State Street’s $885 Million Tax Refund Sparks Boston Protest
An expected $885 million tax refund for State Street Corp. (STT), the third-largest custody bank, helped spark a protest against big banks in downtown Boston that drew about 400 people yesterday.
“Corporations like State Street paying zip despite $1.56 billion in profit is beyond an outrage,” Rich Rogers, executive secretary of the Greater Boston Labor Council, said in an e- mailed statement before the demonstration. “It’s exactly the kind of corporate greed that is bleeding our communities dry.”
Tax refunds for profitable companies have fueled protests aimed at firms already the target of public criticism over their roles in the global financial crisis or the government bailouts they received. General Electric Co. (GE) was the subject of a hoax news release earlier this week by a group claiming the Fairfield, Connecticut-based company had agreed to return “a $3.2 billion tax refund” following public outcry.
State Street used losses reported in 2009 to wipe out its U.S. income tax bill for 2010 and secure a rebate, according to a Feb. 28 regulatory filing. The company paid $75 million in U.S. income tax in 2009 and $1.07 billion in 2008.
The firm had a net loss of $1.88 billion in 2009 and net income of $1.56 billion last year. It received $2 billion in federal bailout funds in October 2008, which it repaid in June 2009.
“State Street follows all applicable tax rules,” Arlene Roberts, a spokeswoman, said in an e-mail. “In the past three years alone, State Street paid more than $1 billion” in federal, state and non-U.S. income taxes, she said.
She declined to comment on yesterday’s demonstration.
“While companies like State Street emerge from the economic crisis they helped cause, many working families and neighborhoods are left behind to struggle with joblessness and revenue problems that resulted,” said Jeff Hall, a spokesman for The April 14 Coalition, a group of labor, housing and community organizations that arranged the protest.
Hall, an employee of the Service Employees International Union that took part in the event, said organizers were angered by layoffs at State Street and by what he called “obscene” pay packages for the company’s executives.
The firm said Nov. 30 it is cutting 1,400 jobs, or 5 percent of its workforce, to lower costs as record-low interest rates eroded profit from investing and securities lending. Chief Executive Officer Joseph “Jay” Hooley received compensation valued at $12.9 million for 2010, according to an April 6 regulatory filing.
Fake News Release
The fake GE news release was issued by US Uncut, a group protesting corporate tax issues and government service cutbacks. The release prompted a news story by the Associated Press that was later retracted.
GE refuted the tax bill claim specifically and said the company received no rebate, refund or payment from the government on its 2010 taxes.
Bank of New York Mellon Corp. and JPMorgan, both based in New York, are the two biggest custody banks.
Custody banks keep records, track performance and lend securities for institutional investors including mutual funds, pension funds and hedge funds. State Street also manages investments for individuals and institutions.
To contact the editor responsible for this story: Christian Baumgaertel at email@example.com