Corporate wrongdoing shouldn't be a tax write-off
Dozens of states have alleged that several pharmaceutical companies ignored indications that their opioid pills were being steered toward people who abused them.
Those states sued, and the four pharmaceutical companies -- Johnson & Johnson, Cardinal Health, AmerisourceBergen and McKesson -- are nearing an agreement to pay a combined $26 billion in compensation to communities harmed by the epidemic. But a tax loophole allows those companies to use that settlement to claim massive tax deductions.
This isn’t how our tax system should work. Tell Congress: Companies shouldn’t be able to claim tax write-offs on money paid to compensate victims.
Pharmaceuticals aren’t the only companies using this loophole to cash in on their wrongdoing.
In April 2010, an oil rig in the Gulf of Mexico operated by BP exploded and sank, resulting in the largest oil spill in the history of marine oil drilling. BP signaled it would write off the $32.3 billion charge incurred for the disaster response -- saving $10 billion on its tax bill.
Tax deductions shouldn’t pay for corporate wrongdoing.
Tell Congress: Close this loophole.
This problem is built into our tax laws, which allow companies to count as a “loss” any payments they make as restitution to those harmed by their actions. That means that, come tax time, those restitution payments make the company eligible for a tax refund.
Tax deductions are meant to encourage good corporate behavior -- such as charitable giving -- not subsidize corporate disasters that hurt average Americans.
That’s why we're calling on our U.S. representatives to pass legislation to require the Internal Revenue Service to revise the rule that allows companies to claim tax write-offs for money paid in restitution.