Tag Archives: Bank of America

Why is Bank of America Not Paying Any Taxes on $4.4 Billion in Income?

( – promoted by Brian Leubitz)

Around this time every year, Californians scramble to finish doing their taxes and pay what they owe to the government.

But not everyone is paying their fair share. Forbes Magazine recently analyzed the tax returns of the top 25 U.S. companies and found out that they’re not paying much in taxes. In fact, corporations such as Bank of America, General Electric and Citigroup will not be paying ANY taxes this year — they’re actually getting money back from the government. Forbes explains:

How did Bank of America not pay any taxes on $4.4 billion in income? Because of deductions like $860 million in tax-exempt income, $670 million in low-income housing credits and a $600 million loss on shares of foreign subsidiaries. With a provision for credit losses of $49 billion, Bank of America probably won’t be paying taxes for a long time.

After taxpayers bailed out Bank of America to the tune of $45 billion and helped boost their income to $4.4 billion, Bank of America is using every possible tax loophole to get out of paying their fair share.

Editor’s Note: Please see the flip…

Bank of America isn’t alone in using tax loopholes, shelters and other shell games to get out of paying taxes. A study by the U.S. Government Accountability Office found that two out of every three U.S. corporations paid no federal income taxes from 1998 through 2005.

In California, state legislators and Governor Schwarzenegger have made it even easier for corporations to use state resources, yet not pay a penny for them. Every year, California gives away $14.5 billion in tax breaks to corporations. Since 2007, Governor Schwarzenegger has signed into law numerous corporate tax breaks, exemptions and credits that will cost the state an estimated $3 billion a year. Three tax breaks, passed as part of the 2008 and 2009 budget deal, will benefit a very small number of extremely wealthy corporations. According to Jean Ross at the California Budget Project :

Nine corporations will receive tax cuts averaging $33.1 million each in 2013-14 due to the adoption of elective single sales factor apportionment. Eighty percent of the benefits of single sales factor apportionment will go to the 0.1 percent of California corporations with gross incomes over $1 billion.

Under existing law, it is nearly impossible to track how much of California’s budget is lost to corporate tax subsidies, what companies are getting the subsidies, and if those subsidies are creating jobs. Many of these tax expenditures are permanent and never reviewed. Companies are permitted to take taxpayer money and run – relocating jobs in other states or countries.

And guess who has to make up what corporations squirm out of paying? You, me and every other working person out there. When corporations don’t pay their fair share, the burden of funding schools, public safety, parks, libraries and infrastructure like roads and bridges falls on the rest of us.

California is facing a $20 billion budget shortfall. The state has cut every vital social service to the bone, and we’re facing more cuts to our schools, police, firefighters, medical clinics, roads and other services we depend on every day. Even though we are paying our fair share in taxes, middle class families are getting less in return and are bearing the brunt of the state’s drastic budget cuts.

$14.5 billion a year could go pretty far in filling the budget hole, if we got rid of corporate tax loopholes. The California Labor Federation is sponsoring a package of four bills  to increase transparency and accountability of public spending on corporate tax expenditures. They are:

AB 2564 (Swanson) – Corporate tax breaks are not included in the budget, making it difficult to track their true cost. This bill requires that an analysis of all tax expenditures show up in the budget so that legislators can review tax expenditures and budget allocations at the same time.

SB 1391(Yee) – Companies that receive tax subsidies and fail to meet the intended purpose and goals required by the Legislature should pay the state back the tax subsidies received. This bill allows the state to recapture, or “clawback,” tax breaks given to a business to create jobs if that company decreases employment in California.

SB 1272 (Wolk) – Tax expenditures should be regularly reviewed for their effectiveness. This bill requires every new tax subsidy to state public policy goals and measures of effectiveness, and each subsidy will sunset after 5 years.

AB 2666 (Skinner) – This bill will create a publicly accessible database that would display the names of all applicants for economic development subsidies, their stated intended purposes, the number of jobs created, their wage rates and benefits. Illinois has adopted such database, providing more information to policymakers and the public to assist in holding recipients of tax expenditures accountable to taxpayer goals.

Click here to learn more .

Sara Flocks is public policy coordinator at the California Labor Federation. Email her at [email protected].

Weekend Open Thread

Well, let’s see what’s going on as we head into this weekend:

• Even more pushback against the cone of silence, from Timm Herdt of the Ventura County Star, and the SacBee editorial board.  It’s not often Calitics lines up with mainstream journalism so neatly.

• Our friends at the Communications Workers of America (CWA) seem like they may be headed for a strike against AT&T. Hopefully the situation will be remedied before it gets to that point, and all will turn out well.

• Just in case you missed it here or at the new site OC Progressive, we don’t have a spending problem.  And the author shows the work, too.  Also, rich people aren’t leaving the state in droves.  It’s hard to keep up with all the zombie lies…

• The State Bar apparently is not backing down on having their state convention at the Manchester Hyatt in November.  Doug Manchester, the owner of said Hyatt, gave $125,000 to the Yes on Prop 8 Campaign.  Other groups have moved their confrences out of the hall, some at great expense, but the Bar apparently got a great deal and won’t take a stand for equality over a bargain.  San Francisco’s LGBT Bar association, Balif, will be boycotting the event. You can check their letter here.

• The Governor nominated Karen Douglas to be the new Energy Commission chair. Douglas, a Democrat, was previously a commissioner and the director of the California Climate Initiative at Environmental Defense.  Seems like a pretty solid pick from Mr. Post-Partisan.

Lots of stories about former CA Congressman, and CA Forward chair, Leon Panetta‘s hearings for CIA Director.

• The LA Times takes a look at whether a true banking behemoth, Bank of America, can save itself. Despite the fact that it is ridiculously large, it’s still an outstanding question.  George Soros has been saying that the most fiscally prudent response would be to simply do what the Swedes successfully did a few years back: nationalize the banks.

• Let’s close with a dirty story: San Francisco will be converting cooking grease to fuel in a biofuels program set to start this year.

Jerry Brown Did More To Help Homeowners Than The Entire US Government

Yesterday, Bank of America announced that they would settle their lawsuit with a parade of states Attorneys General that began before BofA bought out the defendant, Countrywide Financial.  The initial suit alleged that Countrywide engaged “in deceptive advertising and unfair competition by pushing homeowners into mass-produced, risky loans for the sole purpose of reselling the mortgages on the secondary market.”  At the time I thought it would be difficult to hold Countrywide responsible for what the mortgage market is intended to do, but I suppose they didn’t want to face a jury at a time when the financial industry is melting down.

This settlement, which could provide up to $8.68 billion dollars for as many as 400,000 homeowners nationwide (and up to $3.5 billion in California), has some very laudable parts to it:

Under the terms of the settlement, eligible subprime and pay-option mortgage borrowers with loans from Countrywide will be able to avoid foreclosure by obtaining modified and affordable loans. Here is the information released by Brown’s office:

The loans covered by the settlement are among the riskiest and highest defaulting loans at the center of America’s foreclosure crisis. Assuming every eligible borrower and investor participates, this loan modification program will provide up to $3.5 billion to California borrowers as follows:

• Suspension of foreclosures for eligible borrowers with subprime and pay-option adjustable rate loans pending determination of borrower ability to afford loan modifications;

• Loan modifications valued at up to $3.4 billion worth of reduced interest payments and, for certain borrowers, reduction of their principal balances;

• Waiver of late fees of up to $33.6 million;

• Waiver of prepayment penalties of up to $25.6 million for borrowers who receive modifications, pay off, or refinance their loans;

• $27.9 million in payments to borrowers who are 120 or more days delinquent or whose homes have already been foreclosed; and

• Approximately $25.2 million in additional payments to borrowers who, in the future, cannot afford monthly payments under the loan modification program and lose their homes to foreclosure.

This is exactly what should have been in the bailout bill – a large-scale workout for homeowners on the brink of foreclosure to modify their loans and stay in their homes.  It’s arguably costlier to the bank at this point for the mortgages to go completely bust and to deal with the foreclosure.  In addition, BofA is SUSPENDING subprime loans and negative amortization loans as well as loans with little or no documentation from the borrower, which is in a way more significant because that’s at the root of the financial crisis.

These are also the kind of steps that Ted Lieu sought in his AB 1830 which was vetoed by the Governor – banning predatory lending and unsustainable mortgage loans.  Ultimately, Attorney General Brown was forced to seek remedy in the courts because the regulatory structure had broken down and the Congress was unable or, more likely, unwilling to give struggling homeowners a hand.  

This shouldn’t be Jerry Brown’s job, but the systemic failure fell to him, and he performed brilliantly.  And he’s not done:

And this is not the end of this chapter. The settlement does not include Angelo Mozilo, the former Chairman and Chief Executive of Countrywide Financial Corporation or David Sambol, formerly the President of Countrywide Home Loans and the President and Chief Operating Officer of Countrywide Financial Corporation. Brown will continue to prosecute separately his case against Mozilo and Sambol.

Lawmakers like Dianne Feinstein and others should be a little ashamed that they were able to do so little in the wake of this crisis while Jerry Brown did so much more.

Results of Ellen Tauscher Sell-Out on Bankruptcy Bill

On the eighth of March, 2005 the Bankruptcy Bill was still in the Senate. But the New Democrat Coalition wanted to get out in front of the issue and expedite the legislation in the House. So they wrote a stern letter to then Speaker Dennis Hastert and put together a press release to declare their, “intention to work across the aisle to pass bankruptcy reform into law.” The entire press release and letter (with NDC Chair Ellen Tauscher in the Hancock position), were posted online by The New Republic under the headline For Shame. TNR’s web response stated in part:

This magazine and multiple other opinion outlets on the center-left have written at length about how the bill in question is a truly contemptible piece of legislation. Worse, there is no plausible political rationale for supporting it other than to appease credit card companies.

Appease the credit card companies they did. The NDC move helped pass the bill, which made MNBA such a valuable commodity that it was bought up by Bank of America. Surprising nobody, least of all NDC members, BOA earnings are up an astonishing 47%

The legislation was truly contemptible and the politics were even worse. Not only did Tauscher sell out, but she triangulated against any Democrat opposing the bill as being out of the mainstream. Here is the second paragraph of NDC’s press release:

“I’m pleased to see so many New Democrats band together in calling for a mainstream solution to bankruptcy reform. I hope Speaker Hastert will heed our calls and move promptly to bring this legislation to the floor soon,” said Rep. Ellen O. Tauscher.

So if anyone says contempt for Tauscher is simply a debate about Rubinomics, they are wrong. This is a problem with a safe Democratic Party seat being wasted on somebody willing to sell out and let the powerful get richer through legislation.

And the days of the Democratic Party screwing over people so corporations get richer are long over.

Last night Jim Webb gave an amazing response to George Bush’s State of the Union. At CMR, Sherry Greenberg explained the significance by noting, “Webb echoed the themes that won it for us in November — the failed folly of Iraq and populism.” Indeed, Democrats have finally found success by doing the exact opposite of the DLC and NDC.

Tauscher’s problem is that Webb could have been talking about just as much about her as the President when it came to economic policy:

When I graduated from college, the average corporate CEO made 20 times what the average worker did; today, it’s nearly 400 times. In other words, it takes the average worker more than a year to make the money that his or her boss makes in one day.

Wages and salaries for our workers are at all-time lows as a percentage of national wealth, even though the productivity of American workers is the highest in the world. Medical costs have skyrocketed. College tuition rates are off the charts. Our manufacturing base is being dismantled and sent overseas. Good American jobs are being sent along with them.

In short, the middle class of this country, our historic backbone and our best hope for a strong society in the future, is losing its place at the table. Our workers know this, through painful experience. Our white-collar professionals are beginning to understand it, as their jobs start disappearing also. And they expect, rightly, that in this age of globalization, their government has a duty to insist that their concerns be dealt with fairly in the international marketplace.

In the early days of our republic, President Andrew Jackson established an important principle of American-style democracy – that we should measure the health of our society not at its apex, but at its base.

That is how politicians are measured too.

Something to think about with Tauscher having economic meetings with the White House.