>So last week the news came out that Fannie Mae was planning on offloading some “Tax Credits,” effectively selling them for 50% on the dollar to Goldman Sachs and Warren Buffet’s Berkshire Hathaway. Fannie Mae has no profits and never will, thus the credits are useless to them, why not sell them? The problem is that those credits would be bought for half their value and then used to offset actual taxes owed of their actual value – meaning the sale would lose the Treasury $3 billion. Normally I’m a big fan of lowering taxes, but this didn’t seem right – for two reasons:
Reason #1: Why can corporations trade tax credits and individuals cannot? I cannot purchase non-refundable tax-credits from people who could not utilize them, yet corporations can?
Reason #2: We the taxpayers are subsidizing Goldman and bailed Goldman out last year, they would not be here today without us little guys. Now they are paying record bonuses on revenue generated on our backs. They should not be given the opportunity to lower their taxes by buying tax credits at a discount – it is morally unethical in this scenario. As for Warren Buffett…..just imagine the outcry if Halliburton had did the same thing under the Bush administration – the outrage would be epic. Buffet is an insider in the Obama administration and for that reason there cannot be an arms length agreement, he should not be allowed to buy the credits, Buffet should know better.
For once I will praise Tim Geithner (don’t get use to it Tim, you are the king of Idiocranomics and I’m sure this decision was made in order to make your week easy, not because it was the right thing to do).
Scott Dauenhauer CFP, MSFP, AIF