Pifzer was second only to General Electric among 70 companies that added billions of dollars to their stockpile of untaxed overseas profits, Bloomberg reported after analyzing financial records of 70 companies.
Those holdings increased 18.4 percent in the last year, according to Bloomberg, which said GE added $102 billion and Pfizer added $63 billion.
All of that adds to the debate about how to reform the U.S. corporate tax code.
Analysts said in the story and elsewhere say that some U.S. companies are waiting for another U.S. tax holiday to bring home some money. Some people in Washington hope that such a holiday would be used by companies to reinvest in U.S. facilities and create jobs. There was such a holiday in 2004, though Pfizer and Merck were among those companies who announced job cuts soon after the tax holiday.
Most of the changes in pharmaceuticals since 2004 have involved reduction in staff, more outsourcing, more partnerships with smaller firms.
Edward Kleinbard, former chief of staff of the congressional Joint Committee on Taxation, told Bloomberg that companies typically bring home money earned in high-tax jurisdictions that can be offset with foreign tax credits and keep profits earned in low-tax countries outside the U.S.
“The companies continue to reap the harvest of their years of aggressive tax planning to locate as much of their profits as possible in low-tax foreign jurisdictions,” he said in the Bloomberg story.
U.S. pharmaceutical companies have for years said that they can afford to provide vaccines to poor countries in part because much of their profit was made in the United States, which prompts the criticism of them for parking money elsewhere.
However, with the growth of middle class populations countries such as China, India and Brazil, drug companies make progressively more money elsewhere and say they leave cash there to operate those businesses.
Joan Campion, a Pfizer spokeswoman, told Bloomberg the company repatriates profits “as a matter of course.” That strategy gives Pfizer a higher effective tax rate than its competitors, its chief financial officer, Frank D’Amelio, told investors on a conference call Jan. 31.
The full Bloomberg story is here.