Why U.S. Pharmacies Are Playing Hide and Seek with Your Tax Dollars

Unveiling the Hidden Strategies Behind Corporate Tax Avoidance and Its Ripple Effects on American Taxpayers

Welcome to this edition of our newsletter, where we delve into the intriguing world of tax strategies and their implications for taxpayers across the nation. Have you ever wondered how large corporations like pharmaceutical giants manage to minimize their tax contributions, impacting the resources available for public services? Join us as we explore the complexities of tax avoidance and what it means for you as a taxpayer.

🕵️‍♂️ Tax Tactics Uncovered!

Hey there, taxpayers! It's time to dig into the crafty world of tax strategies and their implications for every American. Here’s what you need to know:

• Pharmacy giants like Eli Lilly and Merck are on the move with clever tax strategies, opting to manufacture abroad in low-tax jurisdictions like Ireland.
• Impact on American budget: Tax revenue dips post-2017 tax reform, as U.S. pharmaceutical companies exploit loopholes, leading to significant offshore profits while paying minimal taxes.
• See the bigger picture: Time to End Roundtripping by Big Pharma - Council on Foreign Relations

Additionally, the AICPA is advocating for amendments to taxation laws that would help improve tax parity for passthrough entities (PTEs). They are pushing for full SALT deductibility, allowing business loss carryforwards to offset all income types, and repealing personal casualty loss limitations. These changes aim to mitigate disparities in tax treatment for U.S. businesses. Dive deeper into these recommendations here: AICPA proposes changes to Senate bill that would help most US ...

🔍 What This Means for You

Let’s break it down for you:

• Why this affects you: The fiscal deficit is swelling to 7% of GDP, highlighting the need for substantial reforms in tax policies. As corporations like Eli Lilly and Merck leverage tax avoidance strategies by producing in low-tax jurisdictions such as Ireland, the implications for government revenue are profound, impacting public services and infrastructure funding.

• Forgotten contributions: U.S. taxpayers are paying the price for these corporate tactics. The 2017 Trump-Ryan tax reform has enabled pharmaceutical giants to report substantial offshore profits while significantly reducing their U.S. tax obligations. This shift undermines the tax system's integrity and fairness, putting a heavier burden on individual taxpayers who rely on government services funded by corporate contributions (Time to End Roundtripping by Big Pharma - Council on Foreign Relations).

• Think about it: How will these moves shape future tax policies? The proposals by the AICPA to amend laws for passthrough entities (PTEs) could be a step towards addressing inequities in the tax landscape. By advocating for full SALT deductibility and allowing business loss carryforwards to offset all income types, the AICPA's efforts aim to foster fairness and sustainability within the business tax framework (AICPA proposes changes to Senate bill that would help most US ...). Future regulations could emerge in response to the combined pressures of corporate tax avoidance and the need for equitable tax contributions.

💡 The Takeaway

As a taxpayer, here's how you should react:

• Stay informed on tax reforms to spot potential impacts on your finances and the services you rely on. The recent advocacy by the AICPA for changes that would improve tax parity for passthrough entities (PTEs) could significantly alter the landscape, affecting many small businesses structured as PTEs. Explore these recommendations further here.

• Advocate for fair tax contributions from corporations that leverage tax avoidance strategies. The practices employed by pharmaceutical giants like Eli Lilly and Merck, which manufacture abroad in low-tax jurisdictions and contribute to a decreasing corporate tax revenue, highlight a critical need for reform. Push for legislative changes that compel these corporations to contribute fairly to the funding of public services (Time to End Roundtripping by Big Pharma - Council on Foreign Relations).

• Ask yourself: 'Are we moving towards tax fairness yet?' With the fiscal deficit swelling to 7% of GDP, the urgency for substantial reforms in tax policies is evident. The recent measures suggested by the AICPA may be a step in the right direction to ensure that all business entities, especially those benefiting from PTE structures, pay their fair share (AICPA proposes changes to Senate bill that would help most US ...).

Stay engaged and take action to shape a fair and equitable tax system that serves everyone.