USuncutMN says: Tax the corporations! Tax the rich! Stop the cuts, fight for social justice for all. Standing in solidarity with http://www.usuncut.org/ and other Uncutters worldwide. FIGHT for a Foreclosure Moratorium! Foreclosure = homelessness. Resist the American Legislative Exchange Council, Grover Norquist and Citizen's United. #Austerity for the wheeler dealers, NOT the people.



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USuncutMN supports #occupyWallStreet, #occupyDC, the XL Pipeline resistance Yes, We, the People, are going to put democracy in all its forms up front and center. Open mic, diversity, nonviolent tactics .. Social media, economic democracy, repeal Citizen's United, single-payer healthcare, State Bank, Operation Feed the Homeless, anti-racism, homophobia, sexISM, war budgetting, lack of transparency, et al. Once we identify who we are and what we've lost, We can move forward.



Sunday, March 27, 2011

No federal tax expense for Bank of America in 2010

http://www.kansascity.com/2011/03/25/2753024/no-federal-tax-expense-for-bank.html

By RICK ROTHACKER

McClatchy Newspapers



CHARLOTTE, N.C. - After another money-losing year, Bank of America Corp. got the upper hand with Uncle Sam in 2010.
The Charlotte-based bank had no federal income tax expense for a second straight year and actually reported a tax "benefit" of nearly $1 billion. Also, the bank's billions in accumulated losses could reduce its taxes in future years, a tax expert said.
The bank says the reason is simple: Corporations pay taxes on their profits, and Bank of America posted a pre-tax loss of $5.4 billion in the U.S. in 2010.
"Bank of America takes its role as a corporate citizen very seriously, and pays taxes in accordance with all applicable laws and regulations," bank spokesman Jerry Dubrowski said.
That doesn't satisfy a group that has been staging protests at Bank of America branches around the country and crashed the bank's New York investor conference this month. The bank is an "aggressive tax dodger," said Ryan Clayton, a Washington-based organizer of U.S. Uncut. "We pay our taxes. Why don't they?"
Clayton's group suggests Bank of America and other large U.S. companies are using subsidiaries in offshore tax havens to eliminate their taxes.
Bank of America and other companies do avoid paying taxes on profits they make in overseas operations by reinvesting these proceeds overseas, instead of bringing them back home. Some business leaders recently have called for a lower tax rate on these earnings, a move they contend would encourage companies to bring these profits to the U.S.
Corporate tax returns aren't public, so it's not apparent what companies actually pay in taxes or receive in rebates. But each year companies in their annual reports provide information on the income tax "expense" or "benefit" they recorded in their financial statements. These numbers do show the bottom-line impact. An expense reduces net income for the year; a benefit adds to net income.
In 2010, Bank of America reported a federal income tax benefit of $953 million. But the bank did have an expense for state, local and foreign income taxes: about $1.9 billion. That means, combined, the bank had a total tax expense of $915 million last year.
In 2009, the bank had an overall tax benefit of $1.9 billion, counting federal, state, local and foreign taxes, because of losses that year, too.
In contrast, San Francisco-based Wells Fargo, which bought Charlotte's Wachovia in 2008, made money each year. Wells had a total tax expense of $6.3 billion in 2010. That was up from 2009, when it had a tax expense of $5.3 billion.
In light of its losses, it's not surprising that Bank of America did not have a federal tax expense in 2010, said tax expert Bob Willens of New York-based Robert Willens LLC. Individuals, in contrast, pay taxes based on their income minus certain deductions. Corporations essentially deduct all of their expenses.
It's also not unusual for a company to pay no federal taxes, while still paying state and local taxes, Willens said. Items that can be deducted for federal purposes aren't always deductible for state and local returns, he said. State taxes can also be based on the amount of capital deployed in a state, not pre-tax income.
Dubrowski, the bank spokesman, said the company's taxes rise and fall with each year's financial performance, but over time it has been a major taxpayer. From 2000 to 2009, the bank had a federal income tax expense of $40 billion, which it calculates is more than any other U.S. company. Adding state income taxes, property taxes and other payments, the bank doled out $60 billion in that period, he said.
U.S. Uncut has focused attention on the bank's 2009 tax benefit and plans another rally at bank branches across the country on Saturday. The group, modeled after a similar one in the United Kingdom, contends massive government spending cuts could be curbed if corporations paid their fair share, Clayton said.
He pointed to a 2008 U.S. Government Accountability Office report that found 83 of the largest 100 publicly traded companies have subsidiaries in offshore tax havens, which the GAO defined as jurisdictions with no or nominal taxes. Bank of America had 311 foreign subsidiaries, including 115 in tax havens. The study said the existence of the subsidiaries didn't necessarily mean the companies tried to reduce taxes.
Dubrowski said Bank of America is a global company that has foreign subsidiaries for legal, accounting and client reasons. He noted the bank pays U.S. income taxes on "virtually all of the income" out of its offices in the Cayman Islands, where 59 of the 115 subsidiaries identified by the GAO were located. He didn't have data available on the other locations.
As for U.S. Uncut, Dubrowski said "the individuals claiming to protest this issue are simply pursuing their own private agenda." He added: "We won't let such outlandish claims tarnish the reputation of our company and our employees."
Under U.S. law, Bank of America has been able to save on taxes by keeping profits made in foreign operations invested abroad. In its annual report, the bank said it had $17.9 billion in earnings parked overseas at the end of 2010. Returning that amount to the U.S. would have incurred $2.6 billion in taxes, the report said.
Business leaders such as Cisco Systems Chief Executive John Chambers have argued that a lower tax rate on these earnings - say 5 percent instead of 35 percent - would encourage companies to bring home $1 trillion in earnings that they could invest in new jobs and research. Critics say companies are likely to hoard the cash or spend it on share buybacks.
Going forward, Bank of America has racked up net operating losses and other "deferred tax assets" that can be used to offset tax bills in the future, said Willens, the tax expert. Losses can be "carried forward" for 20 years. Overall, the bank had net deferred tax assets of $27.1 billion at the end of 2010.
"They will not be contributing to reducing the (federal) budget deficit anytime soon," Willens said.
Dubrowski said he couldn't comment on future taxes because it depends on the amount of income the bank earns, which is still to be determined. A portion of those deferred tax assets would apply only to taxes owed in the United Kingdom, he added. He also noted there are specific rules the bank must follow in applying deferred tax assets.
At an investor conference this month, Bank of America chief executive Brian Moynihan said the bank could someday make between $35 billion to $40 billion in annual pre-tax income. But he acknowledged that might still be two to three years away.

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