As the Wall Street Journal explained on Sunday: “Pfizer’s accounting methods raise its reported tax rate, without increasing the actual taxes the company pays. More than two-thirds of the company’s 2014 tax expense—$2.2 billion out of $3.1 billion—was money the company will actually pay only if and when it chooses to repatriate foreign profits.”
Pfizer had as much as $148 billion in profits parked offshore at the end of 2014, on which it has paid no U.S. income taxes. But given that Pfizer alone controls whether, when, and how much of its foreign earnings might actually be repatriated and therefore taxed, the chances of that tax bill being paid are slim.
“Despite its self-serving claims, Pfizer is not at a competitive disadvantage operating under the U.S. tax system,” said Americans for Tax Fairness executive director Frank Clemente on Tuesday. “If anything, Pfizer is highly advantaged. An inversion would lock in these current advantages and extend them further, giving Pfizer an even bigger unwarranted tax edge against other American companies that are paying their fair share.”
According to the U.S. Congress’ Joint Committee on Taxation, the average American pays an income tax rate of 10.1 percent.
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