09/29/2016

EpiPen and the swindle of public services

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By now, you'd have to be living in a bubble not to know about the obvious game that pharmaceutical firm Mylan is playing to squeeze the public for its last dime. Mylan's predatory price hike on life-saving EpiPens—from about $100 to at least $600 a pair—is widely known.

Less well known is the company's tax avoidance scam two years before the EpiPen scandal. As part of a "tax inversion" to lower its tax rate, the firm moved its headquarters from Pennsylvania to the Netherlands, and Mylan paid its top executives lavishly to offset their tax hit, according to a Washington Post account of filings by the Securities and Exchange Commission. Mylan accelerated $32.5 million in executive compensation for its leadership team and then reimbursed them for $20.5 million in taxes.

EpiPen and bagThe uproar over Mylan accompanies fresh outrage after European regulators told tech giant Apple last month that it owes Ireland $14.5 billion in back taxes, plus interest. That's public money that should have stayed in America for public services.

"Our tax system has enabled much of the tax-dodging antics in which Apple and hundreds of other corporations have engaged," says Citizens for Tax Justice, a watchdog group, adding that the U.S. Treasury Department should take a page from Europe and "crack down on rampant corporate tax avoidance."

President Obama has called tax inversions "unpatriotic." He touts new federal rules limiting companies' ability to repeat inversions within 36 months. Those rules prompted a lawsuit from two companies, Pfizer and Allergan, against the government.

There's plenty more money we could recover from tax shelters. U.S. firms had stashed $1.2 trillion in cash overseas by the end of last year, The Guardian reports. Companies that have done tax inversions or other forms of tax avoidance include Fiat, McDonald's, Microsoft and Starbucks. And if America remains unwilling to go after these companies' piles of offshore cash, it seems that Europe is happy to recoup the money itself.

Federal regulators have testified for years on the many ways the tax system is being manipulated. Yet, even though the world's largest nations should be cooperating to fight tax avoidance for the good of their public services, instead they are accusing each other of tax raids and threatening retaliation while public infrastructure goes starving.

Presidential candidate Hillary Clinton highlighted this issue during the first debate on Sept. 26 when opponent Donald Trump bragged about not paying federal income taxes, saying, "That makes me smart."

"If you have paid zero, that means zero for our troops, zero for veterans, zero for schools or health," Clinton replied. She noted that Trump is probably "not all that enthusiastic about having the rest of our country see what the real reasons are [for withholding his tax returns] because it must be something really important, even terrible, that he is trying to hide." Just like the other tax dodgers parking money overseas so they won't have to pay their fair share for public services at home.

[Annette Licitra]