Ask and ye shall receive.

http://www.transparency.org.uk/publi.../#.WpfvCujwbIU

The whole report is worth reading, but here is a summary.

"Within the health sector, pharmaceuticals stands out as sub-sector that is particularly prone to corruption. There are abundant examples globally that display how corruption in the pharmaceutical sector endangers positive health outcomes. Whether it is a pharmaceutical company bribing a doctor for prescribing its medicines irrespective of a health need or a government employee facilitating the infiltration of substandard medicines into the distribution system, public resources can be wasted and patient health put at risk."

That publication estimates $300 billion of annual total global healthcare spend lost to corruption and errors, but it doesn't attribute all of that to pharma companies. It also cites 1/5th of all healthcare spending is spent on medicines.

So even if pharma is contributing 2x its weight to the corruption, you're talking about $120 billion annually. Not to say that's not a huge problem, but it's not hundreds of billion annually.

I also find it unlikely pharma is contributing 2x its weight to the total corruption. (Maybe a closer reading of the publication can flesh out more concrete numbers, but I couldn't find a specific cite attributable to phama on my quick skim.)

Disclosure: I work in pharma and I'm probably biased.

You should read the study. I actually would be interested to see what you think. My brother-in-law works for GSK, and he was pretty gobsmacked by it. He never knew the extent of the criminal activity that was taking place.

One point on the cost estimate is that it excludes the residual costs of the corruption. For example, if there is a corrupt building project, the cost is somewhat capped. As long as it is done safely and doesn't collapse and kill 100 people, the cost of corruption is limited to the excess cost of the project.

But if a doctor gets a kickback for prescribing opiates to patients who don't need them, the cost of that practice isn't limited to the amount of the bribe. Now you have a bunch of people addicted to opiates, which provides a cost to society far beyond the base cost of the corrupt act.

So in a lot of ways, I think that estimate is way low instead of way high.

What? What is Warren Buffett or Berkshire Hathaway doing to not pay the taxes they're supposed to?

His firm got a $29 billion windfall under the new tax bill.

http://fortune.com/2018/02/24/berksh...n-new-tax-law/

You can argue that what he is doing is legal, but I would argue that US tax law is completely FUBAR, which is an important part of the healthcare debate.

For example, Big Pharma hiding $500 billion in tax havens is legal. So is the majority of the estimated $16 trillion in wealth that is not taxed at its proper level.

But the fact that these activities are legal doesn't mean that the practice doesn't contribute to why healthcare, and society in general, is pretty messed up.

You can't blame any person or company for paying the minimum tax possible provided they are following the law.

I would vote to raise my own taxes (as part of a comprehensive tax plan) but I'm sure as hell not paying any more than legally mandated under whatever system is in place.

Cool, so this is all just gibberish and you have no idea what you're talking about.

Here's Berkshire Hathaway's footnote discussing taxes:



Because I'm confident that you don't understand it, here's what the table is telling you (focusing on 2016, because 2017 is bizarre due to the tax law change):

In a world where Berkshire paid exactly the federal statutory rate on all pre-tax income, you would expect them to pay 35% of 33,667, or $11,783. But they recorded a different amount of tax expense ($9,240) for reasons like state income taxes, tax credits, and the fact that some of their investments do not generate taxable income. None of those things are "gaming the system".

The line you want to focus on if you're concerned about tax havens is the one that says "Foreign tax rate differences" - this is where companies show a big reduction in rates because their income is earned in lower-tax foreign jurisdictions AND they consider that income to be indefinitely reinvested. (As I'm sure you don't know, even when money is earned in a low-tax environment, the U.S. tax rate is still applied to that money when it's brought back to the U.S. corporation.) For Berkshire, this has about a 1.5% effect on their effective tax rate ($421 million in 2016 relative to $33,667 of pre-tax income). In other words, Berkshire isn't engaging in tax haven shenanigans.

But yes, when Berkshire Hathaway has an enormous amount of deferred tax liabilities (which I'm sure you don't understand), the value of those liabilities decreases when the statutory tax rate is lower. The decrease in liability translates to a lower current period tax expense.

It's pretty ridiculous to consider this any kind of gaming the system, because the recent tax change was *designed* to lower tax rates.

Oh, and this relates to healthcare costs for... reasons, I guess.

I agree. Companies should seek out the best tax situation they can. But when the government runs out of money to pay for basic services, such as health care, we run into problems. And in a globalized world, the problem becomes the "race to the bottom," where governments compete to offer companies the best tax deal. Which is why there is an estimated $16 trillion in funds globally in money that is not taxed at an equitable rate.

The overall point is, you aren't going to solve healthcare in a bubble. You have to address other issues - global taxation, corruption, financial secrecy - because if you don't, it's not going to get fixed.

And part of the problem is that people don't have any understanding of this. I mean, you work in big pharma, and until today you had no idea of the level of corruption in the industry you work in.

And as far as spidercrab goes, I can't respond to whatever he was saying because it doesn't make sense to me. Which might make me the stupid one. But I am also the guy who found and read a Transparency International report on corruption in the pharmaceutical industry, so if I am stupid, it isn't for a lack of effort not to be.

Are you saying that tax policy does not impact health care costs?

I don't really want to argue with you because you are way smarter than me, but I am just wondering if this is what you are trying to say.

The bolded is wrong. I knew corruption was a massive problem in pharma. I also knew that your numbers smelled wrong to me, which was why I took the time to download and power skim through your source document, and was able to point out how you had misunderstood the information that you cited. (Hundreds of billions in corruption was across the entire healthcare industry.)

But I didn't call you stupid or anything close to that. All I did was share my opinion and point out the error that you made.

And spider basically pointed out that receiving a tax windfall is different than, "avoiding taxes," as you had described it.

This was your really stupid original comment:

I was pointing out that it's really stupid.

Do I think that tax policy (like, for example, non-taxable employer-sponsored health insurance) affects health care costs? Yes.

As I said, that figure doesn't include the indirect costs of corruption, such as the impacts of painkiller addiction in the US. You also have to remember that the study is two years old, and the problem has gotten significantly worse over that period.

Also, if you read the study carefully, which you should, you will see how the pharma industry contributes to a majority of the $300 billion problem, which was the point of the entire study.

If bolded was true, fully 1/3 of all annual spending on medicine would be going to corruption or errors. This seems somewhat unlikely to me.

It's stupid that I would expect companies and wealthy individuals to pay their fair share of taxes and not use loopholes and exotic schemes to avoid that responsibility?

I get that a lot of what Amazon and other large companies from a tax perspective is legal. And, in all honesty, I benefit from it. I lived in the BVI for five years while my wife actually facilitated this activity by creating IBCs for her clients. And it was pretty nice. I got to sail and hang out in beach bars all day. But at least I understood the lack of morality that was funding my lifestyle.

So yeah, I might not understand all this complex money stuff and I might say some stuff that confuses you. But I talk to a lot of people in the offshore industry, and what i say doesn't confuse them.

I can't answer your question. It seemed off to me as well at first, considering that most of the business is US-based, and the US is a relatively corruption-free society, at least compared to other places.

But I would take the time to read it. The stuff on ghostwriting and CROs was interesting to me.

Maybe I am beating a dead horse at this point, but this is a pretty interesting article. It talks about corruption in health care. I just randomly googled that term to see what I could find.

https://www.nakedcapitalism.com/2015...orruption.html

Every single example they use of corruption comes from the pharma industry.

I live in a developing country and follow corruption cases pretty closely. 99 percent of the corruption that I see involves buying something with public money. And the stuff that the medical industry spends its money on - by a large margin - is medicines.

So my question is, if pharma isn't responsible for corruption in health care, what is the avenue for corruption?

Yeah, this is just more gibberish. If you want higher corporate tax rates, that's fine. But you're going off the rails when you talk about loopholes and exotic schemes.
- The fact that companies own tax-exempt municipal bonds isn't a loophole or exotic scheme.
- The fact that corporations have a dividends received deduction so that there's not an infinitely-tiered tax applied to corporate taxes is not a loophole or exotic scheme.

You're imagining a world where companies set up something like a double Irish with a Dutch sandwich structure in order to shield income in tax havens. Some firms have done that, but I'm pretty sure that's a minority of firms. I pressed you specifically on Buffett and Berkshire because I'm a Buffett/Berkshire fanboy and I feel like I have a reasonable understanding of their tax activities. Based on your response, I'm confident that you don't understand much about why different corporations pay different amounts of taxes and you're just barking at the moon about loopholes and exotic schemes that you don't actually understand much about.

I never said pharma wasn't responsible for corruption in health care; I think it's probably responsible for more than it's fair share of the total health care corruption. All I said is that you misunderstood the data from the article you cited. You brushed that off and subsequently pulled a bunch of numbers out of your ass to support your contention that pharma was responsible for hundreds of billions in corruption annually.

So you are saying that, for example, there are zero costs associated with the country's painkiller addiction beyond the amount that would be included in the figures in the TI report?

No associated law enforcement costs. No costs for missed time at work. No costs associated to treatment programs?

Because this article puts the cost at $500 billion a year.

https://www.marketwatch.com/story/ho...-us-2017-10-27

Now, the pharma industry may not be responsible for every penny of that amount. But I would say they own the majority of it.

$16 trillion. That's how much there is. And that's a low-end estimate.

So yeah, it may be a "minority of firms." But it's 10 percent of the global GDP. And it's controlled by the richest people and the richest companies in the world.

And, the US is the biggest player in this game. It has the second most secretive banking system and is by far the world's largest tax haven. And the recent tax bill is going to make that problem far, far worse.

But, you know. Keep trying to dazzle me with accounting terms.

Yes, zero costs. You got me.

I'd be very careful with corruption studies, especially those that get into foreign markets.

That said I have no doubt pharmas are spending billions a year on pretty shady stuff (nominal conferences that are vacations in disguise for doctors, de-facto kickbacks, and so on) even in US and UK.

I don't even know what you're referring to with the $16 trillion number. Audit Analytics, a reputable data provider for US corporations, estimates that there's $2.8 trillion in US income held overseas:
http://www.auditanalytics.com/blog/u...d-by-billions/

Now, it's important to note that this is not $2.8 trillion of missing tax revenue, because when that money comes back to the US, it's going to be taxed at the difference between the US rate and the foreign tax rate for the relevant jurisdiction. But let's be aggressive and say that the money was completely untaxed and it should have been taxed at the former 35% statutory rate. That's just about $1 trillion of missing tax revenue from US corporations keeping money overseas.

And of course it's also important to note that the aggressive $1 trillion estimate would represent payment for the accumulation of foreign earnings over many years. So it's silly to compare that accumulated number to an annual number like GDP. (I also don't know where $160 trillion of global GDP comes from.)

I'm not trying to dazzle you with accounting terms, I'm just trying to express to you how stupid your posts are. If you want to carry on this conversation, it would be helpful to provide sources for your claims and to better describe this connection you're drawing between companies' foreign earnings and US health care costs.

I was referring to the total amount held offshore on a global basis.

Here, read this article.

https://www.theguardian.com/business...fshore-economy

Then maybe we can have an intelligent discussion, after you catch up a little.

This is the post that you jumped in with:
So your idea was that US healthcare would be affordable if only US corporations paid their fair share in taxes.

You've now moved the goalposts to this:
So you're now referencing an article that talks about global offshore holdings by worldwide corporations and individuals. Why does this have any relevance to whether US healthcare costs would be affordable if US corporations paid more taxes?

Without any handwaving, what exactly is your argument?