Goldman Sachs cuts taxes to one percent by moving profits offshore
Bank takes $10 billion bailout, then cuts tax rate 33 percentSay you got a ten billion dollar loan to shore up your finances, and you paid your employees $10.9 billion, and you raked in $2.3 billion for the year.
What would you say you owed in taxes? One percent?
That's what you'd pay if you were Goldman Sachs, Inc. The high-flying brokerage -- and former home of Bush Treasury Secretary Henry Paulson -- has announced it's paying just $14 million in taxes this year.
Last year, their tax bill was $6 billion, or 34.1 percent. That represents a year-over-year tax rate drop of 33.1 percent, and an actual percentage drop of 97 percent.
Goldman attributed its lower tax rate to "more tax credits as a percentage of earnings" and "changes in geographic earnings mix."
Tax accounting advisor Robert Willens told Bloomberg News the rate drop seems "a little extreme."
"I was definitely taken aback," Willens told the business wire. "Clearly they have taken steps to ensure that a lot of their income is earned in lower-tax jurisdictions."
Texas Democrat Rep. Lloyd Doggett, who serves on the House Ways and Means Committee, said Goldman, like other banks, shifted income to countries with lower taxes to reduce its tax burden.
"This problem is larger than Goldman Sachs," Doggett told Bloomberg. "With the right hand out begging for bailout money, the left is hiding it offshore."
Paulson was CEO of Goldman Sachs until mid-2006, and earned $35 million at the firm in 2005. He drew a $16.4 million salary in 2006 -- even though he served as chief executive for just half the year.