Reprinted from Robert Reich Blog
Just like that, Pfizer has decided it's no longer American. It plans to link up with Ireland's Allergan and move its corporate headquarters from New York to Ireland.
That way it will pay less tax. Ireland's tax rate is less than half that of United States. Ian Read, Pfizer's chief executive, told the Wall Street Journal the higher tax rate in the United States caused Pfizer to compete "with one hand tied behind our back."
Read said he'd tried to lobby Congress to reduce the corporate tax rate (now 35 percent) but failed, so Pfizer is leaving.
Such corporate desertions from the United States (technically called "tax inversions") will cost the rest of us taxpayers some $19.5 billion over the next decade, estimates Congress's joint committee on taxation.
Which is fueling demands from Republicans to lower the corporate tax rate.
Donald Trump wants it to be 15 percent.
Mike Huckabee and Ted Cruz want to eliminate the corporate tax altogether. (Why this would save the Treasury more money than further corporate tax inversions is unclear.)
Rather than lower corporate tax rates, an easier fix would be to take away the benefits of corporate citizenship from any company that deserts America.
One big benefit is the U.S. patent system that grants companies like Pfizer longer patent protection and easier ways to extend it than most other advanced economies.
In 2013, Pfizer raked in nearly $4 billion on sales of the Prevnar 13 vaccine, which prevents diseases caused by pneumococcal bacteria, from ear infections to pneumonia -- for which Pfizer is the only manufacturer.
Other countries wouldn't allow their patent systems to justify such huge charges.
Neither should we -- especially when Pfizer stops being an American company.
The U.S. government also protects the assets of American corporations all over the world.
In the early 2000s, after a Chinese company replicated Pfizer's formula for Viagra, the U.S. Trade Representative put China on a "priority watch list" and charged China with "inadequate enforcement" against such piracy.
Soon thereafter the Chinese backed down. Now China is one of Pfizer's major sources of revenue.