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According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

Wednesday, March 9, 2011

How Goldman Sachs Speculates and Avoids Tax

The National People's Action group has prepared an interesting and informative report by Matthew Skomarovsky and Kevin Connor on how the big banks, including Goldman Sachs, manipulate the payment of their taxes so that that public revenues are starved of their needed sustenance. The information is gleaned from the annual reports of the various banks analyzed. It brings home sharply just why the states are in such bad shape with debt and deficits and how some states are now attacking, not the banks that caused the recession, but the people who pay taxes, belong to unions and suffer under the financial crisis caused by the banks.

I have chosen to excerpt those parts of the report that pertain to Goldman Sachs. The whole report is worth reading. It has a number of charts showing, for example, Big Bank Earnings and Federal Taxes; Big Bank Earnings and State Taxes; Big Bank Subsidiaries in Foreign Countries and Tax Havens. etc.

Big Bank Tax Drain
How Wall Street Speculation and Tax Avoidance are Starving Public Revenues
A Public Accountability Initiative report, prepared for National People's Action
by Matthew Skomarovsky and Kevin Connor
March 2011

. . . .

Executive Summary

Wall Street banks caused the economic crisis that has left millions unemployed, foreclosed on, and without prospects in the worst economy since the Great Depression. This crisis has, in turn, caused massive tax revenue shortfalls for the federal government and for state governments across the country: nearly $300 billion combined for 50 states in the years since the crisis began. To deal with these budget woes, politicians are cutting public spending: laying off teachers, attacking public sector workers, raiding pensions, closing hospitals, and eliminating essential services for children, veterans, and the elderly. Raising revenue from the wealthy, bailed-out banks that caused the crisis would be a far more sensible way to address these budget woes. This report analyzes data from the latest financial filings by the six big banks – Bank of America, Wells Fargo, JPMorgan Chase, Citigroup, Goldman Sachs, and Morgan Stanley – to expose the ways in which they continue to avoid taxes and contribute to tax revenue shortfalls, rather than pay for an economic recovery that will put people to work, keep people in their homes, and preserve the safety net – for people, not corporations. (page 3)

from the section on Key Findings

. . . .

Six banks – Bank of America, Wells Fargo, Citigroup, JPMorgan Chase, Goldman Sachs, and Morgan Stanley together paid income tax at an approximate rate of 11% of their pre-tax US earnings in 2009 and 2010. Had they paid at 35%, what they are legally mandated to pay, the federal government would have received an additional $13 billion in tax revenue. This would cover more than two years of salaries for the 132,000 teacher jobs lost since the economic crisis began in 2008. (page 3)

. . . .

Bank of America operates 371 tax-sheltered subsidiaries, more than any other big bank studied, and 204 subsidiaries in the Cayman Islands alone, according to its latest regulatory filings. 75% of Goldman Sachs’s foreign subsidiaries are incorporated in offshore tax havens. (page 4)

. . . .

An epidemic of foreclosures by the biggest banks have cost local governments in California an estimated $2-14 billion. A recent analysis showed that interest rate swaps sold to California by Goldman Sachs, JP Morgan Chase, and Bank of America have cost the state $1.5 billion dollars since 2008.4 (page 6)

. . . .

from the section II Big Bank Income Tax Avoidance

. . . .

A survey of federal, state, and foreign taxes paid over the past decade, as reported in financial statements, indicates six Too Big To Fail banks – Bank of America, Wells Fargo, Citigroup, JP Morgan Chase, Goldman Sachs, and Morgan Stanley – have paid tens of billions less in corporate income taxes than the federal statutory rate of 35%.12 Excluding Citigroup’s three years of deep losses, these six bailed-out banks pay roughly the same federal tax rate on their US profits as kindergarten teachers pay on their salaries, not even counting the banks’ sizable earnings hidden from taxation in hundreds of offshore subsidiaries. (page 8)

. . . .

After taking billions in bailout funds from the US government in 2008, financial
statements for Citigroup and Goldman Sachs suggest that the banks did not pay a penny of federal taxes for 2008, and instead report having received net tax refunds of $4.6 billion and $278 million respectively from the federal government. (page 9)

. . . .

Bank of America, Wells Fargo, Citigroup, JP Morgan Chase, Goldman Sachs, and Morgan Stanley reported roughly $382 billion in domestic earnings over the past ten years, including some heavy recent losses from the financial crisis. During this period, these banks paid $116 billion in federal taxes and $20 billion in state taxes, about 30.3% and 5.2% of their US income, respectively.24 (page 10)

. . . .

The New York Times reported in December that Wall Street banks like Goldman Sachs were “nervously eyeing the calendar” as Congress debated the tax cuts – they were considering whether to pay year-end bonuses before the new year in order to avoid the tax increase. The Times estimated that letting the Bush tax cuts lapse would cost a banker earning a $1 million bonus $40,000 to $50,000. (page 18)

. . . .

Read the entire report here


Anonymous said...

No one is listening to the concerns of the masses so Max is right with his reasoning.

"the politically motivated crowd that rightly understands that buying physical Silver and taking it off the market completely obliterates the cozy relationship between the bullion banks, the IB’s on Wall St., the Fed and the commercials that has carried on for decades. "

Anonymous said...

The "entrenched" interests win either way.....

The "Tea Party" was initially a spontaneous group of people disgusted with the status quo;

in particular bailouts for criminal bankers.

As it gained the slightest momentum, it was rapidly co-opted by the theocratic and most right wing (read militarist) elements of the Republican Party. This was a conscious strategy, borne of the status quo's imperative to maintain the illusion of a choice in the so-called 2 party system. They learned their lesson with Ross Perot and the 1992 election - never again would a third party be given the slightest chance

Anonymous said...

This basically shows you the type of mind -@#% that's going on here on all issues...they will do anything to make the perpetrators of fraud the victims..everyone is bought and paid in the USA..Ireland...England etc

Rep. Scott Garrett Needs To Be Recalled: AG’s Proposed Settlement Punishes Banks Too Much

So, what is Rep. Garrett trying to do here by attacking this toothless settlement as ‘going too far’? I would say that the obvious answer is that he cares far more about who or what funds his campaigns than he does for those he is supposed to represent. This settlement does nothing negative to banks and does nothing positive for homeowners. To even suggest that this ‘punishes’ the banks is a bad joke. These banks have committed massive fraud. This is not just conjecture.

There have been a myriad of rulings from state courts as well as appellate level courts that have found evidence of massive fraud perpetrated by banks against homeowners, much of which has been documented right here on FedUpUSA and also documented over at 4closureFraud. Just spend 20 minutes going through their library of court cases involving illegalities and criminal activity of banks and you’ll get an education of a lifetime. This is not to even mention the revelations of people like William K. Black and Elizabeth Warren, who have testified as to the fraud in front of Congress itself! Yet, Rep. Garrett says this settlement goes too far?!

Joyce said...

If you want to know more about the Koch brothers and their involvement in The Tea Party see:

Anonymous said...

It's funny how the US is always focused on everyone elses corruption....while ours goes untouched!!!!!!!!!!

Biden: Corruption Is Holding Back Russia

U.S. Vice President Joe Biden, in the centerpiece of his European swing, will tell a university audience in Moscow that business and investment in Russia are being held back by corruption, lapses in the rule of law and impediments to true democracy, senior U.S. administration officials say.

The speech at Moscow State University at 5 p.m. local time Thursday (9 a.m. ET) will leave no doubt about U.S. concerns with issues of human rights and civil society, concerns which are often veiled in visits of U.S. leaders, senior administration officials said.

But the tough message will come with positive comments as well: praise for advances in U.S.-Russian relations since the “reset” began shortly after President Barack Obama was inaugurated, a full-throated endorsement of Russia’s accession to the World Trade Organization and a promise to press for the repeal of Cold War-era trade restrictions.

Anonymous said...

You really must ask yourself why we...collectively...can not band together to act in our nations best interest even though we might not all share in the same and listen!

Wake Up ... You A

Americans fail to take responsibility for their own actions. By the time they wake up it will be much too late.

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