"Goldman Sachs Denied $3 Billion Tax Break"

by Joann M. Weiner

"The Treasury Department told Goldman Sachs last week that it could not use Fannie Mae's tax credits to reduce its own tax liability. An official with the Obama administration explained that the proposal "would result in a loss of aggregate tax revenues that would be greater than the savings." This is the right decision. Had the Treasury Department allowed Goldman to reduce its tax liability by using Fannie Mae's tax breaks, it would have potentially opened the door to a severe loss of tax revenue, as other profitable companies would likely have sought to follow suit.

As reported earlier, Goldman Sachs had offered to purchase up to $1 billion of low-income housing tax credits that Fannie Mae had itself purchased during the housing bubble but can no longer use. More recently, the Wall Street Journal reported that Warren Buffett had joined Goldman Sachs in a bid to purchase $3 billion in credits. The credits, designed to encourage additional investment in low-income housing, are useful only if the company claiming them is profitable. And with Fannie Mae currently a very unprofitable company, it does not have much use for the credits. It has lost $59 billion so far this year, and the U.S. government has already given Fannie Mae and Freddie Mac, its related government-sponsored entity, almost $100 billion since September 2008.

Goldman Sachs had portrayed its offer to purchase Fannie Mae's tax credits as a "win-win" proposition. It argued that Fannie Mae would benefit because it could take these credits, which are losing value by the day, off of its books, while Goldman would benefit by reducing its tax liability by the amount of the credits. Unfortunately, Goldman failed to include the interests of the taxpayer in its calculations. For every dollar that Goldman saves, the government - and, by extension, the U.S. taxpayer - loses a dollar. This is hardly a win-win situation.

The Treasury Department might have been sympathetic to Goldman Sachs had it planned to use these credits for their original purpose - to provide loans for low-income housing. But Goldman never intended to pursue such a plan. Its sole purpose seemed to be reducing its tax liability.

Fortunately, the Treasury Department realized this. Goldman Sachs is on track to pay more than $22 billion to its employees this year. And the federal government spent $1.6 trillion dollars more than it received in tax revenue last year, so giving away a $3 billion tax break just did not make sense. This arrangement was clearly not in the taxpayers' best interests. And the deal would have struck a discordant note for another reason. Although Goldman earned $2.3 billion in 2008, it paid just $14 million in taxes that year. With an effective tax rate of about 1 percent, it hardly seems entitled to an additional break."

- http://www.politicsdaily.com/2009/11/09/obama-administration-denies-
goldman-sachs-3-billion-tax-break/

My favorite villains, the Golden Pig of Wall Street, Goldman Sachs. The vilest, most greed-deranged crew of land pirates in the history of the world. But I must admit to a grudging respect for their demented, single-minded, Terminator-like determination to use every conceivable option in order to loot the planet of whatever form of money they stumble upon. And they're very, very good at doing it, too... - CoyotePrime