A U.S. pharmaceutical company that makes expensive hepatitis C medications was able to avoid almost $10 billion in U.S. taxes by the end of 2015 by shifting profits to offshore tax havens, a report released Wednesday by the liberal-leaning Americans for Tax Fairness (ATF) found.
As profits at Gilead Sciences Inc. have skyrocketed in recent years, its tax rate has dropped steeply, according to the report.
“Despite all the benefits Gilead has received from taxpayers, Congress maintains a loophole-ridden tax system that has allowed the company to dodge taxes that pay for those benefits, leaving other taxpayers to pick up its tab,” ATF said in the report.
Gilead is the sixth-most valuable pharmaceutical company in the world, and its profits largely come from hepatitis C drugs.
At least $4.2 million in federal support for hepatitis-related research appears to have helped with the development of Gilead’s drugs. But the high price tag has kept thousands of people from receiving treatment because public health programs could not afford enough of the medications, the report said.
Gilead’s worldwide revenue increased from $11.2 billion in 2013 to $32.6 billion in 2015. At the same time, the company’s worldwide effective tax rate dropped from 27.3 percent in 2013 to 16.4 percent in 2015, ATF said.
Gilead wrote in filings with Securities and Exchange Commission that it had deferred paying $9.7 billion of U.S. taxes on offshore profits and had paid foreign governments a tax rate of 1 percent last year, according to the report. Additionally, Gilead avoided $2 billion in taxes by using tax breaks concerning stock options for executives.
“Congress should stop this assault on the American people’s health and pocketbooks by curbing the company’s flagrant drug-price gouging and tax dodging,” the group said.
Rep. Lloyd Doggett (D-Texas) said on a press call that the report gives lawmakers more evidence that corporate tax loopholes need to be plugged.
The proposed Democratic Party platform calls for ending companies’ ability to defer taxation on overseas earnings. Doggett, a member of the House Ways and Means Committee, said he supports ending deferrals and opposes a temporary tax holiday that would allow companies to bring their profits back to the U.S. at lower rates.
“I think that provision is a good one,” he said of the platform language.
ATF Executive Director Frank Clemente said his group testified before the Democratic Platform Committee and that ending deferrals was “a central part” of its testimony.