Cross-posted at The Progressive Pulse.
Once again Pfizer has slapped American taxpayers in the face. Today’s New York Times has the whole story here. Like most of the drug makers, Pfizer has aggressively used international tax havens to avoid paying United States taxes.
Here is an appropriate analogy to show you how it works. Let’s say you work hard in your office in America for 50 weeks out of the year. You earn one million dollars. For two weeks you attend a conference in the Cayman Islands. You learn they have much lower taxes. You use accounting gimmickry to shift your profits to the Caymans. You pay the United States government a pittance of $20,000 or 2%. You pay the Cayman Islands $140,000 or 14%. So, instead of paying the United States government the correct amount of $350,000 or 35%; you tell the Americans to shove it because $20,000 is all they’re getting.
That pretty much sums up the relationship between Pfizer and the United States of America. Think about that the next time you take your Lipitor or Norvasc. The actual numbers for Pfizer are $13 billion in profits in 2006. They have set aside $1.76 billion (14%) to pay foreign taxes and 233 million (2%) to pay US taxes.
We allow the pharmaceutical companies to make obscene profits in the United States because we won’t allow price controls. Remember this: the drug companies make a profit in every market they operate in, including those countries with rigid price controls. It is estimated that 80% of international pharmaceutical company’s profits are generated from US sales. You would think that the least the drug companies could do is pay us a fair tax rate. But no, it gets worse. Pfizer cut 8,000 American jobs last year, and announced plans to cut 10,000 more. And yes…many of these jobs have moved overseas.
Here’s what we should do:
1) Change the law, immediately, to allow the US government to negotiate prices for the Medicare drug plan. This passed in the US House of Representatives but was defeated in the US Senate. Ask our Senators Burr and Dole why they voted against this bill and would they reconsider. Ask them if the considerable amount of money they receive from drug companies influences their vote.
2) Pressure lawmakers who have received money from companies who are avoiding US taxes to return it. Now. That means you Richard Burr and you Elizabeth Dole.
3) If you believe Pfizer tax policies are irresponsible consider this action: If you take Pfizer products (the list is here), ask your doctor if there is an equivalent substitute or a generic that would be appropriate for you. Particularly if you take Lipitor, Norvasc, Celebrex, or Caduet. (hint: ask about generic Zocor to substitute for Lipitor). Then, e-mail Pfizer here and tell them how you feel.
I wonder if this type of corporate behavior is all part of the "free-market" correcting itself?