, Pfizer led the charge for another repatriation tax holiday as a lead member of the 2011 WIN America campaign, an effort that folded after less than a year.
While dodging federal taxes, Pfizer pockets lucrative federal government contracts
Pfizer raked in $3.4 billion in federal contracts from 2010 to 2012, according to the federal government, putting the company in the top 70 top contractors each year.
Pfizer benefits from taxpayer-funded research labs
Pfizer benefits more than most companies from government services, especially the taxpayer-funded National Institutes of Health. A recent controversy has emerged as Pfizer prepares to launch its hot new drug Xeljanz to treat arthritis. The active ingredient for Xeljanz was discovered by a government scientist in the mid-1990s and given to Pfizer for further development and licensing. Now Pfizer proposes to sell the drug for nearly $25,000 per patient per year. Several members of Congress have cried foul, questioning where’s the taxpayers’ return for their investment in the success of Xeljanz?
Pfizer, a corporate felon, continues to do business with Medicare and Medicaid
Federal law is clear: Medicare and Medicaid cannot do business with corporate criminals. Over the last decade, Pfizer has admitted guilt in three high-profile cases that have included Medicare fraud, overseas bribery of physicians, and the illegal marketing of its products. In the last case, which was resolved in 2009, Pfizer was convicted of a felony for telling doctors that its painkiller Bextra was safe at doses twice the level approved by the Food and Drug Administration. Pfizer pulled the drug from the market and paid a $2.1 billion fine. In order to be allowed to continue to sell drugs to the government, Pfizer pulled another loophole from its bag of tricks: getting one of its dormant subsidiaries – one that has never sold any drugs – to accept the conviction and pay the fine. That subsidiary can no longer sell drugs to Medicare, but Pfizer can. As CNN described the situation: it’s like having your imaginary friend do the time for your crime, while you walk free.
Pfizer continues to lead the charge for corporate tax cuts and Social Security benefit cuts
Pfizer CEO Ian Read is a member of the Business Roundtable, a club for CEOs that is calling for corporate tax cuts and an increase in the Social Security retirement age from 67 to 70 – a benefit cut of about 20%. That’s easy for Read to promote since his $49 million Pfizer retirement account would deliver him a monthly retirement check of more than $275,000 from the time he is 65. In contrast, the average Social Security retiree, whose benefits Read is eager to cut, receives just $1,265 each month.
Pfizer is also a founding member of a new corporate tax-reduction coalition, Let’s Invest for Tomorrow America (LIFT), which is fighting for a “territorial tax system.” That would allow corporate offshore profits to be forever U.S. tax-free, thereby encouraging the shipment of profits and jobs overseas.
Pfizer spent $10.4 million lobbying Congress in 2012 and nearly $131 million since 1999, according to OpenSecrets.org. Taxes were its second-highest lobbying priority in 2012.