Drug Company Taxes

A new tax break for corporations is allowing the biggest American drug makers to return as much as $75 billion in profits from international havens to the United States while paying a fraction of the normal tax rate.

The break is part of the American Jobs Creation Act, signed into law by President Bush in October, which allows companies a one-year window to return foreign profits to the United States at a 5.25 percent tax rate, compared with the standard 35 percent rate.

Think they'll be turning it over to a cheap prescription drug plan for our elderly? If you do, you couldn't possibly be more wrong.

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Tim Grieve at Salon has this to say:

The logic isn't crazy, just cold-hearted. And we're guessing it's not what Congress had in mind when it approved the plan in the first place. In fact, we don't have to guess. The Medicare Modernization Act specifically provides that discounts and subsidies seniors receive through the prescrition drug program “shall not be treated as benefits or otherwise taken into account in determining an individual’s eligibility for, or the amount of benefits under, any other federal program.”