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BofA settlement may cost tax payers

U.S. Public Interest Research Group, a taxpayer watchdog group, said the $16.65 billion Bank of America settlement will cost taxpayers at least $4 billion in lost tax revenue. The lost revenue will mean cuts to programs, a higher national debt or higher taxes, the group said in a statement. It said unlike earlier settlements with JPMorgan and others, the BofA settlement failed to disallow or limit the tax deductibility of specific portions. Giving tax write-offs for Wall Street’s misdeeds means fewer deterrents against future misbehavior,” PRIG said, adding it sends the wrong message to treat the costs of the settlement as a normal business expense. The Justice Department should draw a line in the sand to say this behavior just is not acceptable, it maintained. Only $5.02 billion of the settlement is characterized as a civil penalty, which is not tax deductible by law, leaving $11.63 billion that can be taken as a business expense worth a $4.07 billion tax deduction. The settlement resolves charges BofA misled investors into buying mortgage-backed securities, with $9.65 billion to be paid in cash and $7 billion to provide relief to homeowners and communities.

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