American drug companies don’t want to pay US taxes—but they want global customers to pay US drug prices

Pfizer’s bid to purchase AstraZeneca failed, but the company’s attempt to move to London in an effort to avoid US corporate taxes has inspired a new round of commentary on America’s corporate tax system. Perhaps it should also spur a look at America’s commitment to raising drug prices around the world.

The US taxes the global income of its companies, which has led many of the largest to keep profits overseas indefinitely to avoid paying Uncle Sam, and even shift US profits overseas to avoid public levies. So-called “inversions”—reverse mergers where a US company buys a foreign one and assumes their jurisdiction, as Pfizer proposed—have also become more popular. Four US pharmaceutical companies have used the tactic to go overseas in the last year, and four more are considering similar moves.

While some US lawmakers have proposed a deal that would (paywall) block inversions as part of a strategy to lower taxes—a corporate practice that forecasters say would otherwise cost the US $20 billion in lost tax revenue over the next decade—many multinational companies argue that the US should simply end taxation of overseas income. Gary Hufbaeur, a senior fellow at the Peterson Institute for International Economics, lays out their argument:

[Multi-national companies] must incur huge research and development (R&D) costs and other investment outlays to stay competitive. To recover these costs and earn a decent profit, they must produce and sell in world markets. As part of their growth strategies, many countries—not just Ireland and Switzerland, but also India and China—tailor their tax laws to attract MNC factories, service centers, and research facilities.

More Here: http://qz.com/212657/american-drug-companies-dont-want-to-pay-us-ta...

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