Citizens and businesses can only hope to one day
be as savvy tax-wise as General Electric Comp. The tech giant earned a
sweet $14.2B USD in profit in 2010. And now the U.S. government has given
it a hefty gift -- a year completely free of taxes and a $3.2B USD tax benefit.
The U.S. tax rate for corporations is supposedly
35 percent. But over the years crafty politicians have collaborated with
business allies to work more holes into the tax code than a block of Swiss
cheese. But even in today's era of free flowing corporate tax loopholes
few companies have perfected the art to the degree GE has -- making massive
profits, paying no taxes, and getting a tax benefit.
Part of how it snuck its way into such a
sweetheart deal is the company it keeps. President Barack Obama anointed
GE's chief executive as the head of his new Council on Jobs and
Competitiveness. Among the council's key roles? Discussing
According to The
New York Times, which first
broke news of GE's incredible feat, GE spent years
of "innovative accounting" and fierce lobbying to slowly slim
its tax bill. But when it really started experiencing windfall gains was
when it hired a former Treasury official to lead its tax department and filled
its team with former IRS employees and Congressional tax specialists.
Ultimately GE's massive profits mean a load of
money for the company's executives and top shareholders.
For the rest of the U.S., the situation is less
rosy. Today corporations only account for 6.6 percent of the federal
government's tax revenue. Small businesses and taxpaying citizens have to
make up the remainder of the tax deficit. And in GE's case citizens and
smalls businesses find themselves in the strange situation of financing a
special bonus for the government's favorite wildly successful
GE owns a number of assets, mostly in the high
tech and communications field. It owns a number of utilities, supplies power
grid electronics, sells vehicle components, and even owns cable TV properties, such
as NBC Universal.Updated: March 26, 2011 10:10 a.m.To add a few more specifics on the origins of these tax breaks, GE is largely able to get them via a clever game of disguising profits in lucrative untaxed offshore holdings.President Ronald Reagan in the eighties tried to eliminate this kind of behavior with the 1986 Tax Reform Act. Describes Robert S. McIntyre, director of the liberal group Citizens for Tax Justice, "Cracking down on offshore profit-shifting by financial companies like G.E. was one of the important achievements of President Reagan’s 1986 Tax Reform Act. The fact that Congress was snookered into undermining that reform at the behest of companies like G.E. is an insult not just to Reagan, but to all the ordinary American taxpayers who have to foot the bill for G.E.’s rampant tax sheltering."In the wake of the Reagan era, the loopholes to the bill's strict provisions were added during the George Bush and Bill Clinton eras. Then in 2004 President George W. Bush cooked up the American Jobs Creation Act, perhaps the biggest blow to President Reagan's policy yet. The AJCA handed GE what would amount to $1B USD in tax savings a year. Many of its provisions were reportedly custom-tailored to GE.While President Obama and his Democratic Congress contemplated trying to roll back those provisions, a concerted $21M USD lobbying effort convinced them to drop the effort. The most vocal critic, Representative Charles B. Rangel (D-N.Y.) decided to pull back, though, killing the effort. That same year GE, at his request, donated $30M USD to New York City public schools.While President Obama hasn't added much to the loopholes, he's done little to fight them. And his decision to install GE's CEO on his Jobs board, which plays a role in formulating corporate tax policy, is arguably a step towards preserving the company tax breaks. In that regard President Obama is following in his immediate predecessor's questionable footsteps, and continuing the rejection of President Reagan's tax reform.
quote: Thanks for sharing that useless bit of stock trivia. I have some more for you. Stock over a month period is in no way relevant in the stock market.
quote: #4. GE is a company in terrible shape.
quote: I would prefer the US to have NO coporate tax
quote: I'd prefer seeing a flat- or fair-tax
quote: If he worked to earn it then it is his, and he's just as entitled to his $100,000 as the other guy is entitled to his $10,000.
quote: Even the Church knows its fair to tithe everyone the same 10%, and its about as money grubbing an outfit as you can get.
quote: I would prefer the US to have NO coporate tax, provided the goods and services are produced in the US
quote: He doesn't try to time the market
quote: Only in America
quote: Mick you confuse me to no end. One day you're advocating people not cheapen arguments with partisan BS (your nuclear article) and they next you present this partisan BS.
quote: George W. Bush (along with his father and Bill Clinton) worked to slowly install loopholes that allowed GE to hide its offshore profits. George W. Bush probably had the biggest role with his 2004 Jobs Act.
quote: Actually both you and the above op who argued with you about Obama's role are partially correct. George W. Bush (along with his father and Bill Clinton) worked to slowly install loopholes that allowed GE to hide its offshore profits. George W. Bush probably had the biggest role with his 2004 Jobs Act. That said, Obama, after heavy lobbying from GE, has turned a blind eye to the breaks and has even gone as far as appointing Immelt to his jobs panel, which helps decide corporate tax policy, assuring GE that its breaks will remain. If you're looking for the "good guy" here -- someone who defied such cronyism -- you have to go all the way back to President Ronald Reagan, who passed the Tax Reform Act of 1986 which cracked down on companies hiding profits overseas... Obama, Bush Jr., Clinton, and Bush Sr. all pretty much worked to greater or lesser extents to undo Reagan's cuts. I've added some additional clarification in the final paragraph as I wanted to make sure I wasn't inflating Obama's role here to greater than it was. But he has played a part in this, don't be mistaken.
quote: Besides, what the heck is this doing on a "tech" website?
quote: This is just another example of why we need a fair tax or flat tax. We need to throw out our abomination of a tax code and drastically simplify it.
quote: we don't need like hate crime legislation
quote: You have no idea what a fair or flat tax is, do you?
quote: Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power.
quote: The GOVERNMENT is giving away OUR money. Our politicians are the ones screwing America. This is not about the corporations.
quote: GE is happy to take any bonus that will help it compete.
quote: A national sales tax that will give the raw amount of tax required to support this 800lb gorilla government,
quote: I can not fault any company for legally using the tax laws to their advantage
quote: At least be honest in the rant you have..he did NOT need support for libya..because NATO is not USA. Now if the other countries all voted NO for libya at NATO meeting and he went ahead and did his own thing that would be cause for alarm. But he did not. In fact, at first the USA was hesitant about voting yes, but Clinton spearheaded this Yes vote.
quote: Jason,It sounds like you have given up the fight against corrupt politicians. If you have a little pride in this country, you might find a group of people who are actively trying to put us back on a decent path...whatever your political leanings.
quote: Don't bring me down with this no hope stuff, please.
quote: My point was that there's an endemic corruption @ the federal level.
quote: 6.6% of Federal tax revenue
quote: That's not the point. If someone is pointing a gun at a crowd, do police have justification to shoot that person even if it turns out the gun was a fake?
quote: but just because there weren't any WMDs found is a stupid/unfair reason to blame Bush.
quote: Obama didn't even notify them until after the bombs were dropping
quote: Oboma really is the worst president we have ever had
quote: He is a complete lackey for big business
quote: thinks he is above the law
quote: He got no congressional approval before going into Libya. This is clear violation of the constitution
quote: his obamacare healthcare is also unconstitutional
quote: He is bankrupting our country.
quote: Living well is the best revenge.
quote: - Lies about WMD to get the Iraq war.
quote: - The whole Hali-Burton mess.
quote: - Digging a big hole for the US economy
quote: - Proving the US is a worse as the enemies by using torture, Establishing the Gitmo prison, Rendition...
quote: Enron's bankruptcy, the biggest in U.S. history when it was filed in December 2001, cost 20,000 employees their jobs and many of them their life savings.
quote: As for Healthcare being unconstitutional I'm no expert. If the constitution is prohibiting making sure all people in the US can get proper health care then the constitution needs fixing. Even Cuba has better health care than the US and health care for all should not even be a question.
quote: He is a complete lackey for big business and thinks he is above the law.
quote: (Now he's exactly the same a W, based on your comments ...