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Goldman wants tax credits at its price
The Goldman Sachs headquarters building in New York.
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KAI RYSSDAL: Goldman Sachs is doing way better than Ford. Its quarterly profits last time 'round topped $3 billion. That has the company shopping around for ways to slim down its tax bill. The Wall Street Journal reported this morning one option Goldman's considering -- buying unused tax credits from Fannie Mae. Sounds smart. But Marketplace's Steve Henn reports it just doesn't look good.
STEVE HENN: At first glance this seems like exactly the kind of thing folks worry about when elected officials take over a private company: Politicians gumming up a perfectly logical business deal because of political considerations.
Mark Calabria is at the libertarian Cato Institute:
Mark Calabria: Particularly with questions of politics, there are also questions of perception where you are responding to public anger whether or not the anger is rational.
Sure, few of us are eager to see Goldman Sachs trim its tax bill. But Fannie Mae owns these tax credits it can't use, so why not sell them?
CALABRIA: Fannie Mae is not making profits and will hence not be paying taxes, so it certainly makes sense for Fannie Mae to sell off assets it has for a tax offset.
After all, that benefits Fannie, and U.S. taxpayers basically own Fannie. So it should benefit us too, right? Well, not quite.
See, Goldman's not offering to pay full price for this tax break. So taxpayers would lose. And there's another wrinkle.
The Feds issue these tax credits to builders to stimulate the construction of affordable housing. Then builders sell them to banks or Fannie to finance their projects.
But Affordable Housing advocates like Judith Kennedy worry that if banks like Goldman are buying old tax credits from Fannie instead of new ones from builders ...
JUDITH KENNEDY: It means there will be fewer starts, fewer construction jobs, fewer affordable rental units at a time of foreclosure crisis when we need more rather than less.
But on the upside, there would be one big tax break for Goldman Sachs.
In Washington, I'm Steve Henn for Marketplace.
Sounds like an easy decision.
Sell it at full price or don't sell it at all.
All the negatives are on selling or selling cheaply to GS.
As a taxpayer, I would like the IRS to collect as much as possible. Giving a freebie to GS would mean a smaller budget and a bigger deficit.
That's a no-go.
GS has no edge here. They know they will be paying the tax.
First they take the bailout... then they make hugh profits on credit default swaps that "we the people" had to make good... then they award themselves incredible bonuses.. Now GS wants a Tax Credit.. And On "We the People"... A-G-A-I-N! These white collar legal crooks never quit and never miss a chance to stick it to "We the People."
When will they have enough....?
You got to give them points for serious imagination....
But.... Dear IRS....
Just say no...
