Inspired by the multi-billion settlements currently being negotiated between federal regulators and JPMorgan Chase, there is a campaign afoot on Capital Hill to block big companies from being able to take a tax deduction when they settle cases with the government. JPMorgan has agreed to pay a $5.1 billion settlement over mortgage securities -- all of which is apparently tax deductible, and could save the country's largest bank an estimated $1.5 billion in taxes.
The U.S. Public Interest Research Group has a petition drive to stop the deductions, and two House Democrats have proposed a law. But Allan Sloan, senior editor-at-large at Fortune Magazine is having none of this. He says in the case of JPMorgan owing $5.1 billion to Fannie Mae and Freddie Mac, there's a big difference between a settlement-tax deduction and a fine, which is something else.
"There was a business dispute between Fannie and Freddie and JP, JP settled the business dispute for $5.1 billion -- it is the classic definition of a business expense," Sloan says.
Sloan points out that the settlement negotiated between Fannie and Freddie and JPMorgan was not punitive in the eyes of the law -- unlike a fine, which is not deductible from taxes.
Sloan says that allowing JPMorgan to take a deduction on the settlement is still a win for American taxpayers because of where the money will end up.
"It's going to end up in the Treasury," Sloan explains. "It's going to taxpayers, because of the way Fannie and Freddie work, every extra $5.1 billion that wanders in the door wanders out the door fairly soon to the Treasury. So, we taxpayers are getting all $5 billion. JPMorgan is getting to deduct $5 billion, but it's still out of pocket 65 percent of $5 billion, and it's a lot worse off than it was, and we taxpayers are better off than we were."
Following other tech giants, Apple, Inc. revealed on Tuesday the number of official data requests it receives from governments around the world. During the first 6 months of 2013, the U.S. alone made 3,500 requests -- and those are just the ones Apple is disclosing.
Many of those requests appear to be related to lost and stolen devices, or to aid in missing persons investigations. While the U.S. has made the largest number of requests, the U.K. was second with just 141.
Apple, and other companies like Google, Yahoo, and Microsoft, are now making the disclosures as part of an effort to rebuild public trust, and repair damage from the perception that they were working with the U.S. government as partners.
Democrat Terry McAuliffe wins a squeaker in Virginia. Republican Chris Christie enjoys a laugher in New Jersey. A "big business" Republican defeats a Tea Party challenger in Alabama. Those are among Tuesday's highlights.