May 12, 2023: A Republican law has cut the average tax rates of huge pharmaceutical companies by over 40% since it was stated in 2017, Senate Finance Committee Democrats said in a report Thursday.
“Democrats cautioned in 2017 which stated that the Republican tax law will amount to a huge giveaway to multinational markets, and here’s the proof that that’s what happened,” Sen. Ron Wyden, D.-Ore., the chair of the committee, said in a report.
The GOP’s nearly $1.5 trillion Tax Cuts and Jobs Act brought clean changes to the tax code, including a provision that forcefully put a worldwide minimum tax on foreign earnings.
The report said that provision allowed U.S.-based pharmaceutical firms to access the lower tax rates on their foreign income.
It also made a “huge incentive” for those firms to put their profits, investments and jobs overseas, Democrats stated in the report.
The report said that pharmaceutical companies report 75% of their taxable income overseas.
The pharmaceutical business paid a tax rate of nearly 20% on average from 2014 to 2016, the years right before the law passed, according to the committee’s analysis.
The report stated that the average rate fell to 11.6% in 2019 and 2020, which came in billions of dollars in tax that have been saved for pharmaceutical companies.
“There’s no reason that the tax system was broken before 2017, but instead of putting it, Republicans gave Big Pharma the green light for some of the roughest tax gaming highly trained accountants can dream up,” Wyden said.
He referred to significant tax reform to ensure giant corporations “pay their fair share while supporting to spur investment, not in foreign places.”
The report is recent in Wyden’s investigation into Big Pharma’s tax practices. The Oregon senator stated that the committee would release final information on the probe.
Lawmakers have long talked about the industry for its skyrocketing drug prices, which can prevent some patients from accessing life-saving medicines. Wyden’s probe adds fuel to that fire.
In July, Wyden released a report which details how drugmaker AbbVie related offshore subsidiaries to avoid fulfilling billions of dollars in taxes on the prescription drug market.