A few stats for tax day, drawn from our recent study of big banks and tax avoidance, Big Bank Tax Drain, produced in partnership with National People’s Action as part of its Make Wall Street Pay campaign.
The report found that 50% of the six big banks’ foreign subsidiaries are located in tax haven jurisdictions.
Of the big banks, Bank of America has the most tax haven subsidiaries, with 371 (and 204 in the Cayman Islands alone), according to its most recent SEC filings. 48.8% of Bank of America’s foreign subsidiaries are in tax havens.
Goldman Sachs has far fewer foreign subsidiaries, but of those, 75% are located in tax haven countries. Its two favorite tax havens are the Cayman Islands with 17 and Mauritius with 9.
The report found that all of this helped the six banks avoid $13 billion in taxes over the past two years, shortly after US taxpayers bailed them out to the tune of hundreds of billions. That’s enough to pay for all the teacher jobs lost in the course of the crisis – twice.
Two banks stick out as particularly bad:
Bank of America recorded a $666 million tax refund for 2010, which we deemed the “tax refund from hell.” Bank of America booked a paper loss in 2010, but only because of a non-deductible $12 billion writedown called a “goodwill impairment charge.” Essentially, it wrote down the value of its credit card brand. Without the writedown, Bank of America would have booked positive pre-tax earnings in 2010 of over $10 billion. Depending on how the loss was split between its US and foreign businesses, it seems likely that Bank of America should have paid $1-2 billion in US taxes. Instead, it got a refund.
It may help that Bank of America director Charles O. Rossotti is a former IRS commissioner.
Perhaps more egregiously, Wells Fargo is paying a federal income tax rate of -6.8% for the bailout years of 2009 and 2010, despite booking pre-tax earnings of $37 billion. In other words, Wells Fargo recorded tax refunds of $2.5 billion in those years, despite being immensely profitable.
For your tax day perusal, here are two tables from the report with tax haven information, each based on our analysis of exhibit 21s from the bank’s SEC 2010 10-k filings (annual reports). The full report is here.
Table 6: Big Bank Subsidiaries in Foreign Countries and Tax Havens
| Bank | Total Subsidiaries | Foreign Subsidiaries | Tax Haven Subsidiaries | % Foreign Subsidiaries in Tax Havens |
|---|---|---|---|---|
| Bank of America | 2027 | 761 | 371 | 48.8% |
| Wells Fargo | 1676 | 146 | 66 | 45.2% |
| Citigroup | 174 | 108 | 25 | 23.1% |
| JPMorgan Chase | 547 | 217 | 83 | 38.2% |
| Goldman Sachs | 104 | 52 | 39 | 75.0% |
| Morgan Stanley | 1209 | 587 | 344 | 58.6% |
| TOTAL | 5737 | 1871 | 928 | 49.6% |
Table 8: Bank Subsidiaries Incorporated in Offshore Tax Havens
| Bank | Total Reported Subsidiaries | Subsidiaries in Offshore Tax Havens | Offshore Subsidiaries by Jurisdiction of Incorporation |
|---|---|---|---|
| Bank of America | 2027 | 371 | Bahamas (3); Bermuda (5); Cayman Islands (204); Costa Rica (1); Gibraltar (6); Guernsey (2); Hong Kong (3); Ireland (18); Isle of Man (1); Jersey (20); Lebanon (1); Luxembourg (32); Mauritius (10); Monaco (1); Netherlands (41); Netherlands Antilles (1); Panama (1); Singapore (12); Switzerland (4); Virgin Islands (5) |
| Morgan Stanley | 1209 | 298 | Bermuda (5); Cayman Islands (169); Cyprus (3); Gibraltar (9); Hong Kong (14); Ireland (8); Isle of Man (1); Jersey (21); Luxembourg (49); Malta (1); Mauritius (5); Netherlands (1); Singapore (10); Switzerland (2) |
| JPMorgan Chase | 551 | 166 | Barbados (1); Bermuda (5); British Virgin Islands (3); British Virgin Islands (1); Cayman Islands (11); Hong Kong (9); Ireland (8); Jersey (5); Luxembourg (9); Mauritius (13); Netherlands (4); Singapore (10); Switzerland (4) |
| Wells Fargo | 1676 | 66 | Aruba (1); Barbados (1); Bermuda (5); British Virgin Islands (1); Cayman Islands (19); Cyprus (1); Hong Kong (7); Ireland (2); Luxembourg (4); Mauritius (11); Netherlands (8); Singapore (4); Virgin Islands (2) |
| Goldman Sachs | 105 | 39 | Bermuda (3); British Virgin Islands (2); Cayman Islands (17); Hong Kong (2); Ireland (4); Mauritius (9); Netherlands (2) |
| Citigroup | 174 | 25 | Bahamas (3); Bermuda (2); Costa Rica (3); Hong Kong (3); Ireland (3); Mauritius (2); Netherlands (2); Singapore (3); Switzerland (3); Cayman Islands (1) |
Source: SEC 2010 10-k filings (annual reports), exhibit 21 – list of subsidiaries – for each bank. Accessed at SEC EDGAR.