Tax-exempt income…Represents securities which are tax exempt for U.S. federal income tax purposes…Non-U.S. subsidiary earnings…Predominantly includes earnings of U.K. subsidiaries that are deemed to be reinvested indefinitely.10-K filing for Bank of America notes:
The effective tax rate for 2013 was 29.3 percent and was driven by our recurring tax preference items and by certain tax benefits related to non-U.S. operations, partially offset by the $1.1 billion negative impact from the U.K. 2013 Finance Act, enacted in July 2013, which reduced the U.K. corporate income tax rate by three percent.The UK income tax rate is 20% and if these banks strangely used transfer pricing to shift income out of the UK into the US, their income tax authority would surely object. Of course the IRS should make sure income shifting is not going the other way. But I know of no evidence that either bank is abusing transfer pricing to avoid U.S. income. The other item in both of their 10-K filings relate to the tax exemption for municipal bonds. During those debates this week, maybe someone should ask Mr. Sanders if he wants to end this subsidy for state and local governments. If he does, is he proposing more Federal revenue sharing? If not – I fear more stupid state fiscal austerity.