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.
I've been in a bad mood for two days now because my accountant just notified me that I have a sizable balance for tax year 2010.
ReplyDeleteMr. AOW and I earn well below -- and I do mean well below -- a six-figure income. Yet, we are paying taxes through the nose: federal and local, the latter being real-estate taxes.
Even if Mr. AOW were physically able to go on a vacation, we sure as hell couldn't afford one now. So much for the golden years, huh?
And add to that the silent tax they impose on us by printing more money. Government policy is making us poorer.
ReplyDeleteAs I told someone in Left Blogistan recently, if we could actually see some progress, benefit or improvement from the money our government gobbles up, we probably wouldn't have such a big problem with the tax rates.
We are angry because we see nothing but failure and waste. Federal, state and municipal governments are destroying wealth.
Destroying wealth?
ReplyDeleteYes.
And redistributing wealth too.
I know, it's their capitalist's, but just where oh where is the outrage from the left?
ReplyDeleteWe hear Michael Moore's rhetoric and yet no mention of GE?
The limits of their hypocrisy and theft are boundless!
Being a foo (friend of obama) is very lucrative business.
ReplyDeleteThose that can are gaming the system. Those that can't pick-up the tab. We need to throw away the tax code and establish a flat federal sales tax with exemptions for food , medical, and housing. there would be no such thing as corporate tax and who cares we end-up paying it any way.
ReplyDeleteWe need to start calling this Obama day
ReplyDelete@ Innominatus: "Being a foo (friend of obama)..."
ReplyDeleteFoo... I'd never heard that before. I love it!
Why did you put PBS of all things up on that picture? I mean, WTF man??? Really???
ReplyDeleteI don't care if "GE," an abstract contractual entity, pays taxes. I want the sleazy f'n RICH to pay their fair share for a change. ANY TAX ON A MASSIVE ABSTRACT CONTRACTUAL ENTITY LIKE GE IS JUST A SALES TAX ON EVERTHING YOU AND ME AND EVERYONE ELSE NEEDS.
Why you guys fuss over corporate taxes is beyond me. If we just got rid of the damned tax, it wouldn't be an argument anymore, the rich would see their net income grow even though their taxes increase, we could grow our labor-intensive exports, and the country wqould be far, far, far better off.
We have among the highest corporate taxes in the world and the lowest top marginal income taxes in the world. At what point do you guys think about that fact and think, "Gee???? Am I a stupid sucker????"
Again! Why do you guys fuss over corporate taxes?!?!?!?!?!
JMJ
Level of taxation is a fair subject of debate. My problem is how the government and corporations are having an orgy with our money.
ReplyDeleteThen you might want to consider the effect if all companies had a tax burden like GE's.
ReplyDeleteImagine all the thousands of companies forced out of the US by overtaxation coming back. Imagine all the new business ventures here that would start. Imagine the foreign companies that never were American coming here.
Then... all the massive job increases, and the economic activity. Would this be worth it?
I like John Stossel.
ReplyDeleteJersey McJones doesn't get it. Well what did you expect?
DMarks: In a straight up tax system, I'd agree with you, but we both know that is not the case. GE, like other big crony crapitalists, bought their exemptions from politicians.
ReplyDeleteIt is political corruption and a gross distortion of the US marketplace, which is anything but free. Notice I don't blather on like the left about the rich "paying their fair share." My problem is that our body of law and regulations makes a mockery of the very concept of the rule of law. It is a rigged game.
These corporations and big banks encourage government barriers to free enterprise because they have special way around them. This dampens competition and keeps the little guys out who can't afford lobbyists and whole legions of creative accountants.
We don't need to zero out the corporate tax, we just need to make it as low as the lowest rate in the developed world and get rid of all the exemptions and loopholes.
Go read this NY Times article for a little history.
ReplyDeletehttp://www.nytimes.com/2011/03/25/business/economy/25tax.html?pagewanted=4&_r=1&adxnnl=1&adxnnlx=1301774435-Weg0JLNEVCr65KY36IHBvQ
Ronald Reagan was shocked to learn GE paid no taxes, and his policy makers took that into consideration when they did their tax reform, resulting in GE actually paying taxes for a few years, but they bought themselves more exemptions in the early 90's.
So while paying no taxes should theoretically create more jobs as you posit, here's what has actually happened...
"Since 2002, the company has eliminated a fifth of its work force in the United States while increasing overseas employment. In that time, G.E.’s accumulated offshore profits have risen to $92 billion from $15 billion."
Their legal tax evasion has created jobs somewhere, but not in the stupid country that allows them to pay no taxes.
GE and others like them are corporate welfare queens, and we Americans reap little benefit.
Silver,
ReplyDeleteThink about this.
Constitutionally, taxes are levied on transactions, right?
So, many, if not most, transactions are already taxed, right?
And you would agree that many transactions involve corporations, right?
Now, for all Human Beings, like you and me, all income we receive is transactional, right?
And, of course, a corporation is not in an of itself a human being, right?
So, what exactly is your constitutional argument for taxing the profits of corporations?
ANY ONE OF YOU ANSWER ME THAT.
JMJ
Jersey: Your premise is flawed. It had nothing to do with transactions. Here's what the 16th Amendment to the US Constitution says:
ReplyDeleteThe Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
Also, the corporation is a legally-constructed person under the law. That is how the have the right to give money to campaigns and make commercials for candidates and causes.
Our current tax code encourages businesses to invest profits in unproductive activities in order to avoid taxes.
Anyway, I am all for a complete restructure of the tax code, and the truth underlying your scattered statement is valid: Tax a business and they will just pass it along to the consumer.