CVS Takes Millions in Tax Breaks, Subsidies
CVS Caremark Corp. made $3.21 billion in profit in 2008 - up almost 22% from the year before. And while much of that was made selling toothpaste and aspirin in its stores, CVS had an additional source of gains last year: tax dollars.CVS has taken massive tax breaks and subsidies from the states and cities where it operates its stores, padding the revenue of its multi-billion-dollar pharmacy empire. In May of this year, a report from the Rhode Island Division of Taxation revealed CVS pays less than half the normal corporate income tax rate in Rhode Island, where CVS has its headquarters. The reduced rate is made possible by a state tax loophole and has allowed CVS to avoid paying nearly $14 million in state taxes.
On top of it corporate tax strategy, Providence Business News reports that CVS also tops the list of companies benefiting from corporate tax credits in Rhode Island. According to the report, CVS received $12.8 million in tax credits in the state - 40% of the total credits allocated that year in Rhode Island.
Meanwhile, in Washington, D.C., CVS is set to receive $1.9 million in tax increment financing - a city-paid subsidy - to build a single pharmacy. In a city with thriving retail pharmacy competition and a whopping 52 CVS stores , are such tax incentives really necessary?
Considering the numerous problems at CVS stores - continuing problems with expired products, pricing violations in multiple states, unequal access in low-income communities and communities of color, and questions of patient privacy violations - it seems that these credits, breaks and subsidies could be better spent.
Posted by Alex G. on September 21, 2009, 2:09 PM
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