SUBSCRIBE TO OUR FREE NEWSLETTER
Daily news & progressive opinion—funded by the people, not the corporations—delivered straight to your inbox.
5
#000000
#FFFFFF
5
#000000
#FFFFFF
Pfizer's Tax Rate 'Fiction' Exposed: Pays Less Than Everyone You Know
Numbers used to justify potential corporate inversion 'are largely an accounting fiction,' says Americans for Tax Fairness
Nov 10, 2015
Undermining the company's rationale for a Big Pharma mega-merger that would allow it to dodge paying what it owes in taxes, a new report shows that, in fact, Pfizer has "dramatically overstated its corporate tax rates" and is already enjoying a significant competitive advantage over those who pay their fair share.
The world's largest pharmaceutical company, which manufactures Viagra among other drugs, has cited high U.S. corporate tax rates as an argument in favor of a merger with Irish corporation Allergan. The business deal would likely take the form of what's known as a "corporate inversion," allowing Pfizer to renounce its U.S. tax citizenship while retaining its current U.S. headquarters, management structure, and facilities.
"Despite its self-serving claims, Pfizer is not at a competitive disadvantage operating under the U.S. tax system."
--Frank Clemente, Americans for Tax Fairness
But the report from the coalition Americans for Tax Fairness--entitled Pfizer's Tax Dodging Rx: Stash Profits Offshore (pdf)--indicates that Pfizer's effective tax rate on its worldwide income was just 7.5 percent in 2014, compared with the 25.5 percent rate the company reported in its Securities and Exchange Commission (SEC) filings.
Indeed, according to Americans for Tax Fairness, which analyzed the corporation's SEC filings with the help of tax experts, "a fair reading of those filings is that the company's reported income tax rates are largely an accounting fiction."
As the Wall Street Journal explained on Sunday: "Pfizer's accounting methods raise its reported tax rate, without increasing the actual taxes the company pays. More than two-thirds of the company's 2014 tax expense--$2.2 billion out of $3.1 billion--was money the company will actually pay only if and when it chooses to repatriate foreign profits."
Pfizer had as much as $148 billion in profits parked offshore at the end of 2014, on which it has paid no U.S. income taxes. But given that Pfizer alone controls whether, when, and how much of its foreign earnings might actually be repatriated and therefore taxed, the chances of that tax bill being paid are slim.
"Despite its self-serving claims, Pfizer is not at a competitive disadvantage operating under the U.S. tax system," said Americans for Tax Fairness executive director Frank Clemente on Tuesday. "If anything, Pfizer is highly advantaged. An inversion would lock in these current advantages and extend them further, giving Pfizer an even bigger unwarranted tax edge against other American companies that are paying their fair share."
According to the U.S. Congress' Joint Committee on Taxation, the average American pays an income tax rate of 10.1 percent.
An Urgent Message From Our Co-Founder
Dear Common Dreams reader, It’s been nearly 30 years since I co-founded Common Dreams with my late wife, Lina Newhouser. We had the radical notion that journalism should serve the public good, not corporate profits. It was clear to us from the outset what it would take to build such a project. No paid advertisements. No corporate sponsors. No millionaire publisher telling us what to think or do. Many people said we wouldn't last a year, but we proved those doubters wrong. Together with a tremendous team of journalists and dedicated staff, we built an independent media outlet free from the constraints of profits and corporate control. Our mission has always been simple: To inform. To inspire. To ignite change for the common good. Building Common Dreams was not easy. Our survival was never guaranteed. When you take on the most powerful forces—Wall Street greed, fossil fuel industry destruction, Big Tech lobbyists, and uber-rich oligarchs who have spent billions upon billions rigging the economy and democracy in their favor—the only bulwark you have is supporters who believe in your work. But here’s the urgent message from me today. It's never been this bad out there. And it's never been this hard to keep us going. At the very moment Common Dreams is most needed, the threats we face are intensifying. We need your support now more than ever. We don't accept corporate advertising and never will. We don't have a paywall because we don't think people should be blocked from critical news based on their ability to pay. Everything we do is funded by the donations of readers like you. When everyone does the little they can afford, we are strong. But if that support retreats or dries up, so do we. Will you donate now to make sure Common Dreams not only survives but thrives? —Craig Brown, Co-founder |
Our work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.
Deirdre Fulton
Deirdre Fulton is a former Common Dreams senior editor and staff writer. Previously she worked as an editor and writer for the Portland Phoenix and the Boston Phoenix, where she was honored by the New England Press Association and the Association of Alternative Newsweeklies. A Boston University graduate, Deirdre is a co-founder of the Maine-based Lorem Ipsum Theater Collective and the PortFringe theater festival. She writes young adult fiction in her spare time.
Undermining the company's rationale for a Big Pharma mega-merger that would allow it to dodge paying what it owes in taxes, a new report shows that, in fact, Pfizer has "dramatically overstated its corporate tax rates" and is already enjoying a significant competitive advantage over those who pay their fair share.
The world's largest pharmaceutical company, which manufactures Viagra among other drugs, has cited high U.S. corporate tax rates as an argument in favor of a merger with Irish corporation Allergan. The business deal would likely take the form of what's known as a "corporate inversion," allowing Pfizer to renounce its U.S. tax citizenship while retaining its current U.S. headquarters, management structure, and facilities.
"Despite its self-serving claims, Pfizer is not at a competitive disadvantage operating under the U.S. tax system."
--Frank Clemente, Americans for Tax Fairness
But the report from the coalition Americans for Tax Fairness--entitled Pfizer's Tax Dodging Rx: Stash Profits Offshore (pdf)--indicates that Pfizer's effective tax rate on its worldwide income was just 7.5 percent in 2014, compared with the 25.5 percent rate the company reported in its Securities and Exchange Commission (SEC) filings.
Indeed, according to Americans for Tax Fairness, which analyzed the corporation's SEC filings with the help of tax experts, "a fair reading of those filings is that the company's reported income tax rates are largely an accounting fiction."
As the Wall Street Journal explained on Sunday: "Pfizer's accounting methods raise its reported tax rate, without increasing the actual taxes the company pays. More than two-thirds of the company's 2014 tax expense--$2.2 billion out of $3.1 billion--was money the company will actually pay only if and when it chooses to repatriate foreign profits."
Pfizer had as much as $148 billion in profits parked offshore at the end of 2014, on which it has paid no U.S. income taxes. But given that Pfizer alone controls whether, when, and how much of its foreign earnings might actually be repatriated and therefore taxed, the chances of that tax bill being paid are slim.
"Despite its self-serving claims, Pfizer is not at a competitive disadvantage operating under the U.S. tax system," said Americans for Tax Fairness executive director Frank Clemente on Tuesday. "If anything, Pfizer is highly advantaged. An inversion would lock in these current advantages and extend them further, giving Pfizer an even bigger unwarranted tax edge against other American companies that are paying their fair share."
According to the U.S. Congress' Joint Committee on Taxation, the average American pays an income tax rate of 10.1 percent.
Deirdre Fulton
Deirdre Fulton is a former Common Dreams senior editor and staff writer. Previously she worked as an editor and writer for the Portland Phoenix and the Boston Phoenix, where she was honored by the New England Press Association and the Association of Alternative Newsweeklies. A Boston University graduate, Deirdre is a co-founder of the Maine-based Lorem Ipsum Theater Collective and the PortFringe theater festival. She writes young adult fiction in her spare time.
Undermining the company's rationale for a Big Pharma mega-merger that would allow it to dodge paying what it owes in taxes, a new report shows that, in fact, Pfizer has "dramatically overstated its corporate tax rates" and is already enjoying a significant competitive advantage over those who pay their fair share.
The world's largest pharmaceutical company, which manufactures Viagra among other drugs, has cited high U.S. corporate tax rates as an argument in favor of a merger with Irish corporation Allergan. The business deal would likely take the form of what's known as a "corporate inversion," allowing Pfizer to renounce its U.S. tax citizenship while retaining its current U.S. headquarters, management structure, and facilities.
"Despite its self-serving claims, Pfizer is not at a competitive disadvantage operating under the U.S. tax system."
--Frank Clemente, Americans for Tax Fairness
But the report from the coalition Americans for Tax Fairness--entitled Pfizer's Tax Dodging Rx: Stash Profits Offshore (pdf)--indicates that Pfizer's effective tax rate on its worldwide income was just 7.5 percent in 2014, compared with the 25.5 percent rate the company reported in its Securities and Exchange Commission (SEC) filings.
Indeed, according to Americans for Tax Fairness, which analyzed the corporation's SEC filings with the help of tax experts, "a fair reading of those filings is that the company's reported income tax rates are largely an accounting fiction."
As the Wall Street Journal explained on Sunday: "Pfizer's accounting methods raise its reported tax rate, without increasing the actual taxes the company pays. More than two-thirds of the company's 2014 tax expense--$2.2 billion out of $3.1 billion--was money the company will actually pay only if and when it chooses to repatriate foreign profits."
Pfizer had as much as $148 billion in profits parked offshore at the end of 2014, on which it has paid no U.S. income taxes. But given that Pfizer alone controls whether, when, and how much of its foreign earnings might actually be repatriated and therefore taxed, the chances of that tax bill being paid are slim.
"Despite its self-serving claims, Pfizer is not at a competitive disadvantage operating under the U.S. tax system," said Americans for Tax Fairness executive director Frank Clemente on Tuesday. "If anything, Pfizer is highly advantaged. An inversion would lock in these current advantages and extend them further, giving Pfizer an even bigger unwarranted tax edge against other American companies that are paying their fair share."
According to the U.S. Congress' Joint Committee on Taxation, the average American pays an income tax rate of 10.1 percent.
We've had enough. The 1% own and operate the corporate media. They are doing everything they can to defend the status quo, squash dissent and protect the wealthy and the powerful. The Common Dreams media model is different. We cover the news that matters to the 99%. Our mission? To inform. To inspire. To ignite change for the common good. How? Nonprofit. Independent. Reader-supported. Free to read. Free to republish. Free to share. With no advertising. No paywalls. No selling of your data. Thousands of small donations fund our newsroom and allow us to continue publishing. Can you chip in? We can't do it without you. Thank you.