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 corporate taxes.

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 corporation. 

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.