Pfizer CEO: The Future Of American Innovation Rests On A Competitive U.S. Tax Policy
Today I had the privilege of joining with the CEOs of Merck and Corning at the White House to announce a new type of glass packaging technology for pharmaceuticals that will provide stronger, more reliable vials and cartridges for the delivery of injectable drugs. This revolutionary advance is the result of collaborations amongst three companies that represent over a century of innovation in drug discovery and manufacturing processes. Our dedication and long-term commitment to innovation has and continues to yield significant benefits for patients, industry and the U.S. economy in the form of new jobs, new capital investment and the development and delivery of high-quality, safe and effective products.
If we want to continue to see American companies making strides through innovation, we are going to need more than the commitment of individual companies like ours. It’s going to take U.S. government support in the form of tax policies that create an environment where American companies are incented to continue capital investment in research and development that drives ongoing breakthroughs in science and technology.
Today the U.S. corporate tax rate is 35%–the highest in the developed world. This puts U.S. companies at a competitive disadvantage with their foreign competitors when it comes to investing their earnings back into research dedicated to discovering new, innovative products, such as the Corning Valor Glass, or new breakthrough drugs to treat the cancers, rare diseases or non-communicable diseases that Pfizer and Merck are working to tackle.
Under our current tax policy, U.S. companies are obligated to pay taxes to the U.S. government on their foreign earnings when they invest those earnings back in the U.S. By comparison, the foreign competitors of Corning, Merck and Pfizer are able to invest their foreign earnings in the U.S. tax-free. This is a disadvantage to U.S. companies, causing on average an additional tax charge of approximately 20%, and has resulted in U.S. companies holding approximately $2.5 trillion of their foreign profits overseas. It also puts us at a competitive disadvantage to foreign companies when we try to invest in assets in the U.S. to grow our business.
The unintended consequence is that American workers and consumers are not realizing the full innovative potential of American companies like Corning, Merck and Pfizer. Indeed, the current policy does just the opposite–it creates an advantage for foreign companies operating in the U.S. To keep U.S. companies at the forefront of innovation for many years to come will take Congress and the Administration working together to create a positive investment climate for U.S. multinational companies. Tax policies that bring U.S. corporate tax rates in line with international norms and that don’t penalize bringing cash back to the U.S. are urgently needed.
At Pfizer our mission is clear. We have a steadfast commitment to science, to the communities where our colleagues live and work and to developing new therapies for patients that significantly improve their lives. We have been fulfilling this mission for over 160 years. We want to build a future of innovation as rich as our history. A tax system that creates a level playing field for all companies will make the vision a reality.