Help us end the fiscal year strong. Donate by midnight tonight. Donate Now

Goldman wants tax credits at its price

Steve Henn Nov 2, 2009
HTML EMBED:
COPY

Goldman wants tax credits at its price

Steve Henn Nov 2, 2009
HTML EMBED:
COPY

TEXT OF STORY

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.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.  

The clock is ticking 

We’re so close! Our fiscal year ends at midnight tonight. Help us reach our fundraising goal by making your gift of any amount now!