GOP tax law saved big banks $3.6 billion: AP

Six big banks saved at least $3.59 billion in taxes in the first quarter of 2018 following the enactment of the GOP’s tax-cut law in December, The Associated Press estimated. 

The new tax law slashed the corporate tax rate from 35 percent to 21 percent, allowing the banks to pay less in taxes.

Under the old tax code, the banks paid between 28 percent and 31 percent of their incomes in corporate taxes annually. But they paid less in the first quarter of this year, with Citigroup, the highest taxed, having a tax rate of 23.7 percent, the AP said.

The banks estimated that for all of 2018, they will have tax rates of between 20 percent and 22 percent.

In addition to Citigroup, the AP’s analysis focused on JPMorgan Chase, Wells Fargo, Goldman Sachs, Morgan Stanley and Bank of America. The news outlet looked at the banks’ tax rates for last quarter and their average tax rates in 2015 and 2016. The AP excluded tax rates for 2017 because many of the banks reported significantly higher rates then due to a one-time change in the tax law.

The AP’s analysis quickly caught the attention of Democrats, who have been arguing that the tax law mainly benefits wealthy individuals and large corporations. The Democratic National Committee sent out a press release containing an initial version of the AP’s article.

Democrats and Republicans have been engaging in a messaging battle over the tax law in advance of November’s midterm elections. Republicans have focused on the increases in people’s paychecks and the businesses that have announced bonuses, wage increases and domestic investment in recent months. Democrats, on the other hand, have been highlighting businesses’ large tax savings and their announcements of stock buybacks.

Bank executives have said most of their savings will go to buybacks and increased dividends, but that some will go to increased wages and investments, the AP reported.