Pfizer Trying To Skip The Country Without Paying Its Fair Share of Taxes

May 19, 2014

By Joe Rothstein
Editor, EINnews.com

This is a tale of two companies with similar sounding names, but with radically different histories---Fifer and Pfizer.

Fifer Family Farms is located in southern Delaware, 2,400 acres of rich farm and orchard land owned and operated by the third and fourth generations of founder Charles Fifer.

Pfizer Pharmaceuticals is headquartered in New York, where it was founded by Charles Pfizer and has grown into a $200 billion worldwide entity.

Fifer Family Farms is a successful business, employing dozens of local people, producing fruits, vegetables and flowers using sustainable farming methods for the soil and water, with limited use of chemicals and pesticides.

Pfizer Pharmaceuticals has evolved into a serial felon, scofflaw and tax dodger.

Unless you live in southern Delaware, you won’t hear about Fifer Family Farms. Fifer’s is like millions of small businesses throughout the U.S. Hard working business people who do their best to be socially conscious and law-biding. And while no business people find joy in paying taxes, there’s an understanding that taxes are our dues for civilized living.

Our taxes pay for the roads we use, the schools that educate and train, the public safety that protects us and our rights, the regulations and regulators that keep the lights on, communications intact, and transportation systems from being chaotic.

It’s called community. And for the most part, the system works.

Then there’s that company with a similar name, Pfizer.

Currently, Pfizer is in the news for its offer to buy British pharmaceutical rival AstraZeneca.

If the deal goes through Pfizer will reincorporate itself as a British company for the express purpose of avoiding an estimated billion dollars a year in U.S. taxes. Also, as a British company, it will free up $57 billion in profits that Pfizer has held abroad to avoid paying taxes in the U.S.

Would a deal like this make sense strictly as a business deal? Not likely. Over the past dozen years Pfizer has purchased other pharmaceutical companies without much change in its overall value and profit picture. However, as a tax avoidance strategy, the move looks golden---for Pfizer’s management and shareholders.

But what about the community that has helped Pfizer grow into the behemoth it is today? The community that protects its patents, efficiently regulates its commerce, maintains its transportation system, educates its workers and essentially provides a warm, cushy, safe environment for its operations?

Because of existing tax loopholes, Pfizer consistently pays a much lower effective tax in the U.S. than the published 35 per cent tax rate. Because the U.S. is the most politically stable country in the world, Pfizer has no worries about confiscation of its assets. Its stock shares trade on the most secure world market. It lives in a land where corporate executives are virtually revered as the high priests of capitalism, with most sins forgiven.

Just since we entered the 21st century, Pfizer has been found guilty of pushing doctors to prescribe drugs for uses the FDA never approved, bribing officials in Bulgaria, China, Croatia, the Czech Republic, Italy, Kazakhstan, Russia and Serbia, and cooking the books to conceal illegal offshore activity as legitimate business expenses.

In 2005, Pfizer promised British politicians there would be no job cuts if they were permitted to acquire Wyeth pharmaceuticals. The deal went through and Pfizer promptly closed a British Wyeth plant and pink-slipped 1,500 workers.

Pfizer lives by what has become the mantra for U.S. big business these days, “maximize shareholder equity.” Little else matters. Pfizer is a hugely profitable company, with tens of billions parked elsewhere to avoid taxes, yet has eliminated tens of thousands of jobs during the past few years---with all of the collateral damage that creates for communities where Pfizer operates.

If Pfizer does manage to acquire AstraZeneca, Pfizer’s CEO, who is negotiating the deal, will walk away, personally, with $160 million. The banks involved will earn rich fees. Shareholders of both companies will likely make serious money, for a merger that produces no value for consumers or the communities or countries involved.

In this strategy is Pfizer uniquely greedy? Here’s a clue: According to Andrew Sorkin’s report on this story in the New York Times, at least 17 other Fortune 500 companies have contacted their bankers since learning about Pfizer and AstraZeneca, requesting analysis of similar non-U.S. merger prospects. Corporate America hardly finds such a tax dodge distasteful. On the contrary, the message seems to be, let’s take advantage of this loophole before it closes.

There’s a huge difference between the Fifer Family Farms of the U.S. and the Pfizers. It’s a difference in the way the government treats Wall Street and Main Street, a difference between business that understands the community it serves and business that serves only itself.

Government helped create the environment that rewards excessive greed to the detriment of the rest of us. It’s well past time for government to do some serious attitude adjustment and convince American companies that if they want the rewards of being American they need to pay the just dues of belonging to that exclusive and valuable society.

(Joe Rothstein can be contacted at joe@einnews.com)