From the excellent report “Unfair Advantage: The Business Case Against Overseas Tax Havens” produced by a new US group called Business and Investors Against Tax Haven Abuse comes the follwoing:
In 2008, Goldman Sachs, with 29 subsidiaries located in offshore tax havens, reported profits of over $2 billion and paid federal taxes of $14 million, an effective tax rate of just one percent, and less than one third what they paid their CEO Lloyd Blankfein ($42.9 million).
It pretty much says it all really, doesn’t it?
And makes the perfect case for new taxes on banks.
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It says it all. The other small thing is that nation states cannot function unless the tax and other revenues are reliable and the sources of wealth pay their share. Because so many Global Plundercrats are now exporting their tax and other liabilities to the tax havens the effect of this on developed nations is increasingly seriour and on the poor catastrophic. It is getting worse by the year. The one advantage of the world descending into an anarchy of local warlords is that the first they will go for is the plunderers.
I’m not a fan of GS, but I’d check those salary figures for the CEO as I think he waived all rights to bonuses in 2008.
I’m guessing they also paid taxes in other jurisdictions as well, which aren’t included in the “federal taxes” figures.
I’d much rather people had a go at GS for their shoddy business practices and ripping off their clients.
@Greg
I can’t see anything you say changes the argument
a) They didn’t pay in the US – and that’s a major loss to the US
b) He was paid that much
So why isn’t this a major issue for concern?
This is shocking and abusive by any moral standard. However, it would interesting to know how much was allowed by the IRS in respect of the tax deductability of interest payments on GS’s onshore debt and whether President Obama has any plans to curb this particularly anachronistic form of state welfare to the finacial sector.
That’s bad I agree…but not as bad as ExxonMobil:
http://blogs.forbes.com/energysource/2010/04/05/big-oils-tax-bill/
http://motherjones.com/mojo/2010/04/exxon-mobil-paid-zero-income-tax-offshore%20shelter-wal-mart-general-electric-forbes
A major loss to the US…
I do not get it.
You may like or dislike Goldman Sachs, but the facts are pretty clear: Under Blankfein’s leadership, GS survived the biggest financial crisis in several generations. GS never asked for a bailout, and when it was forced to accept TARP money it produced returns for investors/taxpayers in excess of 30%, making it probably the best single investment in the history of the Federal government.
So why would any US taxpayer care for a minute about the amount of tax Goldman paid for that single period, considering it has paid billions of Dollars over the years, and that its shareholders, bondholders and employees have paid many more.
Overseas taxpayers have even fewer reasons to complain or care, considering Goldman (and its various stakeholders) is everywhere a net tax contributor. Goldman pays billions in direct and indirect taxes in the UK, but has never received a Dollar of UK government support.
And as a final note, I think most Americans would have been happy to pay Blankfein a multiple of what he got for if he had been able to sort out Lehman and AIG as well. At least he never blew a hole in their 401K’s.
I think exxonmobil is an excellent example, they pay a lot of tax where the oil comes from and that is where the value is added , GS pay nothing as all the revenue from their scams is spirited away.
I think the other oil industry comparison is BP have an accident , they pay the clean up costs and get stung with a 20 billion fine , GS cause a train wreck , pay none of the costs of the clean up and have a bail out orchestrated on their behalf to save AIG who owe them billions…
I don’t know why obama doesnt change the law and hit them with a 20 billion fine … Well I do actually as half the government has been or will be on the GS payroll.
@ Richard
(a) They made $2.2bn globally. Without seeing the taxation figures for other countries, the $14mio figure in isolation tells us nothing. The vast majority of that $2.2bn could have been generated in the UK (made on constructing some IR swaps for the Greek Government….). Therefore UK tax would have been paid, yet no mention of this is made.
(b) He wasn’t paid that much.
@Greg
OK:
a) Tell us how much they paid elsewhere – precisely – please, and their profit by location as well
b) How much was he paid – with supporting link please
@catsick
Well, I’m not sure that oil companies do actually do as you say either….
We’d know if we had country-by-country reporting
Richard,
For a start, we know that GS paid over $600 million in UK bonus tax. We also know that it paid over $20 billion in compensation which, assuming a 30% average federal, state, municipal and overseas income tax rate would have generated over $6 billion in tax revenues.
GS also paid several hundred million Dollars in interests on its various bond issues, and dividends on its prefferred and common stocks. Most or all of it is taxable.
So it seems to me that GS and its stakeholders have paid a considerable amount of taxes.
Catsick,
The analogy with the oil industry is actually quite poor. BP inflicted direct collateral damage on a wide range of coomunities in the Gulf who had no way of avoiding contact with the company.
Goldman only trades with sophisticated institutional counterparties. It does not take retail deposits or have any retail brokerage operations. Goldman’s clients chose to trade with Goldmanan in products they were qualified (or so they thought) to deal in. They were no innocent by-standers.
@ Richard
a) I don’t have the time or inclination to do so, and it’s quite possible that the information is not easily available (which is, of course, an enitrely different subject!). But “Business and Investors Against Tax Haven Abuse” are assuming that zero tax was paid globally by GS in 2008, apart from in the US.
b) http://topnews.us/content/24671-goldman-sachs-ceo-s-2008-compensation-drops-984-percent. Here you go. $1.1mio instead of the $42.9mio claimed.
@Greg
a) So your argument cannot be substantiated – and is therefore unproven
b) A press report. Why not try the accounts?
@Jason
GS does not pay the payroll taxes of its staff – they do
We want tax on capital too
And you’re deliberately ignoring that
Richard,
I am not ignoring this at all. Shareholders pay tax on dividends and capital gains. In years where capital gains are negative (stock proce falls), no capital gain tax is due. That is normal. You would not expect a taxpayer with negative income to pay income tax, would you?
@Jason
I said the taxation of capital – not capital gains
Capital includes profits – which is the return on capital
It helps to know a little before entering into discussion
“Capital includes profits – which is the return on capital”
That is a very strange statement for an economist.
Profits say nothing about return on capital. They are purely an accounting number. The fact that reported profits from the very same economic activity can vary widely depending on which accounting standard is used should alone tell you that they are a very poor indicator of return on capital.
Return on capital is very easy to measure: it is how many Dollars one receives in return for every single Dollar one coomits to an economic activity. Companies do not commit capital, only their shareholders (and other providers of capital) do, and it is not therefore the companies that should be taxed on the basis of ambiguous accounting standards, but the shareholders.
Considering we are now digressing from the initial topic of this post, I respectfully suggest it should be closed.
What socially useful value does GS actually create? And how much of the wealth created by others does it expropriate?
Richard..
a) Well i’m quite happy for you to believe that Goldmans didn’t pay a penny in tax in the UK. What is clear is the figures quoted by “Business and Investors Against Tax Haven Abuse” are pointless.
b) The press report is based on the SEC filing. Are you saying the press report is false? Do you believe he was paid $42mio in 2008?
@Jason
Oh good heavens – if this is the level we’re descending too please do stop posting now and go off to your economic fantasy world whilst the rest of us engage with the real thing
@Greg
Typical right wing offshore claim
I don’t like it
I disagree with it
I can’t be bothered to research it
And oh, whoops, we’re blocking the data anyway
So let’s say it’s rubbish
That’s your level of argument, isn’t it Greg?
No Richard, it’s not a typical right wing cliam. It’s just correct analysis of figures.
FACT 1:- Comparison is made between global earnings and US tax. Chalk and cheese.
FACT 2:- According to SEC filings, Blankfein was paid $1.1mio, and not $42mio.
But if you stil believe the salary was $42mio, how about Bloomberg and CBS articles stating the contrary?
http://www.cbsnews.com/stories/2009/04/07/business/main4925394.shtml
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a9oh26RDtT5Y
You generally seem happy with Bloomberg articles?
@Greg
1) Without country-by-country reporting who knows?
2) I note you haven’t been to the SEC filing
The point is, anyway, so what? The previous year he waqs paid substantially more
And I suspect the pay referred to was just deferred
1) Exactly my point! To make the assumption that the only tax paid by Goldman Sachs in 2008 was in the US is plainly absurd. Country-by-Country reporting would of course clear this up.
2) No, because i’m happy to rely on trusted new sources (the same as you).
And the point is if you make up facts (or make mistakes) then you lose all credibility.
@Greg
I’m sorry – only one person is incredible here – and that’s you
This debate is closed