Maybe You Don't Own Yourself...

As you may have noticed in previous posts, I enjoy watching 60 Minutes every Sunday on CBS and I was on their website today watching an old story about patenting genes. They began by covering the story of Myriad Laboratories, a company that has patented a couple of genes that have proven extremely significant in relation to cancer, specifically breast cancer. This patent like an invention, means that no other company can test, work with or even develop therapies towards these genes without Myriad’s consent. But this is very different from any invention because the gene in question here, can be found in any woman who has ever genetically inherited breast cancer. Essentially, Myriad didn’t invent anything; it just found something we were long looking for that thousands of women have already owned.

Today, almost 10,000 genes have been individually patented accounting to a grand total of about a third of all human genes. That’s right, companies across the world hold the write to examine and experiment with about a third of each and every one of our bodies. This reminded me of the case of corn planted on farms across the United States and elsewhere which contains patented genes that prevent disease. These patents have come to the point that farmers cannot replant seed and must buy it for each year and further, they must prevent cross pollination of the gene to the corn of farmers who haven’t bought it. If we were to extend this to humans the implications sound absolutely crazy. If a member of a couple bought a gene from Myriad for example that somehow prevented all cancer, would the couple have to pay to have children who would inherit the gene. It’s absurd but could be a very real problem in the future.

For now, these patents have been condemned for preventing advancement. For as long as Myriad has owned the genes it does, research within breast cancer has come to an effective stand still outside of the company which fiercely protects its patent. However, if such protections didn’t exist there exists the very real possibility that the economic incentive to investigate grave disease wouldn’t exist. So the question arises if our system of rewarding discovery is preventing the potential for future discovery and many would say it does. So how do we solve this problem?

Capital City: Zug, Population: 15

                60 Minutes recently reported on over $1.2 trillion that has weaseled its way out of US coffers into the hands of foreign governments.   What is this treasure trove; it’s investment, capital and primarily corporate taxes on billions in revenue from US companies whose assets have been shifted offshore to avoid our aged, outrageously high tax rates.

                To report, they traveled to a tiny unheard of town in Switzerland called Zug specifically to its economic development office. Zug in past years has worked with companies to offer a tax rate lower than Switzerland’s which itself is far less than the US. In effect, this tax haven within a tax haven allows for a mere 15-16% corporate tax rate. The result is that many companies move their corporate headquarters to Zug… well sorta. To explain let’s look at Transocean, the company involved in BP’s recent oil spill catastrophe, which moved and now claims to be internationally head quartered in Zug. Sounds like a pretty big move right? Transocean maintains about 1300 employees in Houston and less than 15 in Zug none of whom is even the CEO. In fact international headquarters comprise of a relatively small office in a rented business complex which somehow transfers the company’s citizenship to Switzerland. And this story isn’t all that uncommon.

                The obvious solution would be to impose tighter restrictions which congress did in 2004 only to see these companies relocate altogether or lawyers find new loopholes to avoid full payment. Sleazy as this may seem, companies have a very valid point in searching for low tax alternatives. Un-American as their actions may seem, these actions funnel money into the hands of shareholders many of whom are Americans.  When taxes result in about 60 to 90% lower tax rates, companies simply cannot refuse.

                However, this occurs at the cost of thousands of American jobs. In the example of Ireland, nearly 60 US companies employ over 100,000 Irish workers on a 12.5% tax rate. As they put it on 60 minutes, our treasury effectually subsidizes investment in Ireland. And it’s really not that hard in today’s world. With everything computerized and digital, moving a company is as simple as moving a folder or code or data center to another country.

                The solution quite simply is to reduce tax rates but that could mean trillions in lost revenue. This is quite obviously impractical and until a better solution can be found, the US will continue to lose business to foreign states.