By Anna Peel. Originally published at ValueWalk.
(Washington, DC) Today, the Washington Post reported that four big drug companies plan to deduct opioid-abuse legal settlements from their corporate taxes, saving each company roughly $1 billion, at the expense of American taxpayers. And those deductions are supercharged thanks to a provision in the coronavirus-relief CARES Act enacted last March.
Companies generally may not write off amounts paid in legal settlements of criminal or civil fines. But they can write off payments made in legal settlements if those payments are defined as “restitution.” All four companies apparently structured their settlements to seize on that exception.
The CARES Act included a provision allowing companies to apply losses from recent years against profits from earlier years, including years prior to 2018, when the corporate tax rate was two-thirds higher than it is now. By applying the loss to those higher-taxed years and amending those prior-year tax returns, the companies pocket bigger refunds then they would ordinarily be entitled to.
“The fact that huge companies implicated for their role in the tragic opioid epidemic can write off the cost of their wrongdoing is unconscionable,” stated Frank Clemente, Executive Director of Americans for Tax Fairness. “It’s even worse that up to 40% of the unjust tax breaks Cardinal Health, Johnson & Johnson, and other pharmaceutical manufacturers and distributors are seeking are permissible only because of the giveaway the GOP snuck into the CARES Act, which was supposed to be about addressing peoples’ basic needs in the pandemic. Congress should immediately repeal this huge tax cut for these companies and other wealthy business owners.”
“In one example, Dublin, Ohio-based drug distributor Cardinal Health said earlier this month it planned to collect a $974 million cash refund because it claimed its opioid-related legal costs as a “net operating loss carryback” — a tax provision Congress included in last year’s coronavirus bailout package as a way of helping companies struggling during the pandemic.
“It is past time for Congress to serve the people, not the special interests, especially those companies that have contributed to drug addiction and deaths,” added Clemente.
The post GOP PROVISION IN CARES ACT GIVES DRUG FIRMS MAJOR TAX REDUCTIONS FROM OPIOID CRISIS SETTLEMENTS appeared first on ValueWalk.
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