Competitive US Tax Policy Puts Change and National Security First

Arguing that Congress should raise taxes on US companies’ foreign earnings—and implying that international provisions in the 2017 Tax Cuts and Jobs Act are merely “loopholes” putting “America last"—is just plain wrong. As director of the Alliance for Biopharmaceutical Competitiveness and Innovation, I have a different perspective.

Far from undermining America, the TCJA’s international tax reforms created a fairer, more level playing field for US firms globally and helped spark a renaissance of investment and innovation at home. As the US House Ways and Means Committee, the tax-writing committee, recently demonstrated, we should recognize the success of these policies, and the risk of reversing course, before rushing to unwind them.

The TCJA leveled the playing field for US companies and spurred a surge of domestic investment in manufacturing as well as research and development by cutting the corporate tax rate and modernizing international rules, with the biopharmaceutical sector leading the way.

Since 2017, biopharma companies have poured over $624.2 billion into R&D and expanded US manufacturing sites by 55%. These investments represent new labs, factories, and jobs across the country, supporting about 5.8 million US workers.

Since 2017, nine of the US’ top pharma companies have made or committed investments of more than $161.4 billion total in the US, expanding their footprint right here at home. Companies have plowed earnings into research at record levels—by 2020, annual R&D spending by US biopharma reached $91.8 billion, or 16.6% of revenue.

This boom is no coincidence. Before 2017, the US’s uncompetitive tax system (a 35% corporate rate with outdated international provisions) disadvantaged its companies compared to their foreign counterparts. From 2004 to 2014,47 US companies moved their headquarters overseas in tax-driven “inversions,” and many others were acquired by foreign competitors.

By lowering the corporate tax rate and establishing a modern international framework, the TCJA made it far less attractive to shift profits or headquarters abroad. Since then, that exodus has stopped—no major US company has relocated overseas.

Instead, companies doubled down on growth at home. From 2021 through 2024, more than 80% of large biopharma and medical device acquisitions were made by US companies. Most new therapies stayed in US hands rather than being sold off to foreign buyers.

We can’t afford a U-turn that drives innovation overseas. Biopharma breakthroughs aren’t just about corporate profits. They emerge from an ecosystem of research, manufacturing and talent development that sustains millions of US jobs and underpins the country’s strategic edge in a world of growing geopolitical competition.

As the National Security Commission on Emerging Biotechnology recently warned, the US’ growing dependence on China for numerous critical supply chain elements is a national security vulnerability, and strong US biotechnology leadership can be the solution.

The ability to develop and produce critical medicines, vaccines and biologics at home isn’t only economically important; it’s also essential to our preparedness, resilience and global leadership.

A stable, pro-innovation tax climate advances that mission by giving companies the confidence to invest in high-risk, long-term projects—whether developing the next vaccine or building a gene therapy production line—and to train the next generation of scientists and skilled workers. That keeps the US at the forefront of medical progress, ensures patients benefit first from treatments developed here and reinforces our national security.

Policymakers in Congress should continue to disregard false narratives that US multinational companies pay no US taxes. Such claims wrongly equate financial statement reporting with actual cash tax and rely on misleading interpretations of financial reports.

Accounting adjustments, such as litigation reserves or one-time charges, create fluctuations in book income while companies still pay substantial domestic taxes. This flawed interpretation ignores the billions of dollars pharma companies pay annually to the US government.

From 2021 to 2024 alone, nine of the largest US pharma firms paid around$70.6 billion in US taxes, nearly double what they paid to foreign governments.

The current framework simply encourages companies to invest closer to home. Imposing a heavier tax burden, especially one out of sync with global norms, would undercut US competitiveness and risk sending investment and jobs offshore, reducing R&D and opening the door once more to foreign takeovers of US companies.

What should Congress do now? Innovation requires investment, and investment requires certainty.

As lawmakers consider the expiring TCJA provisions, they should preserve the international tax framework that has served the US well, as the current legislation being considered by the House of Representatives does. That means keeping global intangible low-taxed income at a competitive rate and retaining incentives such as foreign-derived intangible income that reward companies for locating high-value activities in the US.

Continuing the TCJA’s smart, competitive tax policies will preserve US competition for investment.

Ensuring companies pay tax on their profits and ensuring the US remains the best place to invest aren’t mutually exclusive. The TCJA created the right balance—imposing smart guardrails, striking a reasonable compromise, and yielding dividends in the form of more jobs, more R&D investments, and yes, more domestic tax revenue from a growing economy.

Congress has the opportunity and responsibility to keep the US a top destination for business and innovation. Rejecting the misguided calls to raise the GILTI tax recognizes that a competitive tax code is a strategic asset for our country which may otherwise drive innovation into the hands of China. Our economic future depends on it.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

An immaterial amount of this content was drafted by generative artificial intelligence.

Author Information

Greg Nickerson founded the Washington Tax & Public Policy Group and is director of the Alliance for Biopharmaceutical Competitiveness and Innovation.

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