Drugmakers' low U.S. taxes belie their high sales

Tax day is here. While Americans are scrambling to file last minute returns, things are somewhat more complicated for corporations.

Corporations are supposed to pay a nominal tax rate of 21%. But in recent years, the biggest pharmaceutical companies had an average effective tax rate of less than 12%, according to an analysis by the Senate Finance Committee.

Why is that happening? Economist Brad Setser, of the Council on Foreign Relations, spent some time trying to understand it. He pointed to Pfizer as an example. "In a typical year, Pfizer reports losing money in the United States and making money abroad," he says. "And as a result, in a typical year, Pfizer pays a lot more in tax outside the United States than it pays inside the United States."