The US corporate tax rate is now 35%—the highest in the world—and analysts point to this as having hurt biopharmaceutical companies. Moreover, even though the US became the first country to instate tax credits for research and development (R&D) in 1981, its incentives now fall behind those of 27 other countries. According to one estimate by the consulting firm Challenger, Gray & Christmas, based in Chicago, pharmaceutical companies have lost a gross estimate of 300,000 US jobs since 2000. An overall decline in jobs within the sector has been partly caused by a “heavy wave of mergers and acquisitions,” says John Challenger, chief executive of the firm.
During his time as governor of Massachusetts, Romney was known to court biopharmaceutical companies by offering them special tax incentives to encourage economic growth in his state. In his bid for the presidency, he has pledged to cut corporate tax rates to 25%, which some hope will lower costs for companies and thereby incite growth. But it might not be so simple when it comes to biopharma, according to Erik Gordon, a health care and pharmaceutical industry economist at the University of Michigan–Ann Arbor. Biopharma companies are often willing to accept higher taxes if it means they have access to the largest number of highly trained people, and although the US has a significant edge in terms of the supply of individuals equipped to do research, other countries are training individuals in the area of product development faster than the US, Gordon says. If companies decide to leave in pursuit of these highly skilled people, Romney's lower US corporate taxes won't dissuade them, he warns. “We want to try to create an environment where drug companies can find the skilled workers that they need,” Challenger says.
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