Former President Donald Trump’s tax cuts allowed drugmaker AbbVie to shield most of its earnings from federal taxes, The Washington Post reports.
A report by the Senate Finance Committee found that the pharmaceutical giant generated 75% of its sales in the United States but only reported 1% of that income to the IRS.
The company was able to reduce its tax burden after the Trump law changed how companies account for profits they make internationally.
AbbVie had based its patents, trademarks and other assets for the drug Humira with its subsidiaries in Bermuda and manufactured parts of the drug in Puerto Rico, allowing it to reduce its tax rate from 19% in 2017 to about 8.7% in 2019.
The report also found that AbbVie CEO Richard Gonzalez told investors in 2018 that the GOP tax law would lower the company’s tax rate to around 9%, far lower than the 21% corporate tax rate set by the law.
“Broken system”:
Democrats released the report and called for an overhaul of the tax code.
“It’s critical that Congress takes steps to fix this broken system, so nurses and firefighters aren’t paying higher tax rates than Big Pharma,” Senate Finance Chairman Ron Wyden said in a statement.
Wyden has demanded similar documents from drugmakers Merck and Abbott.
The committee’s report said both companies have “refused to substantively cooperate.”
Democrats target pharma:
Democrats appear set to pass legislation allowing Medicare to negotiate the cost of some prescription drugs but Sen. Joe Manchin has held out against other measures sought to rein in Big Pharma.
Wyden’s aides told the Post that the report was aimed to illustrate the consequences of inaction.
“It is imperative that Congress enact needed international tax reforms that would close loopholes that allow drug companies like AbbVie to stash their profits in tax havens,” they wrote.
