Home > Uncategorized > Paul Buchheit’s Post Reveals Astonishing Fact: Only ONE Bank Lost $$$ in Recession… and They Only Lost It for One Year!

Paul Buchheit’s Post Reveals Astonishing Fact: Only ONE Bank Lost $$$ in Recession… and They Only Lost It for One Year!

May 15, 2018

While I follow the news on the economy closely, I am not an expert on the technical aspects of how businesses use the tax codes to define profits and losses nor am I entirely clear on the nuances of the recent  tax bill passed in Congress. Consequently, when it comes to unravelling the impact of changes in tax laws and analyzing profits and losses I find myself relying on bloggers who DO understand this for my information, and one of the writers whose knowledge I trust and respect is Common Dreams contributor Paul Buchheit, a college teacher who is also the founder and developer of social justice and educational websites (UsAgainstGreed.org, PayUpNow.org, RappingHistory.org), and the editor and main author of several books. In his post yesterday titled “The Kindly 87-Year Old Man Who Took All the Schoolkids’ Lunch Money“, Mr. Buchheit notes that Warren Buffett, “the one beloved billionaire among us“, has accepted the government’s largesse and will be increasing his company’s bottom line by $23,000,000— which is coincidentally the same amount needed to provide lunches to all children raised in poverty, a program that has not been cut to date but one that will clearly be on the chopping block when the GOP legislators discover that the lost tax revenues prevent them from balancing the budget.

But the main point of Mr. Buchheit’s column was not Mr. Buffett’s hypocrisy. It was the fact that despite the public’s belief to the contrary, only one bank suffered ANY loss of profits during the so-called Great Recession making any argument that they need to beef-up their balance sheets due to “losses” suffered during the past decade completely bogus. Here’s Mr. Buchheit’s explanation of how deferred tax assets works for the billionaire bankers:

Here’s the bankers’ excuse for tax trickery: Deferred Tax Assets, which are write-offs against previous losses (specifically due to the 2008 recession) or advance payments on their tax bills. But an examination of their 10-Ks over the past 12 years shows that both companies made profits every year since 2006 (with the exception of relatively small losses for Bank of America between 2010-11), and that they never paid more than the required 35% tax rate, and sometimes paid much less. Goldman Sachs reported a 61% tax rate for 2017, but almost all of it was deferred, and their announced tax was grossly inflated by a one-time (and relatively small) tax expense on a very large repatriation of offshore money.

As for any mysterious writeoffs against recession-related losses, Business Insider notes: “The banks did not actually lose money during the crisis. [It] is the difference between what the banks made during the last five-year crisis period compared to what they would have made if they would have continued to make money at the rate they did prior to the crisis.” Any losses that might be claimed by these financial institutions are imaginary losses, according to their own SEC filings.

But it isn’t the use of the tax code that galls Mr. Buchheit the most. It’s the failure of businesses to acknowledge how much they benefit from the services the government provides for them:

There seems to be no corporate recognition of the shameful act of taking decades of societal largesse and then doing everything possible to avoid paying for any of it. Financial institutions are the beneficiaries of decades of public support:

  • Technology: Internet-related stock market trading and communications.

  • Finance and Law: Patent and copyright systems, intellectual property, contract law.

  • The Military: National defense, local police forces, the National Guard.

  • Infrastructure: In the physical form of highways, railroads, airports; the energy grid; the communications grid.

  • Federal Agencies: The Federal Reserve, SEC, FTC, SBA, FAA.

All of the underscore the fact that from a business CEO’s perspective, government ISN’T the problem. It provides not only the federal services cited above, but also local services like fire and police protection, roads to and from their business venues, and outstanding schools that serve the affluent communities where their corporate leaders reside. And since most of the large corporations get these services at a discounted rate thanks to PILOT agreements they should be even more grateful for government. But, as Mr. Buchheit concludes, that is not the case… and the school children suffer as a result:

Taxes are long overdue on tens of billions in profits, but they remain unpaid, or deferred to some unknown time in the future.

But food for the children can’t be deferred.

 

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