Citigroup Wants to Pay More Taxes
In a world where most companies do all they can to avoid taxes, it is odd to hear that Citgroup is looking to incur more taxes here in the United States.
Citigroup recently bought $7 billion in credit card loans made to Best Buy customers from Capital One, along with all the taxes associated with them. The group also reclassified their foreign spending to bring the money back into the United States–making it subject to U.S. taxes.
Why the sudden change of heart? It wasn’t to stimulate the economy. With these efforts, Citigroup is able to take advantage of special tax deductions and credits that it did not have access to before. The total deductions could be as much as $55 billion. The bank approximates that it will need to make $112 billion to use all of its deferred tax assets.
“We are focused on executing our strategy and any allocation of resources must be in line with that strategy. If those actions also result in aiding the use of our DTA, then that is an added benefit,” said Citigroup spokesman Mark Costiglio.
Essentially, Citigroup is just making the current system work to its advantage, and it is doing so in an unconventional way. While some critics suggest Citi will have to write down some of their assets after all of this is completed, many agree that their plan is brilliant.