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Even the VCs get a better deal here, they end up with equity. If followed that model, then the taxpayer would own at least 50% of the patents generated (via sha

Even the VCs get a better deal here, they end up with equity. If followed that model, then the taxpayer would own at least 50% of the patents generated (via shares the corporate entity that owned the patents). Under the current model the taxpayer gets nothing, which hardly seems reasonable given the amount of capital they provide.

BobbyJo 5y ago
Don't we already own a portion of what gets created though? If Merck makes a boatload of money off of this, the taxpayers will indeed be taking a cut.
- ipaddr 5y ago
  No we decided that corporate taxes should be low so the company can reinvest. The shareholders benefit.
- callmeal 5y ago
  >If Merck makes a boatload of money off of this, the taxpayers will indeed be taking a cut. Merck's effective tax rate was 15% in 2019 and 20% in 2020[0] They make boatloads of money by underpaying their taxes [1]: In 2004 Merck disclosed that it might owe the U.S. Internal Revenue Service (IRS) some $2 billion after the agency notified the company that it was disallowing deductions Merck had taken since 1993 relating to a partnership set up in 2003 as a vehicle for obtaining financing for the acquisition of Medco. In 2006 the Wall Street Journal reported that Merck had set up a subsidiary in Bermuda that, in partnership with a British bank, was given title to the patents for the company’s blockbuster cholesterol drugs Zocor and Mevacor, thus saving Merck an estimated $1.5 billion in federal taxes over ten years. Shortly thereafter, Merck disclosed that it was embroiled in four separate tax disputes in the United States and Canada with total potential liabilities of more than $5 billion. In 2007 the IRS announced that Merck had agreed to pay $2.3 billion to settle its federal tax disputes. They also make additional boatloads of money overcharging Medicare/Medicaid: In 2008 Merck agreed to pay the federal government more than $650 million to settle charges that the company routinely overbilled Medicaid and other government programs and made illegal payments to healthcare professionals to induce them to prescribe its products. In December 2011 the Massachusetts attorney general announced that Merck would pay $24 million as its part of a $47 million settlement reached with 13 drugmakers to resolve allegations that they overcharged the state’s Medicaid program. In 2012 the Louisiana attorney general announced that Merck and four other companies would pay a total of $25.2 million to resolve allegations that they overcharged the state’s Medicaid program. [0] https://www.stock-analysis-on.net/NYSE/Company/Merck-Co-Inc/Analysis/Income-Taxes https://www.stock-analysis-on.net/NYSE/Company/Merck-Co-Inc/... [1] https://www.corp-research.org/merck https://www.corp-research.org/merck
  - BobbyJo 5y ago
    That's 15%-20% we the taxpayers own then :)
    - labawi 5y ago
      By that logic, they would own a similar share of Papa John's, your corner grocery, and companies funded by VCs or banks instead of public funds. Then is the investment return fair? Do people kind-of get health and Merck gets their fleece?
      - BobbyJo 5y ago
        > Then is the investment return fair. That's a totally different conversation, and it has to start with what we mean when we say 'fair'. My definition is very likely different than yours in the context of taxes.
  - adventured 5y ago
    > Merck's effective tax rate was 15% in 2019 and 20% in 2020 20% is not unreasonable. That's similar to the European OECD nation average of 21.7%.

BobbyJo 5y ago

Don't we already own a portion of what gets created though? If Merck makes a boatload of money off of this, the taxpayers will indeed be taking a cut.

ipaddr 5y ago
No we decided that corporate taxes should be low so the company can reinvest. The shareholders benefit.
callmeal 5y ago
>If Merck makes a boatload of money off of this, the taxpayers will indeed be taking a cut. Merck's effective tax rate was 15% in 2019 and 20% in 2020[0] They make boatloads of money by underpaying their taxes [1]: In 2004 Merck disclosed that it might owe the U.S. Internal Revenue Service (IRS) some $2 billion after the agency notified the company that it was disallowing deductions Merck had taken since 1993 relating to a partnership set up in 2003 as a vehicle for obtaining financing for the acquisition of Medco. In 2006 the Wall Street Journal reported that Merck had set up a subsidiary in Bermuda that, in partnership with a British bank, was given title to the patents for the company’s blockbuster cholesterol drugs Zocor and Mevacor, thus saving Merck an estimated $1.5 billion in federal taxes over ten years. Shortly thereafter, Merck disclosed that it was embroiled in four separate tax disputes in the United States and Canada with total potential liabilities of more than $5 billion. In 2007 the IRS announced that Merck had agreed to pay $2.3 billion to settle its federal tax disputes. They also make additional boatloads of money overcharging Medicare/Medicaid: In 2008 Merck agreed to pay the federal government more than $650 million to settle charges that the company routinely overbilled Medicaid and other government programs and made illegal payments to healthcare professionals to induce them to prescribe its products. In December 2011 the Massachusetts attorney general announced that Merck would pay $24 million as its part of a $47 million settlement reached with 13 drugmakers to resolve allegations that they overcharged the state’s Medicaid program. In 2012 the Louisiana attorney general announced that Merck and four other companies would pay a total of $25.2 million to resolve allegations that they overcharged the state’s Medicaid program. [0] https://www.stock-analysis-on.net/NYSE/Company/Merck-Co-Inc/Analysis/Income-Taxes https://www.stock-analysis-on.net/NYSE/Company/Merck-Co-Inc/... [1] https://www.corp-research.org/merck https://www.corp-research.org/merck
- BobbyJo 5y ago
  That's 15%-20% we the taxpayers own then :)
  - labawi 5y ago
    By that logic, they would own a similar share of Papa John's, your corner grocery, and companies funded by VCs or banks instead of public funds. Then is the investment return fair? Do people kind-of get health and Merck gets their fleece?
    - BobbyJo 5y ago
      > Then is the investment return fair. That's a totally different conversation, and it has to start with what we mean when we say 'fair'. My definition is very likely different than yours in the context of taxes.
- adventured 5y ago
  > Merck's effective tax rate was 15% in 2019 and 20% in 2020 20% is not unreasonable. That's similar to the European OECD nation average of 21.7%.