How Parasite Corporations Like Pfizer are Chucking U.S. Citizenship to Escape from Taxes
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Let’s say you’re a giant American corporation like Pfizer, founded in Brooklyn way back in 1849. The fact that you exist and make a profit is largely due to the generous support of U.S. taxpayers. It’s the taxpayers, after all, who pony up for the National Institutes of Health, which does the basic research you rely on to develop drugs on which you make gigantic sums. And it’s the taxpayers who shell out large amounts of money to protect your patents, broker trade treaties in your favor, and protect your interests around the world in international negotiations. The same ones who pay for the public education of your employees and the costly infrastructure—the highways, airports, etc.—needed to move your products. The very folks who pay the billions in federal contracts you receive.
So what do you do? Do you pay your share of taxes to return some of this largesse?
Oh, no. You vigorously lobby for lower taxes and leave no loophole unexploited. You are not satisfied to have received $2.2 billion in federal tax refunds from 2010-2012 while raking in $43 billion worldwide even though 40 percent of your sales are in America. You’re not ashamed in the least that in 2012, you stashed $73 billion in profits offshore on which you paid zilch in U.S. income taxes.
Your greed and irresponsibility demand still more. So you decide to get out of paying a single nickel to the country that feeds you. You rig up an overseas purchase so you can “officially” relocate to a place with a lower tax rate and in doing so deliver a giant middle finger to your fellow Americans.
Last week, New York-based drugmaker Pfizer finally admitted why it wants to buy British drugmaker AstraZeneca, which is based in London. Sure, it will get some experimental drugs out of the deal, but that’s not what it’s really after. What Pfizer wants is to cheat American taxpayers.
Ian Read, CEO Hall of Shame
Pfizer is willing to shell out $100 billion for AstraZeneca so it can get a new tax home and lower its tax rate from the roughly 27 percent it paid last year, to the UK tax rate, which is now 21 percent and will drop down to 20 percent in 2015.
Let’s pause for a moment to consider the CEO of Pfizer, Ian Read, who is orchestrating this move. According to Forbes, he is a poster boy for grossly overblown executive salaries, hauling in almost $19 million bucks last year. Read looted the company for this obscene amount of money, despite the fact that under his leadership, profits actually declined in 2013. So instead of trying to make money by doing productive things, like, for example, investing in research and development for new products, Read is looking for shortcuts that are less about doing anything useful for society and more about plain destroying it.
Fiduciary Duty to Cheat?
Right on cue, Read trotted out the predictable nonsense that he has a fiduciary responsibility to maximize value for Pfizer shareholders, and therefore must make the tax-dodging move.
Actually, that is baloney, as economist William Lazonick has repeatedly pointed out.
Shareholder value ideology is merely an absurdity that has been spread through American business schools since the go-go 1980s — a specious justification that allows executives to turn corporations into predatory extraction machines at the expense of stakeholders like workers and taxpayers. The fiduciary-duty-to-shareholders argument would be laughed out of court in nearly all circumstances (such as the exceptional case when a company is going to be sold). The reason for this is simple. Any idiot can figure out that sometimes a company must take short-term profit hits in order to do things that are in the long-term interest of the company.