Did you see that Glaxo has agreed to pay the IRS $3.4 billion dollars in past due taxes? Read more here. Glaxo had estimated that it might be on the hook for $15 billion.
The good news for Glaxo is that paying the money will not have any significant impact on the company’s earnings. Isn’t that nice?
The Washington Post says that "the case, which began with an IRS audit in the early 1990s, involved the way Glaxo paid taxes on U.S. profits from such popular drugs as Zantac, a stomach remedy, Imitrex, for treatment of migraines, and Ceftin, an antibiotic."
There is only one reasonable excuse for compromising the claimed underpayment for less than a quarter on the dollar and that is that the tax code is too damn complicated for anyone to predict the outcome of a dispute about it. The way to cure that problem is to reduce the tax rates, eliminate every deduction for everything and stop using the tax code as (best case) a public policy tool and (worst case) a gifting device to corporations and other special interests who can afford lobbyists. The estimated cost of compliance with the tax code is $125 Billion per year .
Of course, I cannot let this pass without mentioning Anna Alaya, who got 9 years in prison for attempting to extort money from Wendy’s in the finger-in-the-chili case. The decision-makers at Glaxo not only will not face prison time for the underpayment of taxes but will use shareholder money to pay less than 25 cents on the dollar for the tax bill.
I am not saying criminal charges against Glaxo or its executives were warranted – I do not enough about the facts to say one way or the other. But my point is that it is events like this that cause Joe and Sally Six Pack to wonder if we truly have equal justice in this society or, more accurately, reinforces their existing belief that it does not exist.