If I could be reincarnated, I would come back as a banker. The world revolves around them. They get multi-million dollar bonuses, live in Fifth Avenue apartments, own spreads in Greenwich, CT, and summer in seaside cottages in the Hamptons. When their money-making schemes go awry, taxpayers bail them out -- and even pay their bonuses!
But we already knew that. What I did not know, until I read this, is that banks also get the kid glove treatment from the Internal Revenue Service (IRS) when it comes to audits. In fiscal 2008, the financial services industry got audited at a 9% rate -- less than half the 19% audit rate for all other industries that fiscal year.
Is banking getting off easy because it's so much more virtuous? Not at all. In fact, recent IRS audits reveal that banks under-report taxable income at a far higher rate than IRS audits of the four other industry groups. And this doesn't even include Swiss banks like UBS (NYSE: UBS) which have been helping clients dodge U.S. taxes for years -- it just paid $780 million in fines for those sins.
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book is You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing. He has no financial interest in the securities mentioned.
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