The back and forth regarding the new tax reform bill has been endless since even before it became law. Obviously, there are pros and cons and both sides hold tight to their arguments. Additionally, some taxpayers and industries oppose the reform, while others are embracing it.
Two such industries are biotech and pharma. However, it might not be for the reason you think. While the corporate tax rate has been lowered significantly, the fact is, these industries won’t actually see a big gain from the new rate, because they have been keeping so much of their cash overseas. That means they’ve already been saving big-time on corporate taxes.
However, biotech and pharma companies will be able to use that overseas cash much easier under the new law. That’s because the new law encourages companies to bring cash being stored overseas back to U.S. soil. Corporations have been slow to do that because of the high corporate tax rate previously in place.
Now, the new law makes it a lot cheaper for companies to bring money back to the U.S. Pharma companies and biotech firms have some of the largest amounts of cash in foreign lands, so by lowering the corporate tax rate stateside, these companies are likely to start bringing more of that cash back home.
By bringing it back to the U.S. these companies would then have access to a lot more assets, which they could use to fund more transactions.