Big biopharma is bullish on the prospects of tax reform under the Trump administration. And it wants to get a deal done ASAP.
In a letter addressed by a lineup of corporate CEOs — including Eli Lilly’s David Ricks, Pfizer’s Ian Read, Ken Frazier from Merck and Mark Alles at Celgene — the group billing itself as the “American Made Coalition” urged leaders of the House and Senate to rally around a reform plan that would allow for the repatriation of billions of dollars in overseas accounts and a lower tax rate for all companies.
But the group is also advocating a controversial border tax.
“A critical element of the House blueprint is the provision that ensures goods and services produced abroad face the same tax burden as those produced in the United States….,” they wrote. “(I)t would effectively end the ‘Made in America’ tax that creates an unfair advantage for foreign-based companies at the expense of U.S. jobs and economic growth.”
That BAT, or border adjustment tax, would add a tax of 20% on goods coming into the country while making exports tax free.
Predictably, American retailers are up in arms over the idea, which has been pushed hard by Congressman Paul Ryan as a compromise between free-trade conservatism and the populist agenda voiced by President Trump. A border tax would fall heavily on imported consumer items.
Big Pharma’s big interest here is a lower tax rate and repatriation provisions that would make it easier for them to do deals in the US. Waiting for the next shoe to drop on tax reform may be holding up M&A plans. The companies also promised that tax reform would lower the need for new tax inversions, with companies moving their tax base to overseas shelters. But after Pfizer’s last planned inversion fell through, there’s been no signs of that being revived anytime soon.
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