The New York Times reports that GE made $14.2 billion last year, $5.1 billion here in the US.
Its American tax bill? Zero. $00000.00.
In fact, G.E. claimed a tax benefit of $3.2 billion. And Obama's cool with it, poking his head out of GE boss HeMelt's blazer pocket to tell us so.
Its extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore. (NY Times)Are Corporate tax Rates Too High?
Such strategies, as well as changes in tax laws that encouraged some businesses and professionals to file as individuals, have pushed down the corporate share of the nation’s tax receipts — from 30 percent of all federal revenue in the mid-1950s to 6.6 percent in 2009.How do you reconcile this apparent discrepancy?
Yet many companies say the current level is so high it hobbles them in competing with foreign rivals. (NY Times)
Easy. Tax avoidance ain’t cheap. This is how high tax rates can rob the treasury by resulting in less taxes. Businesses hide their money in unproductive pursuits and spend more on financial trickery. All money that could have gone to capital expansion that brings more jobs.
This is why many democrats and republicans are talking up tax reform that cuts out the swiss cheese exemptions and loopholes in exchange for a lower rate. It also explains why the move would be revenue neutral. At a certain point, it’s easier and cheaper to just pay the tax rather than pay skyscrapers full of accounting wizards and tax lawyers.
Crony Crapitalism
Unfortunately, too many people think "free market" means pro-business. It doesn't. Free market means laissez faire -- prohibit force and fraud, but otherwise leave the marketplace alone. No subsidies, no privileges, no arbitrary regulations. Competition is the most effective regulator. (John Stossel)Government statists have a vested interest in the kind of crony capitalism that allows GE to pay no taxes. You can't have your campaign sponsors wasting money on frivolities when you need that cash to finance your next election.
