Benzinga - by Shanthi Rexaline, Benzinga Editor.
Tesla CEO Elon Musk seems to think biopharma giant Pfizer, Inc. (NYSE:PFE) has dodged taxes despite high profits.
What Happened: The issue began on X, the platform Musk owns, where Ashley St. Clair, a contributor to satirical outlet The Babylon Bee, shared a blog post.
She claimed Pfizer paid zero federal income taxes in 2023. The post alleged the company achieved this by offshoring most profits, effectively eliminating its tax burden.
The author further stated Pfizer, which was among a prominent vaccine maker during the COVID-19 pandemic, spent “tens of billions lobbying legislators to manipulate the tax code.”
A May 2023 Senate Finance Committee report echoed these concerns. It criticized pharmaceutical companies for charging exorbitant prescription drug prices while paying minimal taxes.
The report highlighted that a significant share of these sales come from federal health programs like Medicare and Medicaid, funded by taxpayer dollars.
Despite this, “the pharmaceutical industry pays tax rates that barely exceed single-digits, and the lion’s share of Big Pharma profits show up offshore, yielding massive tax savings,” the report concluded.
The report noted Pfizer’s effective tax rate was a mere 7.6% in 2021, with profits reaching $24.3 billion.
Pfizer’s 2023 10-K filing showed a negative 105.4% effective tax rate.
Source: Company filing
Musk responded to the St. Clair’s post with a simple, “Seems low.”
Sounds low— Elon Musk (@elonmusk) May 12, 2024
Why It’s Important: In December 2021, Musk paid a record-breaking $11 billion in federal income taxes, resulting from selling Tesla stock to finance his purchase of Twitter, which has since been renamed X.
For those wondering, I will pay over $11 billion in taxes this year— Elon Musk (@elonmusk) December 20, 2021
A report by Americans For Fair Taxation (AFFT) also revealed Tesla paid no federal income taxes despite significant profits and executive pay.
In 2022, CNN reported that Tesla, in its 10-K filing, said that its U.S. operations lost $130 million on a pre-tax basis in 2021, while all of the pre-tax profits, amounting to $6 billion, came from overseas operations. This meant the company may not have to pay taxes in the U.S., from where 45% of Tesla’s revenue that year came from.
Tesla’s 2023 10-K filing further confirms a negative 50% effective tax rate.
Source: Company filing
Why It Matters: These corporate tax practices deprive the government of vital revenue. AFFT urges Congress to increase the corporate tax rate from 28% and close loopholes.
Billionaire investor Warren Buffett, at Berkshire Hathaway’s annual meeting, noted his firm paid $5 billion in federal corporate taxes. He stated, “If 800 other companies had done the same thing no other person in the United States would have had to pay a dime of federal taxes.”
Read Next: Warren Buffett Was Right! America’s Billionaires Now Pay Lower Tax Rate Than Working Class For First Time Ever, New Analysis Shows
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