Goldman Sachs’ Mysterious 2008 Tax Rate
Goldman Sachs’ tax rate dropped to 1% in 2008. That’s down from 34% in 2007, according to Bloomberg News. Goldman attributed this drop to “geographical changes” and tax credits. I’m not a CPA, but that screams “tax haven!” to me.
If they are using offshore corporations to dodge taxes, the testicular fortitude on these guys is impressive. They’re taking taxpayer dollars via the bailouts, shifting profits overseas to avoid paying any taxes, then awarding themselves generous bonuses. This type of creative tax-accounting is common among big banks. See the CBS story which I link to below for more. Just to be clear, I do not have any evidence or proof of legal wrongdoing by Goldman Sachs, or any other investment bank traditional bank. But it just doesn’t smell right.
There is some hope. Today Timothy Geithner announced the Obama administration’s support for legislation which aims to eliminate offshore tax havens:
Let me just start by saying that we fully support the legislation you referred to championed by your colleagues on offshore tax centers, and we look forward to working with you as part of the broader effort to address international tax evasion and close the tax gap. source
Most large banks who received taxpayer-bailouts have significant oversea tax havens. But the sheer number of tax-haven subsidiaries owned by the banks in the Cayman Islands alone is staggering:
Goldman Sachs has 15 subsidiaries there. Bank of America: 59. Citigroup: 90. But Morgan Stanley beats them all with at least 158 subsidiaries in the Cayman Islands – seven times the number of hotels. source
Goldman Sachs stock was down 4.5% today. Given their miraculous 4q tax-rate, I’d say there’s a good chance that these events are related.
Post was updated for clarity and legal-compliance 5/24/09.
Minor edits made again 8/11/09 (sloppy writing, slowly getting better I hope). It is interesting to note that absolutely nothing has been done to shut down these tax-havens, despite Geithner and Obama’s promises. Working on an update piece on this now.
Disclosure: short JPM, long GS puts. Disclaimer: None of the information here should be considered investment advice. Always consult a professional before making investment decisions.
If any information here is not correct, please contact me through the form at the top of the page and I will remove/fix it ASAP.
7 Comments
Proof
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One more proof that most of the rich people especially the 7% who own 80% of the wealth don’t create any wealth.
They simply steal wealth through tax elevation, stock market scams, fractional reserve banking frauds, insurance scams, currency arbitration scams.
Wealth is only created when someone stores more energy than they use !
Joe, I couldn’t agree more. These so called “loans” are a joke when the execs are taking bonuses. How are bonuses coming out of “loans” fer cryin’ out loud?
If these execs who are giving themselves bonuses are not prosecuted for stealing, then it’s not a loan, it’s a GIFT and the execs AREN’T being prosecuted, they’re only getting severe tongue-lashings.
Which might as well be bl*w-j*bs.
[...] Bank Tax Havens: Goldman Sachs and others are in jeopardy … – Examining the suspicious drop in tax-rate by Goldman Sachs, and overall tax-havens used by US banks who received taxpayer bailouts. [...]
Awesome!
Buy guns.
GS owns the shitehouse and both parties as such this is not surprising.
[...] evasion services while publicly proclaiming it as immoral yet doing it themselves – [a], [b], [c], [d], [e], [f], [g], [h], [i], 5)The Banksters are willing to allow thousands of legitimate smaller [...]