Okay, that title is a bit over the top, but I couldn’t resist. It’s one way of summing up the critique by Citizens for Tax Justice (CTJ) of a proposed new federal tax break for pharmaceutical and biotech companies, which CTJ calls “the worst ‘job creation’ idea yet.” Since they have seen some very ill-conceived tax cut ideas, it’s worth paying attention when they flag one as being especially bad.
CTJ warns that policymakers shouldn’t jump on board every tax cut proposal that comes along, just because it’s labeled by some as a way to create jobs. Their August 5 analysis argues that the new legislation, which is billed as a job creation strategy, combines “two terrible tax policies — the research and experimentation (R&E) credit and a tax holiday for repatriated offshore profits — into one monstrosity.” CTJ makes the case why it would actually reduce, not increase, jobs in the U.S, and they point out that the R&E credit would reward companies for research that they are doing anyway.
I haven’t seen an official cost estimate for the proposal, but an August 3rd article in the San Francisco Chronicle reports that: “An analysis of the legislation prepared for a coalition of businesses and research institutes backing the plan estimates the bill would cost the U.S. Treasury $2.5 billion in forgone revenue over five years and $7.3 billion over 10 years.”
We will continue to monitor this bill. You can read the CTJ critique here.