The Treasury Department has the ability to prevent Pfizer from dodging $35 billion in taxes through closing an offshore tax loophole.
My colleague Chuck Collins, almost exactly five years ago, wrote a blog post that opened: “We’re chumps unless we force Congress to stop tax haven abuse.”
I’m here to say: we’re chumps. [pullquote]Pfizer is currently stashing an estimated $194 billion in profits offshore and avoiding $40 billion in tax obligations.[/pullquote]
Congress has not taken significant action on offshore tax havens despite serious and sustained efforts by progressive legislators and groups to draw attention to the issue. However, there is a chance that a different arm of government could step up where Congress has failed to act: the Treasury Department.
The tax haven abuser of the moment is Pfizer, a behemoth pharmaceutical giant currently stashing an estimated $194 billion in profits offshore and avoiding $40 billion in tax obligations according to Citizens for Tax Justice.
The company is trying to make this arrangement permanent through a corporate inversion with “Irish” pharmaceutical firm, Allergen. The motivation behind Pfizer’s desire to merge with Allergen could not be more clear: by changing their official headquarters from the U.S. to Ireland, they would get to keep their main operations in country and move their tax liability overseas. (For more on this merger, see my colleague Scott Klinger’s piece, “The Tax-Dodging Marriage of Viagra and Botox)
We at the Institute for Policy Studies Program on Inequality, along with 54 other organizations, sent a letter this week organized by Americans for Tax Fairness to the Treasury Department calling on them to close the loophole that would enable Pfizer to dodge $35 billion in taxes.
Americans for Tax Fairness released a recent report outlining exactly how Pfizer is able to dodge paying their fair share in taxes as well as the implications of their actions. The report also outlines what the missing revenue could have been spent on that would help working families.
The report also outlines a whole host of abhorrent business practices by Pfizer ranging from price gouging consumers to using holes in the tax code to subsidize ballooning executive pay.[pullquote]Pfizer charges an average of 12 times more money per dose to American consumers than their Irish counterparts.[/pullquote]
For example, Pfizer charges an average of 12 times more money per dose to American consumers than their Irish counterparts. They also dodge an average of $7 million per year in taxes through the “CEO performance pay” loophole in the tax code that my colleague, Sarah Anderson has written extensively about.
Action to permanently end offshore tax shelters will in the end need to come from Congress. Senator Dick Durbin (D-IL) introduced the Stop Corporate Inversions Act of 2015, which has received the support of 272,000 ‘citizen co-sponsors’.
U.S. Senator and presidential candidate Bernie Sanders has also introduced legislation to this effect, titled the Corporate Tax Dodging Prevention Act. Sanders also sent a letter to Treasury Secretary Jack Lew demanding he block the Pfizer merger.
Presidential candidate Hillary Clinton has also spoken out against offshore tax shelters and against the Pfizer merger despite accepting nearly $40,000 from the company in contributions to her presidential campaign.
If we’re ever going to end the scourge of offshore tax havens, we need to start pushing back against behemoth multi-national corporations and their tremendous power and influence. Action from the Treasury Department to block Pfizer is exactly the kind of action needed to begin to turn the tide.