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DevinCauley-Towns t1_izz83lj wrote

Reply to comment by [deleted] in [OC] Visualising Pfizer's latest income statement. Pharmaceutical profit margins are notoriously higher than most other industries by giteam

Wait, how does employee compensation make their taxes negligible and why is this good?

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[deleted] t1_izz8g9t wrote

It doesn’t change the amount of tax they pay, it just lowers their effective tax rate. The $356 million in income tax reported here isn’t the same thing as the tax they actually pay the IRS

When stock options are exercised by employees, this lowers their income tax expense without lowering profit, which results in a lower tax rate

It’s a weird adjustment because it’s basically just theoretical, but most large companies have large adjustments for it each year

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DevinCauley-Towns t1_izz8z9w wrote

Ok, so are you suggesting they pay more than this to the IRS? If so, how would we find THAT number? And I’m still not seeing how this is “good” for society at large.

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[deleted] t1_izz9ow8 wrote

>are you suggesting they pay more than this to the IRS

Could be more, could be less. And there’s no way to see it, it’s not public info. Usually when companies report very low rates though, their actual tax paid tends to be higher

I’m not saying that it’s good for society, I just think most people are under the impression it’s due to some shady accounting or loopholes. But it’s basically just normal stuff

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DevinCauley-Towns t1_izzh6yq wrote

I don’t think people believe the accounting practices are shady per se. It’s more so that the system is broke if a company can generate 10s of billions in revenue AND profit while only paying a few % (1.5% of revenue in this case) in taxes. I don’t care what legal or illegal means are used to get there. They simply should be paying a much more substantial amount of their profits towards the government and therefore society at large. Especially in a case where some these companies are causing tremendous harm like many pharmaceutical companies today.

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