John Strangfeld, Prudential - Corporate Tax Dodger
Prudential Financial is reaping low-income housing tax refunds by investing in luxury hotels.
Reaping low-income housing tax refunds by investing in luxury hotels
CEO compensation: $17.2 million
U.S. federal income taxes: $722 million refund
Prudential CEO John Strangfeld has been well-rewarded for his firm’s tax avoidance creativity. His company’s most creative moment: The insurance and real estate giant has managed to pocket mega millions in tax refunds for its investments in luxury hotels, through an initiative intended to create jobs and better housing in low-income communities.
The program Prudential has exploited, the New Markets Tax Credit, has been around since 2003. Tax refunds available through the program only go to Census tracts with high poverty rates. But ace Prudential tax avoiders realized they could claim a project to renovate the ritzy Blackstone Hotel in downtown Chicago for the refund — because the Census tract surrounding the Blackstone hosts large numbers of students from nearby universities. These students, while hardly poor, technically qualify as low-income.
The Blackstone renovation generated $15.6 million in tax refunds, much of which went to Prudential Financial and its partner in the project, JPMorgan Chase. Prudential pocketed another $27.3 million refund for another luxury hotel in Portland, Oregon. The company reported a total IRS refund of $58 million in 2010 for investments in low-income housing and other tax-creditable activity.
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