Corporate Tax Dodgers . . . Citigroup
This is the third 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
It isn’t enough that Citigroup was among the Wall Street banks whose fraudulent and predatory “exotic financial instruments” caused the collapse of our economy. It isn’t enough that they were bailed out with hundreds of billions of public tax dollars. It isn’t enough that Citigroup’s tax dodging is driving America into debt. It isn’t enough the Citigroup’s multimillionaire CEO, Michael Corbat, is doing everything in his power to undermine Social Security and healthcare for the elderly.
From the Wall Street Journal: “The Justice Department is investigating whether a Citigroup Inc. unit in California failed to alert the government to suspicious banking transactions along the U.S.-Mexico border that in some cases involved suspected drug-cartel members, said people familiar with the probe.
U.S. prosecutors want to know why Citigroup didn’t submit so-called suspicious-activity reports flagging the questionable transactions, one of these people said.
The focus of the federal probe highlights the breadth of problems faced by Citigroup following the Federal Reserve’s recent rejection of its capital plan and revelations of potential fraud in a separate Mexican unit called Grupo Financiero Banamex.”
From Global Research: “Mexico is in the grip of a murderous drug war that has killed over 150,000 people since 2006. It is one of the most violent countries on earth. This drug war is a product of the transnational drug trade which is worth up to $400 billion a year and accounts for about 8% of all international trade.
The American government maintains that there is no alternative but to vigorously prosecute their zero tolerance policy of arresting drug users and their dealers. This has led to the incarceration of over 500,000 Americans. Meanwhile the flood of illegal drugs into America continues unabated.
One thing the American government has not done is to prosecute the largest banks in the world for supporting the drug cartels by washing billions of dollars of their blood stained money. As Narco sphere journalist Bill Conroy has observed banks are ”where the money is” in the global drug war.
HSBC, Western Union, Bank of America, JP Morgan Chase&Co, Citigroup, Wachovia amongst many others have allegedly failed to comply with American anti-money laundering (AML) laws.”
There are no morals or shame, no sense of basic human decency. Money must be made no matter what the cost.
The following summary of Bank of America tax avoidance is from the report by Americans for Tax Fairness and the Institute for policy studies:
Citigroup’s an ATM: Avoiding Taxes Machine
The global banking giant makes aggressive use of the world’s tax-haven network. This allowed it to hold $42.6 billion in offshore untaxed profits in 2012, according to its annual SEC report. Citigroup tells shareholders in this report that it would owe $11.5 billion in U.S. income tax if it brought these funds home. This means the company paid just 8% in taxes to foreign governments on these funds. With such a low tax rate, it is clear that much of these funds are being held in tax-haven nations, which impose little or no taxes on corporate income.
As recently as 2008 the company made a full disclosure of its subsidiaries, producing a list that ran 65 pages in its annual SEC filings. When the U.S. Government Accountability Office last counted up the number of subsidiaries in foreign tax havens of America’s 100 largest businesses in 2008, Citigroup ranked first, with 427 of its 1,240 subsidiaries in tax-haven nations.
The following year Citigroup made understanding its offshore activities more opaque, by limiting its report of subsidiaries to those it deemed “significant”, omitting information about thousands of subsidiaries and slashing the report to just five pages. Today the report is slightly more than two pages in length and lists just 63 foreign subsidiaries, a third of which are in taxhaven nations.
U.S. taxpayers subsidize Citigroup’s malfeasance
Citigroup takes advantage of loopholes in the tax code that allow corporations to deduct the cost of corporate malfeasance from their taxes. Last year Citigroup announced a $2.2 billion settlement with state attorneys general to cover damages caused by the company’s lending abuses leading up to the financial crisis. It can be taken as a deduction on the firm’s taxes, and while Citigroup has yet to announce how much it will save in taxes, it will almost certainly run to the hundreds of millions of dollars. This loophole effectively shifts part of the cost of the bank’s abusive lending practices to other taxpayers.
Last year Citigroup also settled a mortgage fraud case brought by the U.S. Department of Justice. The bank agreed to pay $158 million, but after its tax write-offs, the settlement wound up costing just $125 million. Other taxpayers picked up the tab for $33 million of damages Citigroup caused when it misrepresented the quality of its loans in order to gain federal insurance.
Citigroup uses its lobbying clout to win tax breaks
Last year, Citigroup spent $6 million lobbying Congress, and taxes were the company’s second highest priority issue, according to OpenSecrets.org. The bill that Citigroup lobbied most heavily on was to renew the Active Financing Exemption to the tax code. As the name suggests, the provision would create an exemption to normal tax rules that do not allow corporations to shift their profits offshore for the purpose of avoiding taxes. Citigroup won renewal of this lucrative loophole as a part of the New Year’s fiscal-cliff tax deal. The active financing exemption will cost taxpayers more than $11 billion over two years.
More than 85% of Citigroup’s lobbyists (53 of 62) are former Members of Congress or their staffs, a group that OpenSecrets.org labels part of Washington’s powerful “revolving door.”
Citigroup’s CEO is a leader in campaigns pressing for corporate tax cuts and cuts to Social Security
CEO Michael Corbat is on the Steering Committee of Fix the Debt, a well-funded CEO-led effort to slash federal spending, cut Social Security and Medicare, and shift to a corporate territorial tax system that would make offshore profits permanently U.S. tax-free, giving a huge windfall to Citigroup and others that exploit offshore tax loopholes to shift profits and jobs overseas. Corbat is also a member of the Business Roundtable, a lobbying club of more than 200 CEOs who recently called for the Social Security retirement age to be raised from 67 to 70, a benefit cut of about 20%. The Business Roundtable is also pressing for more corporate tax cuts.
Corbat has been CEO of Citigroup for less than a year and as a result has yet to amass the enormous retirement assets common among CEOs. But even so, Corbat’s $7.4 million in his Citigroup retirement account is enough to deliver him a monthly retirement check of $42,090 once he turns 65. This is 33 times the $1,265 monthly check received by the average Social Security retiree, whose benefits Corbat and his CEO pals seek to cut.