Corporate Tax Dodgers . . . Bank of America
This is the second in a series on corporate tax dodgers that will be presented over the next several weeks. These summaries are taken directly from the report on Corporate Tax Dodgers by Americans for Tax Fairness and the Institute for Policy Studies
Bank of America is one of the “too big to fail” “to big to jail” Wall Street banks whose unethical practices led to the economic collapse in 2007-2008. Bank of America received billions of public tax dollars to keep it afloat during the recession. Because of the bank’s abusive lending practices, hundreds of thousands of American families lost their homes.
Like many of the corporations that pay little or no taxes, Bank of America is responsible for causing billions of dollars of government debt. Yet Bank of America’s CEO, Brian Moynihan, is a member of the CEO Council of Fix the Debt, a lobbying effort of more than 100 CEOs aimed at cutting earned benefit programs like Social Security in order to pay for corporate tax cuts. As a member of the Business Roundtable, Moynihan is seeking even greater corporate tax cuts along with a hike in the Social Security retirement age from 67 to 70 – a benefit cut of about 20%. Moynihan was paid $12.1 million in 2012.
The following summary of Bank of America tax avoidance is from the report by Americans for Tax Fairness and the Institute for policy studies:
Bank of America avoids U.S. taxes by stashing profits in offshore tax havens
Bank of America reported $17.2 billion in accumulated offshore profits in 2012, according to its Security and Exchange Commission (SEC) filing. The company reported that it would owe $4.3 billion in U.S. taxes if these funds were brought back to this country. This indicates that Bank of America has paid just 10% in tax to foreign governments on these offshore earnings, which means most of those offshore profits are U.S. profits shifted to tax havens.
Of Bank of America’s 594 foreign subsidiaries, 313 are registered in offshore tax havens, including 175 in the Cayman Islands. Tax havens often impose little or no income taxes, and as long as the profits are held offshore Bank of America avoids U.S. taxes. There are 161 corporations registered in the Cayman Islands per hundred citizens, one of the highest ratios of any country on earth. Only the United Kingdom has more investment by U.S. corporations than the Cayman Islands.
Abusive lending practices cut the tax bill
Late last year Bank of America reached a settlement with Fannie Mae over abusive lending practices that led to the loss of hundreds of thousands of families’ homes. The settlement reduced Bank of America’s 2012 earnings by $2.7 billion, but since settlements pertaining to corporate malfeasance are tax-deductible, Bank of America saved hundreds of millions of dollars on its 2012 tax bill. Many of the same families harmed by Bank of America’s lending practices are now forced to pick up a share of the taxes the bank avoided.
Bailed out twice, once directly, a second time with tax loopholes for losses
Bank of America received $45 billion in TARP loans in 2008 to keep the giant bank in business. It also received tens of billions of dollars in virtually zero-interest loans daily from a secret lending program operated by the Federal Reserve between 2007 and 2010, loans that the bank used to generate $1.5 billion in income at taxpayers’ expense, according to Bloomberg.
Bank of America was bailed out a second time when it was allowed to keep the losses generated by its financial near-collapse and use them to reduce its future taxes, effectively forcing taxpayers to subsidize its business failures. Over the last three years, Bank of America has written off more than $69 billion in bad loans. Because of these losses the bank paid no net federal income tax between 2010 and 2012, according to its SEC filings, and instead claimed $941 million in refunds from the IRS.
Bank of America’s job destruction has hurt the economy
Bank of America has been slashing jobs for the last decade. More than 20,000 of these job cuts have occurred in the last two years. The majority of Bank of America’s employees are in the United States, but it does not report data on the number of employees who work here.
Bank of America wants to “Fix the Debt” by cutting Social Security
Bank of America’s CEO Brian Moynihan is a member of the CEO Council of Fix the Debt, a lobbying effort of more than 100 CEOs aimed at cutting earned benefit programs like Social Security in order to pay for corporate tax cuts. A top priority is to create a “territorial tax system” that would allow corporate profits stashed offshore to be forever U.S. taxfree, thereby encouraging the shipment of profits and jobs overseas. Moynihan is also a member of the Business Roundtable, which wants Congress to cut corporate taxes and to raise the Social Security retirement age from 67 to 70 – a benefit cut of about 20%.
Moynihan was paid $12.1 million in 2012, a 73% pay raise over the previous year. And he doesn’t need to rely on Social Security since his Bank of America corporate retirement account was worth $8.9 million at the end of 2011.