Big Pharma is poised to reap huge rewards from the GOP tax bill
Following the lead of big banks and other corporations, none of their tax savings are going to workers. Ever since Republicans passed the biggest overhaul of the United States tax code in over three decades, there have been a flurry of reports detailing just how much corporations and the ultra-wealthy will benefit from the GOP tax law. The Senate Finance Committee even held hearings last week on the initial impacts Tax Cuts and Jobs Act, with Democrat lawmakers raising fears the legislation is too skewed toward corporate America. Americans For Tax Fairness, a political advocacy group devoted to tax reform, released a report last week analyzing the tax bill’s effect on the pharmaceutical industry. Big Pharma stands to reap billions of dollars from the tax bill, and not a penny of that will “trickle down” to American workers, according to the report. Tax cut estimates have only been released for five of the ten largest pharmaceutical companies in the United States, but when it comes to those five, a savings of $6.3 billion dollars is potentially in their future. Pfizer predicts the company will receive a tax cut of over $1 billion in 2018 alone, for instance, and that it will pay a tax rate of just 17 percent — much lower than what many working families pay. AbbVie could pay just a 9 percent income tax rate this year. Its tax savings in 2018 could reach $1.3 billion. Merck will likely receive a tax
cut of over $2.7 billion in 2018, while increasing its stock buyback program by $10 billion. Only two companies in the “Pharma Big 10” — Pfizer and Merck — have announced any plans to share their tax savings with their existing employees in the form of bonuses, wage hikes, or an expansion of benefits. And the two companies chose the most common route among corporations profiting from the tax overhaul: a one-time bonus. Only two companies in the “Pharma Big 10” — Pfizer and Merck — have announced any plans to share their tax savings with their existing employees in the form of bonuses, wage hikes, or an expansion of benefits. And
are choosing to give their workers. Big Pharma CEOs, meanwhile, are making 94 to 452 times more than their typical worker, according to the report. This disparity between corporations’ tax savings and employees bonuses is reflected in other industries. A ThinkProgress analysis of a list of companies offering tax bill bonuses in January 2018 found that out of the $1 trillion dollars it costs to permanently lower the corporate tax rate to 21 percent, corporations were only spending .13 percent of that amount on bonuses for their workers. Like most other corporations, big pharmaceutical companies believe their tax savings are better spent on their shareholders. Five of the Pharma Big 10 — AbbVie, Amgen, Celgene, Merck and Pfizer — have announced increased stock buybacks since the tax bill was in the early stages of negotiations. Stock buybacks are an ineffective way to get wealth to middle-class workers, given that the rich own the most corporate the two companies chose the stock. While about half of U.S. most common route among adults own stock in any form, corporations profiting from the the wealthiest 10 percent of tax overhaul: a one-time bonus. households own 84 percent of One-time bonuses are a cheap shares and the top 1 percent way to ensure free positive owns more than 40 percent. publicity among the public and Corporations and big banks the company’s employees, but have also gone the buyback effectively do very little for route, with a majority of Fortune workers in the long run. 500 companies spending a total Bonuses also represent just a of roughly $238,244,348,330 in tiny portion of what the industry stock buybacks since GOP tax is expected to gain in tax bill was passed in December. savings. The one-time bonuses Overall, just 2 percent of doled out by Pfizer and Merck Americans have reported are worth a total of just $169 getting a raise or bonus as a million dollars — which means result of the tax bill, according the pharmaceutical industry’s to a Reuters/Ipsos survey estimated $6.3 billion in 2018 conducted a month after its tax cuts amounts to 37 times passage. more than what drug companies
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