The Journal does some good work in looking at some of the pigs lined up at the $700 billion TARP trough. It reports that life-insurance companies that barely pay any taxes are eager for their taxpayer-funded bailouts.
For instance, Prudential Financial:
Despite reporting pretax profits to shareholders of nearly $25 billion over the past decade, Prudential has paid just $1.3 billion in taxes to federal, state and foreign governments in that period, filings show, for an effective tax rate of 5.1%. That compares with a statutory combined federal and state corporate income-tax rate of about 39.5%.
Check out the hubris:
A company spokesman said its taxes should have no bearing on its participation in TARP. He declined to comment on why Prudential was applying for assistance.
Rule No. 1 of the bailout should be you have to tell us why you want the money.
The insurers aren’t doing anything improper. They are benefiting from a variety of provisions in the tax code intended to favor the industry…
Some critics contend any bailout money should be accompanied by changes to boost the industry’s future tax rates.
The life-insurance companies “want to be subsidized when they’re making money and be bailed out when they’re not,” said Robert McIntyre, director of Citizens for Tax Justice, a liberal tax-policy research group in Washington, D.C. “If they’re going to get a bailout I think they should promise they’ll start paying taxes in the future”…
In general, the commercial banks and investment banks that have received the bulk of federal bailout money have much higher effective tax rates than life insurers.
This is good watchdog reporting by the Journal.Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at firstname.lastname@example.org. Follow him on Twitter at @ryanchittum.