Record Bank Of America Settlement To Cost Taxpayers
International Business Times
Published Aug 24, 2014 05:45PM ET
Updated Aug 24, 2014 06:15PM ET
Record Bank Of America Settlement To Cost Taxpayers
By Marcy Kreiter -
The taxpayer watchdog group U.S. Public Interest Research Group says the $16.65 billion Bank of America settlement will cost taxpayers at least $4 billion in lost tax revenue. Phineas Baxandall, PIRG senior analyst, said in a press release Thursday the lost revenue will mean cuts to programs, a higher national debt or higher taxes.
PIRG said unlike earlier settlements with JPMorgan and others, last week's BofA settlement failed to disallow or limit the tax deductibility of specific portions.
“Giving tax write-offs for Wall Street’s misdeeds means less deterrent against future misbehavior," Baxandall said. "It sends the wrong message to treat the costs of the settlement as a normal business expense. The Justice Department should draw a line in the sand to say this behavior just isn’t acceptable.”
Only $5.02 billion of the settlement is characterized as a civil penalty, which is not tax deductible by law, leaving $11.63 billion that can be taken as a business expense worth a $4.07 billion tax deduction. The settlement resolves charges BofA misled investors into buying mortgage-backed securities, with $9.65 billion to be paid in cash and $7 billion to provide relief to homeowners and communities.
Congress is considering legislation that would require the impacts of such settlements to be spelled out. The Truth in Settlements Act (S. 1898) would require agencies to post online details about settlements to spell out their value, PIRG said.
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Written By: International Business Times
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