The pharmaceutical industry has had such a hard time, what with the Vioxx scandal and such. So it comes as a relief to learn that the government is helping these suffering firms out by giving them a tiny tax cut. It goes like this:
A new tax break for corporations is allowing the biggest American drugmakers to return as much as $75 billion in profits from international havens to the United States while paying a fraction of the normal tax rate.
The break is part of the American Jobs Creation Act, signed into law by President Bush in October, which allows companies a one-year window to return foreign profits to the United States at a 5.25 percent tax rate, compared with the standard 35 percent rate.
Any company with profits in other countries can take advantage of the law, but the drugmakers have been the biggest beneficiaries because they can move profits overseas relatively easily, independent analysts say.
The money the companies are bringing home has come from many years of using legal loopholes in the tax law to aggressively shelter their profits from U.S. taxes, tax lawyers say. While the companies' tax returns are private, fragmentary information about their tax payments is buried inside their annual financial statements.
Those figures show that the drugmakers have told the Internal Revenue Service for years that their profits come mainly from international sales, even though prescription drug prices are far higher in the United States than elsewhere and almost 60 percent of their sales take place in America.
I'm very glad to learn this, because now we are obviously going to find the prices of drugs drop by a significant amount. Aren't we?