No Tax Write-Offs For Wrongdoing
END WRITE OFFS FOR WRONGDOING
Paying for misdeeds shouldn’t be a tax write off. Unlike regular citizens and small businesses, large corporations accused of wrongdoing like oil spills and mortgage scams typically negotiate out-of-court settlements to resolve charges from government regulators. The company agrees to make a payment and the government agency agrees not to prosecute the alleged misdeed. Annually, billions of dollars are exchanged between corporations accused of crimes and government agencies attempting to hold them accountable.
These settlements shouldn’t just be another cost of doing business.
Unfortunately, that’s exactly what these payments often end up being.
Unless agencies specify otherwise, these corporations usually deduct the costs of out-of-court settlements on their taxes as ordinary business expenses, leaving taxpayers to pick up the tab.
Especially when Congress is struggling to reduce budget shortfalls, every dollar that corporate wrongdoers avoid paying by deducting a settlement must be made up for through higher tax rates for others, cuts to public programs, or an increase in the national debt.
The public often can’t even know when these settlement agreements come with a tax deduction because there are no standards for transparency. Government agencies aren’t required to publish the settlement agreements or publicly post the details, and corporations don’t disclose whether or not they deduct the payments from their taxes.
That’s how Bank of America, accused of consumer fraud that contributed to the financial crisis, can write off up to $11 billion of their recent settlement agreement and leave taxpayers to pick up the tab, with no one the wiser.
THERE IS A SOLUTION
We’re calling on Congress to pass bipartisan common-sense legislation to restrict write offs for wrongdoing. We are also supporting a bipartisan bill to make settlement agreements between government agencies and corporations more transparent, so that Americans can know the real value of the deals being signed on their behalf. In the meantime, we’re pushing agencies to update their settlement policies and deny tax deductions for corporate misbehavior.
Tools & Resources
Corporations Able to Secure Tax Deductions for Mortgage Violations, Price-Fixing and Other Misconduct, But Two Bipartisan Bills Would AddressU.S. PIRG
Calling for an end to BP tax-write offs for Gulf oil spillPhoto taken 3/25/2015
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