I do my own tax prep and filing online–no charge, and have done so for years. TurboTax tried to get me to pay one year, but the IRS listed them as a “free to file” tax prep and filing company at the time–so I did it at no charge. There is no present OR known future value to me for others to prepare or file my taxes. Which makes your offer substantively different than R&D by pretty much any company.
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I’m certainly no tax expert, but to be dollar-for-dollar, wouldn’t that need to be a tax credit, as opposed to a deduction?
Otis
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OK. Clearly the poking fun approach didn’t work. So let’s back up.
This is flat out wrong - which is what I was trying to point out with my silly offers.
You do NOT recoup tax deductions dollar for dollar by deducting them. A tax deduction merely reduces the expense. It does not eliminate it. The deduction reduces taxable income, which will save you taxes at your marginal tax rate.
So if a company spends $5 billion on R & D and is in the standard 21% tax bracket for corporations, the R&D expense will save them just over $1 billion in taxes. That still leaves them $4 billion out of pocket, which - as JLC pointed out - they plan to recoup by coming up with some new product or new process for an existing product.
–Peter
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Well, I was having fun with the back and forth! So you got at least one smile.
JimA
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Educate, enrich, amuse. I hit a couple of those, apparently.
–Peter <== tried to enrich myself, but that one failed. 
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Key point: The company reduced their income–dollar for dollar–for every dollar spent on R&D. So they did get “all” their R&D expenditures back. The fact it is a reduction of gross income before taxes doesn’t matter.
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Expenses don’t reduce income.
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Ok. So I’m back at my tax consulting offer. I know you don’t want that particular service, so let’s change it to whatever it is that you do want. And let’s change the amount to something more realistic. What is the impact on your personal finances if you pay a grand for a tax deductible expense?
Just like the R&D expense, your claim is that you get your money back by deducting it from your income.
So how does that work?
—Peter
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Gross revenue no; net income yes.
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Very nicely–when you have taxable income. If you do not have a taxable income, or if your existing tax deductions reduce your income to a non-taxable level, further tax deductions have no value.
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Except if you can carry them into the future, or apply them into the past.
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I’m sorry, but that doesn’t help me understand what you are claiming. Can you explain in more detail?
And to be clear, I’m dropping the humor at this point. I am really trying to understand how you believe that getting a tax deduction recoups an expense.
—Peter
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Often because their patent laws are much less stringent, and litigiousness is not as extreme as in the US
In many developing markets, the potential volumes are so large that unit prices can be much lower for the same absolute profit potential.
In both developed (Germany, France, Singapore, UK) and developing markets, governments are often the largest purchasers, so they get to call the shots on intensely competitive tender-based pricing
As for the US, as long as PBMs continue to have a stranglehold on pricing and the government doesn’t demand competitive tenders for its drug purchases, drug pricing will continue to follow the Pentagon’s gold plated lead
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Start with the known fact: If R&D expenses were NOT tax deductible, then the company has to pay both the R&D expense AND the taxes owed that year.
Because the R&D tax deductible is from gross income before taxes, the tax on profits for that year’s income is deferred to the next year. As long as the R&D expenses continue, the deferred tax amount is a “tax free” loan from the US taxpayers.
Eventually, the R&D expenses incurred (on each individual project) will end. If the result is a non-sellable product, it gets written off–again, against taxable income. If the result is a profitable product, then the company realizes a significant profit as a result of the loan(s) ( = deferred taxes) from US taxpayers.
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But if the tax rate is 20%, that means 80% of those R&D costs are lost. Since 90% of drug trials fail that’s a pretty big risk.
Basic pharmacological research is relatively cheap. Developing new drug technologies can be mostly done at the level of university labs with federal grants. What is expensive is demonstrating that the drug is safe and effective over the long term in a highly diverse mass population. This means there is a long and expensive lead time between the first promising result in the lab and selling the finished product.
Now the Novo Nordisk situation is an entirely different animal. Ozempic was demonstrated to be safe (enough) for use by diabetics long ago. There is no developmental cost reason why it should be priced so high now that one of its side effects turns out to be marketable, other than that is what the market will bear.
And why exactly is that?
The economics of obesity is interesting. People could save a lot of money by life style changes that reduce obesity. But that is apparently too hard. We could impose taxes that would in some way make highly processed foods and sugary drinks significantly more expensive. But that is unpalatable. Instead, we want to impose legislation to make an appetite suppression drug cheaper.
This way the masses can be permanently dependent on a drug to keep their weight down, creating enormous profits for the Novo Nordisks of the world.
The problem isn’t Big Pharma or the JCs. We are a lot more empowered than we think. It is just easier to blame someone else.
“We have met the enemy and he is us”.
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So, taxes on corporations should be increased, to increase the effective government subsidy of R&D?
Sorry, couldn’t pass that up. 
Steve
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