Bloomberg: Goldman Sachs’s Tax Rate Drops to 1%
Tom Davos
Goldman Sachsbs Tax Rate Drops to 1%, or $14 Million
By Christine Harper
Dec. 16 (Bloomberg) -- Goldman Sachs Group Inc., which got $10 billion
and debt guarantees from the U.S. government in October, expects to
pay $14 million in taxes worldwide for 2008 compared with $6 billion
in 2007.
The companybs effective income tax rate dropped to 1 percent from 34.1
percent, New York-based Goldman Sachs said today in a statement. The
firm reported a $2.3 billion profit for the year after paying $10.9
billion in employee compensation and benefits.
Goldman Sachs, which today reported its first quarterly loss since
going public in 1999, lowered its rate with more tax credits as a
percentage of earnings and because of bchanges in geographic earnings
mix,b the company said.
The rate decline looks ba little extreme,b said Robert Willens,
president and chief executive officer of tax and accounting advisory
firm Robert Willens LLC.
bI was definitely taken aback,b Willens said. bClearly they have taken
steps to ensure that a lot of their income is earned in lower-tax
jurisdictions.b
U.S. Representative Lloyd Doggett, a Texas Democrat who serves on the
tax-writing House Ways and Means Committee, said steps by Goldman
Sachs and other banks shifting income to countries with lower taxes is
cause for concern.
bThis problem is larger than Goldman Sachs,b Doggett said. bWith the
right hand out begging for bailout money, the left is hiding it
offshore.b
In the first nine months of the fiscal year, Goldman had planned to
pay taxes at a 25.1 percent rate, the company said today. A
fourth-quarter tax credit of $1.48 billion was 41 percent of the
companybs pretax loss in the period, higher than many analysts
expected. David Trone, an analyst at Fox-Pitt Kelton Cochran Caronia
Waller, expected the fourth-quarter tax credit to be 28 percent.
The tax-rate decline may raise some eyebrows because of the support
the U.S. government has provided to Goldman Sachs and other companies
this year, Willens said.
bItbs not very good public relations,b he said.
To contact the reporter on this story: Christine Harper in New York at
cha...@bloomberg.net.