You may have heard about tax inversions – that is where a U.S.-based industry merges with a foreign firm and, voila, the latest company ignores paying its U.S. tax bill.
A new article in the New England Journal of Medicine finds these tax inversions in health care have a type of double whammy effect.
Take Pfizer, for instance.
The drug maker is primed to become the world’s greatest pharmaceutical company if its deal with Ireland-based Allergan goes through.
And that would mean all its earnings that have been parked offshore would avoid taxation.
“The pharmaceutical industries are playing a game,” claimed Dr. Haider Warraich, one of the authors. He said it is a game they win “making billions and billions of dollars of revenue. “
The point, stated Warraich, is companies such as Pfizer can sidestep the very taxes that support Medicare or Medicaid. Then they turn around and make money off those similar health programs.
“Someone requires to pay the taxes to support our public infrastructure,” claimed Steve Rosenthal, with the non-partisan Tax Policy Center.
Rosenthal estimates Pfizer’s tax inversion would mean the federal government losing out on nearly $22 billion.
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