Corporations will sometimes go to great lengths to avoid paying taxes. Is it worth it? Reporter Jesse Drucker explores this idea in a Bloomberg article following the money from the sale of a bottle of anti-depressant Lexapro.
The journey beings with a $99 bottle of Lexapro sold to someone in Phoenix, Ariz. Drucker found that $85 of the purchase ends up with New York City-based Forrest Laboratories, which makes the drug. But the majority of the profits then travel to Ireland, where Forrest makes the pills at a manufacturing facility that enjoys low taxes. The company then makes licensing payments to a subsidiary of itself in Bermuda, which has no corporate income tax, shifting a majority of the income out of Ireland into Bermuda.
Forrest earned nearly a billion dollars in pre-tax income in 2009, and spends in the low millions to save about $200 million on taxes.
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