By moving its headquarters to Ireland via a merger with Allergan, pharmaceutical giant Pfizer will dodge $35 billion in taxes, according to a report issued Thursday that Democratic presidential candidate Bernie Sanders seized on as an example of the kind of corporate rip-off he has campaigned against.
Americans for Tax Fairness, a left-leaning nonprofit group, released an analysis Thursday concluding that Pfizer would be able “to permanently dodge an estimated $35 billion in U.S. taxes owed on an estimated $148 billion in profits it currently maintains offshore” if it carries out its planned merger with Allergan and moves to Ireland.
“If Pfizer wants to pretend to be an Irish corporation, it could at least have the decency to charge Americans the drastically lower prices it charges Irish consumers,” Sanders said. “Enough is enough. Pfizer and other pharmaceutical companies can no longer be allowed to rip off American patients who already pay the highest prices in the world for prescription drugs.”
Sanders has criticized the pharmaceutical industry during his campaign and has introduced legislation that would aim to lower drug costs by directing Medicare to negotiate on drug prices and importing lower-cost drugs from Canada.
He also has backed legislation to tighten the rules against corporate inversions such as the one announced by Pfizer and Allergan in November, the latest in a string of high-profile mergers aimed at moving corporate headquarters outside the U.S. for tax purposes. Sanders’ rival for the Democratic nomination, Hillary Clinton, also has sought to highlight her opposition to the tax maneuvers on the campaign trail.
Under current U.S. law, companies have to pay the 35 percent corporate income tax rate on all overseas earnings, although that tax can be avoided by keeping earnings outside the country. In Pfizer’s case, the Americans for Tax Fairness report warned, the company might permanently avoid paying taxes on those earnings through a merger with Allergan by having its foreign subsidiaries essentially loan their untaxed offshore profits to the new Ireland-headquartered parent company, avoiding ever sending the funds to the Treasury.
The report noted that the taxes that would be lost to the Treasury could fund the National Cancer Institute for almost seven years, among a range of other options.
