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Opioid Crisis Corporations Seek Escape Hatch – Through 2020 GOP Tax Giveaway

February 12, 2021

FOR IMMEDIATE RELEASE

February 12, 2021

Contact:

Kate Stotesbery (Doggett), 202-494-4620 

Rich Davidson (Whitehouse), 202-228-6291

 

Opioid Crisis Corporations Seek Escape Hatch – Through 2020 GOP Tax Giveaway

Tax break tucked into pandemic relief bill sweetens massive tax windfall for Cardinal Health

Washington, DC – Today, Senator Sheldon Whitehouse (D-RI) and Representative Lloyd Doggett (D-TX) released a joint statement regarding the revelations from the Washington Post today that American taxpayers will partially subsidize settlement payments in major opioid litigation. A massive tax giveaway for so-called “net operating losses” that Republicans slipped into must-pass pandemic-relief legislation last year will sweeten the deal. Rep. Doggett and Sen. Whitehouse have staunchly advocated its repeal. Their statement:

“Many of the same Americans who were victimized by opioid hucksters are now being asked, as taxpayers, to finance almost $1 billion of the belated settlement for Cardinal Health through a special interest tax provision buried in pandemic relief legislation,” stated Congressman Doggett and Senator Whitehouse. “This is the same provision which we have been opposing since it was discovered last April. Our repeal legislation would deny them at least half of this unjust windfall, which has absolutely nothing to do with the pandemic. We still have an opportunity to stop this travesty. The American Rescue Plan should rescue the needy, not the wrongdoers.”

On February 2, the lawmakers led 120 of their colleagues in calling for their repeal, writing in a letter to leadership that its $250 billion cost should flow to Americans fighting to make ends meet in the midst of the COVID-19 crisis, not rich real estate investors and hedge fund managers. To unwind the tax giveaway and redistribute its benefits to working Americans, Rep. Doggett and Sen. Whitehouse also reintroduced the CARES Windfall for the Wealthiest Repeal Act, which passed the House of Representatives twice last year as part of the Heroes Act and Heroes 2.0 but was blocked in the Republican-controlled Senate.

These tax breaks for so-called “net operating losses” in the Coronavirus Aid, Relief, and Economic Security (CARES) Act were estimated by the nonpartisan Joint Committee on Taxation (JCT) to cost more than the assistance to hospitals included in that legislation, and to overwhelmingly benefit a narrow set of wealthy taxpayers.

To see the details of the settlement windfall, note this excerpt from a Cardinal Health financial statement relating to the tax benefits stemming from the opioid settlements:

“Our provision for income taxes during the three months ended December 31, 2020 included a $420 million benefit from the net operating loss carryback primarily to reflect the difference between the federal statutory income tax rate during the fiscal years from 2015 to 2018 (35 percent for fiscal 2015, 2016, and 2017 and 28 percent for fiscal 2018) and the current federal statutory income tax rate of 21 percent. We intend to file for a federal income tax refund of $974 million as a result of the net operating loss carryback under the CARES Act, which we expect to receive within 12 months, and accordingly have recorded a current asset on our condensed consolidated balance sheet at December 31, 2020. We also increased our non-current deferred tax liability by approximately $700 million during the six months ended December 31, 2020 related to this matter.”

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