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Updated December 19, 2009
December 17, 2009
Not only does Citigroup get unfettered access to taxpayer money to line their own pockets, the Internal Revenue Service, with approval from our “Change We Can Believe In” President, has given the company permission to not pay billions in taxes. The Washington Post puts it in the proper context: “The federal government quietly agreed to forgo billions of dollars in potential tax payments from Citigroup” [bold added], meaning yet another government/corporate deal done under the cover of darkness. Unfortunately this is “change” we didn’t expect — same old Bush/Republican policies — take from the poor and give to the rich.
Before former Treasury Secretary Henry Paulson bowed out on January 20, 2009, he also handed his corporate friends a huge tax gift. I reported on that little tidbit in January of this year. Paulson “revoked a 22 year-old tax law, thereby giving banks a monstrous tax shelter for merging with or buying out other financial institutions, and allowing them to create shell companies in order to write off billions of dollars for tax purposes. The result is a windfall of $140 billion for banks”. So last year Paulson assumed the privilege of arbitrarily doing away with a tax law that he and his wealthy friends didn’t like and , not to be outdone, this year the IRS discards yet another corporate-unfriendly tax law. Makes you wonder who and what is next, doesn’t it. Actually, the IRS didn’t exactly throw a law out the door; they simply dug an appropriate one out and reinterpreted it for Citigroup’s benefit.
We are constantly hearing from the President’s people and many in the news media how we-the-taxpayers are going to actually see a profit from our bailout investment. But one expert on tax accounting, Robert Willens, says any profits we realize from Citigroup could be offset with losses in tax revenue. This article by the Wall Street Journal says the net profits the government expects from its Citigroup investment is about $14 billion, but Citi could realize more than $10 billion in tax savings with this new giveaway.
I suppose in order to keep up appearances, Republicans must constantly be throwing rocks at the Obama administration. However, I must believe that behind closed doors they are (not-so) “quietly” raising their Champagne glasses in a toast to him, his treasury man, his fed chairman and the IRS. But this comes right out of the Republican play book — let the opposition do your evil bidding, then later you can raise your “clean” hands and point at the “bad” guys. It’s worked several times before, so why not here?
UPDATE December 19th: Democrat Dennis Kucinich and his panel is now investigating this action. Hopefully, he won’t be ignored as he has so much been in the past. But, to many, since he’s a Democrat, that settles it — ‘there should be no investigation’.
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