In January, Wells Fargo announced a one-time benefit from the Tax Cuts and Jobs Act of $3.89 billion. With the 40 percent cut in the corporate-income tax, Wells could write down the cost of its deferred tax liabilities—money it owed down the road to the government. So with the stroke of a pen, Donald Trump made Wells Fargo $3.89 billion richer.The benefits didn’t end there. In the first quarter of this year, Wells Fargo enjoyed a drastically reduced effective income-tax rate of 18.8 percent, down from 27.5 percent a year earlier. That produced a $636 million savings, on top of the $3.89 billion. Wells Fargo’s Q1 income would have declined year-over-year were it not for the tax law.
When you put Wells Fargo’s ongoing tax bounty against Friday’s $1 billion fine from the Consumer Financial Protection Bureau and Office of the Comptroller of the Currency for scamming customers on mortgage and auto loans, the penalty looks more like a kickback, worth 22 percent of what Wells Fargo has been gifted in tax savings so far. Over time that $1 billion will constitute a smaller and smaller percentage of the tax perk, more like a tip to the Trump administration—a thank-you for its generous support.