Pharma firms stash profits in Europe's tax havens
investigate-europe.eu
investigate-europe.eu
If you didn't predict Novo Nordisk's hit weight loss drug ahead of time, but just held a big portfolio of large pharmas, the returns seem pretty disappointing to me. Or put differently, if you have a lot of extra money to invest today, would you significantly overweight big pharma based on what we learned from this article?
For an individual investor who wants unopinionated exposure to “Big Pharma” it’s hard to buy more than, say, the ten largest stocks as in your example. They’d probably also focus on American stocks only since European are typically harder to buy. And then they miss out on Novo Nordisk.
But an index fund that buys (for example) the top 100 global companies in this vertical would have benefited from the rise of Novo.
If you had invested one million in a fund that held Novo at only a 2% weighing five years ago, there’s now a 100k gain from that stock alone. That makes up for a lot of middling big caps, and you didn’t have to actively pick Novo or any other stock.
High returns comes when stocks do better than expected, these companies are expected to fleece people to hell and make massive profits so when they do that it is just the expected thing happening meaning normal return on investment.
If you had constantly lowered taxes, like we had constantly lowered interest for a couple of years, then that could have been expected to be reflected in the share price.
Or if you could isolate a short time period when they started doing this, then that would have affected earnings and likely the share price. But once that is the way the business operates, why would shares continue to rise? It does not make sense.
Question: why can’t we do the same for corporations in the USA? The equivalent action might be to only allow a company to expense money spent inside the USA and thus they can’t just license themselves all their own technology and patents which are held in a one person office in Ireland.
I’m sure I’m simplifying things too much, but I’m tired of the two tiered tax system where regular people pay for everything and corps reap the rewards.
where does the paying income tax come in? rich people are always, legally speaking, on the brink of bankruptcy, and can't afford to pay tax.
Most companies big enough to be doing business around the world do so through separate companies.
Uncle Sam will get his share. Unless you’re a large corporation, that is.
B. Corporations are owned by people (perhaps a very disparate group of people via pension plans, 401ks, etc) and the tax man eventually gets a piece
B) A smaller piece. I pay no more than 15% on my capital gains, I think they're capped at 20%, and I get to write off losses. It's wild to me that this is taxed at a lower rate than employment.
> If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude your foreign earnings from income up to an amount that is adjusted annually for inflation ($107,600 for 2020, $108,700 for 2021, $112,000 for 2022, and $120,000 for 2023). In addition, you can exclude or deduct certain foreign housing amounts.
i.e. if you make <$120k in a foreign country, you don't need to pay taxes on it (though you will need to declare!).
https://www.irs.gov/individuals/international-taxpayers/fore...
And here's info about the housing exclusion part: https://www.irs.gov/individuals/international-taxpayers/fore...
(I don't think any of this detracts from the OP's main point, but if you're an American living and working overseas, I hope you aren't paying taxes on all of your income)
corporations are under almost the same tax regime
Otherwise there is no way to stop companies doing the licensing Intellectual Property trick to bring profit to near zero.
But the people who would have to do it and the people who sponsor them into the office would lose a lot of money. So it will not be done.
Recently the Panama papers investigation was concluded and no wrongdoing was detected.
One thing begs a question why were the journalist responsible killed in a car bomb? As far as I checked a car bomb is not a random event.
> The structures helped the company [Bristol-Myers Squibb (BMS)] reach an effective corporate tax rate of 4.7 per cent, far below the US statutory rate of 21 per cent.
The main payers are not these large corporations, it’s the little guy who can’t retain earnings year over year without paying that statutory rate. The little guy doesn’t have offshore entities and transfer pricing. And these little guys are 75% of corporate tax receipts!
Scrap the whole thing and this shell game disappears.
How does that help?
They only pay 6% now, you are saying, so let's have them pay 0%?
At a minimum tax capital gains at the same rate as labor. Ideally, don't tax labor at all either, they are taxed plenty by inflation.
Of course policy changes tend to remain half done, like Davos’ motto, and we’re left with two taxes.
What this does allow for is carrying over profits from year to year for small businesses that operate on a cash accounting basis. Which in turn allows multi year planning without taking a 22% hit.
Never extracting the profits would lock them away in the corporation with no means of spending them. It’s definitely a possibility, but it’s not really an issue for public corporations because the shareholders wouldn’t want a company just sitting on cash.
What if my company just held on to the cash but every share had some ownership of that cash. Sure, it probably wouldn't trade at par, but it would also be silly for it to trade at the payout rate considering it's non taxable.
Could the paper backed by my corporation become a new currency?
Where does it say that? And what are non-corporate expenses anyway? Keeping the founder happy surely is a corporate expense otherwise this guy would rot in prison
https://techcrunch.com/2024/04/01/canoo-spent-double-its-ann...
Companies buy sports arenas and private jets all the time.
Europe is further west than I though
The question is, why do the countries tax something that doesn’t cost them anything to host.
Citizens from EU not being the Netherlands or Ireland have to witness how international big corporations pay taxes in countries different to the ones they are doing their business and big local companies moving their headquarters to neighbor countries. Which benefits their citizens.
That's the neat part, they don't
Who knew?
It’s ok to blame things on the taxes or free college, one also has to take a mirror and wonder “Can I change something in my attitude?”
No, that doesn't happen.
Pay is not the only criteria. Some select for the culture, lifestyle, similar language, etc.
However, you're correct that salary might not be the only criteria. That said, the Greek healthcare systems is already too thin, in ten years there will be a huge crisis due to lack of personnel. Most islands go by without doctors. During the summer these islands get flooded with ppl.
Taxes paid: 2019 FY: 1,515,000 2020 FY: 2,124,000 2021 FY: 1,084,000 2022 FY: 1,368,000 2023 FY: 400,000
Effective tax rate: 2019 FY: 30.45% 2020 FY:NM 2021 FY: 13.39% 2022 FY: 17.74% 2023 FY: 4.74%
Average tax rate paid last five years looks closer to 29% to me…
I feel morally obligated to keep myself fit and healthy as a personal boycott of the pharmaceutical companies. This means taking care of nutrition and being physically active. This provides no guarantee of not needing their products, however, not doing this makes it inevitable that I will need their products.
It is no accident that Western democracies allow companies to park their profits in tax havens, tax havens that are typically provided security and defence by the likes of Great Britain due to former colonial ties. Sanctions should apply to countries that have these tax loop holes.
Any country is free to tax any business however much it wants within its borders.
If a country’s leaders choose to not tax a business, it it is up to the voters of the country to change the leaders.
The nasty secret is called "transfer pricing", which is permissible under OECD rules, which permits companies to claim their headquarters are whereever they want (so they choose a low tax jurisdiction), when everybody knows that their "real headquarter" is not there (including their own Website, which names an entirely different place as their HQ). One such loophole the "Double Dutch-Irish Sandwich" was closed two years ago, but plenty of other ways remain.
It is a bit unfair to "Big Pharma" (or Apple) to single them out, because lots of other corporations do the same. For example, just check the Canton Zug (CH)'s ratio between companies registered there (29k?) and people living there (25k?). I have not seen a single political party offering in their manifesto to fix this... meanwhile large corporates create shell companies owned by other shell companies licensing brands to third shell companies while receiving loans from fourth parties etc. etc. - typical money laundering patterns like organized crime, yet entirely legal at the moment.
In my opinion, everyone who is a Director of >50 companies should be investigated for fraud to begin with, and rules for determining companies' true headquarter should be changed so they cannot be freely chosen "only for tax purposes".
https://en.wikipedia.org/wiki/Global_minimum_corporate_tax_r...
Though remains to be seen when it will actually go fully into effect and when/if all the various loop holes will be closed.
This can't be fixed by most individual countries but there are a few individual countries that could do it. The US could easily do it, easily from a technical point of view that is; unfortunately it is politically impossible.
>This amount outweighs their research and development (R&D) costs, despite the industry's frequent claim that high drug prices allow them to innovate and design new drugs.
R&D is one thing, but most drugs fail at the clinical trial stage. This money (hundreds of millions per drug) is just gone, unlike R&D which might result in new tech or at least a patent. For Oncology its even worse, its close to a 95% failure rate. Simply taxing companies won't make their drugs successful. Large pharma companies rely on a few blockbuster products for their profits and they milk them dry. This is standard corporate greed/behavior, but it certainly seems offputting because we're dealing with peoples lives. Personally, I think its inevitable that there is going to be some form of nationalization for a protected class of life-saving medication.
https://www.labiotech.eu/trends-news/clinical-trials-success...
I'll admit I'm not as well read on the day-to-day reporting as I'd like to be.
Wouldn't it make sense for governments to just run their own drug manufacturing company? All the drugs from expired parents are free game.
If you have some magical formula that would avoid doing I'm sure that NICE would love to hear from you.
If governments were making their own generic drugs and sold them at cost then it would help avoid situations like Martin Shkreli. The drug wasn't protected by a patent, it's just that nobody else produced that drug. In my opinion this seems like a reasonable thing for governments to do.
Also, the best treatments aren't always available in this first place. Eg (at least a few years ago, don't know today) Adderall was illegal as a treatment here. Some EU countries, until recently, even treated methylphenidate like that.
It's been put at about $10 million, for the purposes of EPA regulations. Insurance companies have their own formula, from a couple hundred thousand into the millions, and healthcare users QUALYs - quality-adjusted life years, and those are priced at $50,000-$150,000.
Triple that in places like US (not for fubars but the costs).
Are you saying the clinical trial stage is somehow not part of R&D spending? It sounds like quite obviously research to me, but I'm not familiar with how it's actually reported.
Is it completely wasted? we learn something doesn't work. It's not fantastic like it would be to find drugs that cure things , but we still learn.
The Spider's Web: Britain's Second Empire | The Secret World of Finance
https://www.youtube.com/watch?v=np_ylvc8Zj8
It was even done on a 4klb budget!!!
The reality is that the brits realized they could no longer maintain hard power and Lionel Curtis was the primary pusher of the psyop transition to "commonwealth" soft power while maintaining all the real vestiges of empire under a false name.
* Taxes are excessive and out of control in the US
* Most taxes just end up in lawmaker's buddy's pockets
* Programs in the US get created, and never garbage collected
* Literally every business is doing this
Really the only thing that upsets me is that these tax havens aren't accessible to common people like me, as I'm not blood or marriage related to a US Senator or Congressional Rep.
Edit: https://www.concordcoalition.org/wp-content/uploads/2024/03/...
Given that the income tax didn't exist in the US before 1861, and even when it was introduced it was 3%, and in 1913 the highest bracket was 7% (on income over $11 million in todays's money) and the lowest was 1%, I seriously doubt that.
https://www.taxpolicycenter.org/briefing-book/how-do-federal...
For our contemporary age, they are at an all time low.
https://dictionary.cambridge.org/dictionary/english/historic...
Consider yourself enlightened.
the reality is that Americans pay 10X taxes than in 1930. Surely government services have growth since then as well, but I question if the public is getting 10X the value.
Tax as a percent of the economy has gone through the roof, both as a percent of GDP, and as inflation adjusted dollars. If you compare to a benchmark like the 1940s, tax% of GDP has more than doubled[1], and GDP has increased ~4.5x[2]. This means someone today pays about 10X the taxes (controlling for for inflation!). State and local taxes have grown even faster than federal taxes.[3]
Put another way. Taxes/Real GDP has gone from 2% o
Federal tax/GDP: https://fred.stlouisfed.org/graph/?g=ockN
Real GDP: https://fred.stlouisfed.org/series/A939RX0Q048SBEA
State +local/Real GDP:https://fred.stlouisfed.org/series/W070RC1Q027SBEA#0
In 1930 they were 4.4% of GDP
In 1940 they were 6.3% of GDP
In 2023 they were 16.2% of GDP.
Federal spending has indeed Grown faster than receipts, but I dont want to muddy the water with debt spending and inflationary effects, and dont have to because Taxes per GDP is fractional and accounts for inflation.
The main point I want to drive home is the change in total tax amount, controlling for inflation. People tend to focus on percent tax burden and over look the total tax payment in inflation adjusted real dollars.
This is because when you look at the taxes actually paid, it evens out due to deductions, credits, changes to the brackets, etc.
It's only if you look at statutory progressive rates that it appears that federal income taxes appear to be a larger % of US GDP.
That is demonstrably false.
In fact garbage collection is so common I'd bet I can just stand here and do nothing for 5 minutes until my brain finds an intersection with my own circumstances...
Found it...
Look up the used PHEV federal tax credit. While you're at it, look at the tax credit for new electric and PHEV vehicles. That one even has a little built-in ramp to decrease the incentive over time.
It's as if the government has somehow gained practical knowledge and experience over time with various garbage collection routines...