The Washington Post today reported (click here for PDF) that while Congress and the public were focused on the $700 billion bailout, the Bush Administration’s Treasury Department wrote a five sentence policy that gave banks a $140 billion tax cut windfall.
Our friends at Citizens for Tax Justice have published a short (2 page) clear explanation of the policy change (PDF) and why it is misguided. In a nutshell, the new rule allows banks acquiring other banks whose tax losses are attributable to bad loans to use the acquired banks’ losses to reduce their tax liability.
CTJ notes that “[t]he single most prominent beneficiary of the new rules is Wells Fargo, which by one estimate will see a federal tax cut of $19 billion from its purchase of Wachovia.”
Wells Fargo and Wachovia operate in Oregon, so this potentially impacts us.
How much will this cost Oregon? Governor Kulongoski and legislators ought to be asking that question.
We need to know how well we’re going to get fargo-ed by Wells Fargo and other banks utilizing the new policy.