Top Health Bosses Using Their Firms to Try to Extend Cuts, Save Millions More

A single expiring Trump tax-law cut may have saved the 20 highest-paid healthcare CEOs a total of up to $14 million on their personal taxes over the first six years of the law, a new Americans for Tax Fairness (ATF) analysis shows. These kinds of personal savings offer a ready explanation for why America’s top healthcare bosses are using their companies’ resources as part of the business lobby’s effort to extend that break, along with others due to run out at year’s end. 

“The executives who run our nation’s biggest healthcare companies should put patient care first, but it’s clear their higher priority is saving themselves millions of dollars in personal income taxes,” said David Kass, ATF’s executive director. “Why else would they be part of the lobby pushing for an extension of the expiring Trump tax cuts that overwhelmingly benefit rich people like them, while hemorrhaging so much public revenue that Medicaid, Medicare, Affordable Care Act subsidies, and other vital health services could wind up in critical condition?”

Source: ATF analysis of corporate proxy data

Most of the 2017 Trump-GOP tax law is set to expire on December 31. Permanently extending those provisions instead–as Trump, his fellow Republicans and big businesses are pushing to do–would cost $5.5 trillion while mostly cutting taxes for the wealthy and big corporations. The highest-income 1% (all with annual incomes over $914,000) would get an average tax cut of over $80,000 in the first year alone of such an extension. Middle-income families would get less than $3 a day. 

One of the cuts is a reduction in “ordinary” tax rates. The biggest source of ordinary income for most people is their wages, but the term also covers other sources like interest and rent. For these extravagantly compensated healthcare CEOs, who over those six years were collectively paid $500 million in ordinary income, the most important cut was of the top rate from 39.6% to 37%–what’s paid on ordinary income over roughly $750,000 per couple this year. (Many of these top executives also probably received stock-based compensation, which depending on its form could have been taxed under a separate, lower rate system.)

Representatives of four of the healthcare companies in the study–Abbot Laboratories, Bristol-Myers-Squibb, Elevance Health, and Pfizer–serve on the board of directors of the U.S. Chamber of Commerce, the biggest tax lobbyist last year. 

Connected to the current legislative battle over extending the Trump tax cuts is an effort to repeal tighter restrictions on how corporations, including healthcare companies, can deduct certain expenses. Deductions lower taxable income and thus tax bills. If just one of those stricter rules–on the deduction of research costs–had already been rolled back, eight big pharmaceutical companies could have collectively saved up to $15 billion in a recent year, according to a recent report from ATF and the advocacy group Lower Drug Prices Now.