Indianapolis-based Eli Lilly and Co. and other multinational companies are socking away profits in overseas tax shelters and ultimately stripping the U.S. Treasury of about $50 billion annually, according to The New York Times.
Last year, Lilly paid only 6 percent of its $3.4 billion in global profits in taxes, the newspaper said.
That’s a far cry from the intent of Congress when it passed tax breaks in 2004 to persuade drugmakers and other corporations to stop hiding profits in offshore shelters and create more jobs in the U.S.
Since 2005, drug companies-which benefited most from the amnesty-repatriated $100 billion in foreign profits. But rather than create jobs, they cut positions by the thousands.
Lilly, which saved $2.3 billion in taxes, said in a statement that it followed the law and believed the tax break encouraged it to invest in the U.S.-including $1.3 billion in Indiana.
However, Lilly slashed its domestic workforce by 8 percent, to 22,000 positions, as of January.
Now that the tax break has expired, the companies have returned to using the often-legal strategies of shifting profits offshore.
And the companies expect Congress to offer another incentive to repatriate profits, said New York University tax specialist. H. David Rosenbloom.
“Congress can swear on two stacks of Bibles that it’ll never do it again,” Mr. Rosenbloom said, “but they’ve lost their virginity.”