Public Health and Corporate Avoidance of U.S. Federal Income Tax

Published date01 September 2018
Date01 September 2018
Public Health and Corporate Avoidance of U.S. Federal
Income Tax
William H. Wiist
The amount of U.S. federal revenue affects the government’s ability to provide public health services,
programs, infrastructure, and research to adequately protect the public’s health. Public health
funding shortages are chronic. Corporate income tax avoidance is one source of unrealized federal
tax revenue that, if collected and allocated to public health, could help offset those shortages. Major
corporate methods of tax avoidance, their effect on federal revenue, and recommended policy changes
are described. Corporate tax avoidance and government revenue shortages are framed as social
determinants of health, and research questions and data sources for public health researchers for
examining the issue are suggested. Although there is no guarantee that any additional corporate
income tax revenue would be directed to public health, the subject warrants the attention of public
health researchers and policy advocates. The United States serves as a case study for public
professionals in other countries to conduct similar analyses.
KEY WORDS: corporations, federal income tax, social determinants of health
The U.S. public health infrastructure lacks the resources necessary to carry out
its roles effectively and to ensure basic health protections (Institute of Medicine
[IOM], 2012). Per capita public health expenditures fell 9.3 percent between 2008 and
2014. Public health’s share of total health expenditures rose from 1.36 percent in 1960
to 3.18 percent in 2002, then declined 17 percent by 2014 (Himmelstein &
Woolhandler, 2016). Funding shortages prevent public health agencies from
implementing and evaluating essential public health services (IOM, 2012), and result
in an inadequate workforce and weakened data and information systems (Baker
et al., 2005). Between 2012 and 2016 funding shortages and allocation mechanisms
resulted in a 3 percent decrease in funding for state health departments and a
decline in their provision of health and environmental services (Krisberg, 2018).
In 2013, four U.S. government agencies (the Health Resources and Services
Administration; Centers for Disease Control and Prevention; the Substance
Abuse and Mental Health Services Administration; and the Food and Drug
World Medical & Health Policy, Vol. 10, No. 3, 2018
doi: 10.1002/wmh3.274
#2018 Policy Studies Organization
Administration) spent $77.9 billion on public health. Def‌ined as spending on
epidemiological surveillance, disease prevention programs, public health labora-
tories, biosecurity, public health preparedness, and occupational health and
safety, public health expenditures accounted for 23.8 percent of total government
public health spending, but only 2.8 percent of total government spending on
health (personal health care and public health combined) (Dieleman et al., 2016).
Shaw-Taylor (2016) def‌ined public health as activities and spending by govern-
ments to organize and deliver health services and to prevent or control health
problems, including government administration. That def‌inition of spending was
net the expense of health insurance for implementing government health-care
programs; the difference between premiums earned by insurers and the claims or
losses incurred; and excluded spending on public works, environmental
functions, and emergency planning. Using that def‌inition, Shaw-Taylor (2016)
found that, on average, 29 percent of all government health expenditures go to
public health. Taking into account health spending that includes personal health
care (all medical goods and services for treating or preventing specif‌ic diseases or
conditions in a specif‌ic person), spending on public health (activities and
spending by the government to organize and deliver health services and to
prevent or control health problems to the benef‌it entire communities) from 2000
to 2012 was 3 percent of overall government spending on health (Shaw-Taylor,
Reports show that larger public social expenditures (e.g., education, income
maintenance) by government are associated with better population health out-
comes (Rubin et al., 2016). Increases in local health department expenditures
result in declines in state-level infectious disease morbidity and years of potential
life lost (Singh, 2014). Each $100 increase in taxation of income, prof‌its, and
capital gains (tax on investments) in low- and middle-income countries correlates
with a $16.70 increase in government health expenditure, particularly to support
universal health coverage (Reeves et al., 2015).
Federal revenue is also needed to pay for other government programs that
have public health implications, such as education and transportation, customer
service at federal agencies, infrastructure needs, and developing new initiatives
(Van de Water, 2017). Federal funding shortages also reduce the resources for the
Internal Revenue Services’ audits of corporations and decrease the assessments of
corporate taxes (Kubick, Lockhart, Mills, & Robinson, 2017; Slemrod, 2004).
Tax Avoidance
Tax Avoidance as a Social Determinant of Health
Corporate tax avoidance fulf‌ills the def‌inition of a social determinant of health
because it contributes to the unequal distribution of income across the population
and the government’s provision of goods and services to address health inequities,
while it adds to corporate political (e.g., election campaign contributions, lobbying)
and economic power (Commission on Social Determinants of Health, 2008). Tax
Wiist: Tax Avoidance and Public Health 273

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