Public interest group upset over 'secret' tax credits

U.S. PIRG criticized the Obama administration on Monday for "secretly" allowing corporations to write off settlements over wrongdoing for big tax breaks at the end of the year.

The group pointed to the Justice Department's settlements with BP over its oil spill and JPMorgan over toxic mortgages it sold as examples of the federal government letting these companies off easy.

ADVERTISEMENT
"Giving companies that break rules and endanger the public a tax break when they get caught is hardly the way to deter bad behavior," Gynnie Robnett, coordinator of the Coalition for Sensible Safeguards, said in a statement.

U.S. PIRG, a federation of public interest research groups, said that while companies are not allowed to deduct fines and penalties from their taxes, they can deduct settlement costs unless their agreement specifically prohibits it. Studies show that the federal government loses billions of dollars each year through these deductions.

U.S. PIRG released a poll Monday that finds the public wants the Justice Department to close this tax break by specifying that future settlements cannot be written off for tax breaks and being more transparent about the deals it makes with these companies.

The poll found that 80 percent of Democrats and 75 percent of Republicans are concerned by these companies being allowed to write off their settlements for tax breaks, while more than half of the respondents said the government should place restrictions on this practice.

"Americans want corporations that break the rules held accountable, just as ordinary citizens must follow the law," said Phineas Baxandall, senior analyst at U.S. PIRG. "There shouldn't be secret deals to resolve responsibility for public harms such as insider trading, Medicare fraud, or selling dangerous products. And the public doesn't want corporations to treat payments for these actions as a tax deduction."

Meanwhile, about two-thirds of respondents said federal agencies should be required to disclose these details to the public.

"Agencies like the Department of Justice can start disclosing all their settlements online, and make clear whether these deals can be deducted, or whether totals include 'credits' for other activities or past settlements," the group wrote.

The study measured the opinions of more than 1,000 people in March.

More in News

LBJ library director upset over 'Selma'

Read more »