Drugmakers helping to lobby for a "tax holiday" on repatriated foreign cash say the break would create jobs. But a new report finds companies that benefited from the 2004 repatriation-tax exemption--including Eli Lilly ($LLY) and Pfizer ($PFE)--saved billions in taxes, but laid off workers rather than adding new ones long-term.
Big Pharma companies are among the major U.S. corporations touting a proposed corporate tax break on repatriated cash. The tax holiday would let big companies bring their foreign cash back home, without paying the taxes they'd normally pay. The argument is that access to that cash would let companies invest in the U.S.--and create jobs in the process.
But according to a report from the Institute for Policy Studies, the last time U.S. officials tried this approach, the job-creation benefits were questionable. And nowhere has that been more obvious than in the pharmaceuticals business, the report states. Drugmakers benefited more from the 2004 break than any other industry did, bringing $100 billion home tax-free, saving $30 billion.
As anyone who follows pharma knows, the years since have been full of job cuts. The institute figures on 119,000 pharma job cuts since 2008. Among the specific companies that saved on taxes in 2004--but laid off workers since--include Pfizer, with more than 50,000 job cuts; Lilly, with more than 6,000; and Bristol-Myers Squibb ($BMY), with more than 9,000. Merck ($MRK) benefited from the tax holiday, but its employment change since has been on the positive side--by 500 jobs.