Ever since Republicans passed the biggest overhaul of the United States tax code in over three decades, there have been a flurry of reports detailing just how much corporations and the ultra-wealthy will benefit from the GOP tax law.
The Senate Finance Committee even held hearings last week on the initial impacts Tax Cuts and Jobs Act, with Democrat lawmakers raising fears the legislation is too skewed toward corporate America.
— Joe Weisenthal (@TheStalwart) April 30, 2018
Americans For Tax Fairness, a political advocacy group devoted to tax reform, released a report last week analyzing the tax bill’s effect on the pharmaceutical industry. Big Pharma stands to reap billions of dollars from the tax bill, and not a penny of that will “trickle down” to American workers, according to the report.
Tax cut estimates have only been released for five of the ten largest pharmaceutical companies in the United States, but when it comes to those five, a savings of $6.3 billion dollars is potentially in their future.
Pfizer predicts the company will receive a tax cut of over $1 billion in 2018 alone, for instance, and that it will pay a tax rate of just 17 percent — much lower than what many working families pay.
AbbVie could pay just a 9 percent income tax rate this year. Its tax savings in 2018 could reach $1.3 billion.
Merck will likely receive a tax cut of over $2.7 billion in 2018, while increasing its stock buyback program by $10 billion.
Only two companies in the “Pharma Big 10” — Pfizer and Merck — have announced any plans to share their tax savings with their existing employees in the form of bonuses, wage hikes, or an expansion of benefits. And the two companies chose the most common route among corporations profiting from the tax overhaul: a one-time bonus.
One-time bonuses are a cheap way to ensure free positive publicity among the public and the company’s employees, but effectively do very little for workers in the long run.
Bonuses also represent just a tiny portion of what the industry is expected to gain in tax savings. The one-time bonuses doled out by Pfizer and Merck are worth a total of just $169 million dollars — which means the pharmaceutical industry’s estimated $6.3 billion in 2018 tax cuts amounts to 37 times more than what drug companies are choosing to give their workers.
Big Pharma CEOs, meanwhile, are making 94 to 452 times more than their typical worker, according to the report.
This disparity between corporations’ tax savings and employees bonuses is reflected in other industries.
A ThinkProgress analysis of a list of companies offering tax bill bonuses in January 2018 found that out of the $1 trillion dollars it costs to permanently lower the corporate tax rate to 21 percent, corporations were only spending .13 percent of that amount on bonuses for their workers.
Like most other corporations, big pharmaceutical companies believe their tax savings are better spent on their shareholders. Five of the Pharma Big 10 — AbbVie, Amgen, Celgene, Merck and Pfizer — have announced increased stock buybacks since the tax bill was in the early stages of negotiations.
Stock buybacks are an ineffective way to get wealth to middle-class workers, given that the rich own the most corporate stock. While about half of U.S. adults own stock in any form, the wealthiest 10 percent of households own 84 percent of shares and the top 1 percent owns more than 40 percent.
Corporations and big banks have also gone the buyback route, with a majority of Fortune 500 companies spending a total of roughly $238,244,348,330 in stock buybacks since GOP tax bill was passed in December.
Overall, just 2 percent of Americans have reported getting a raise or bonus as a result of the tax bill, according to a Reuters/Ipsos survey conducted a month after its passage.