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  • GE avoids paying Taxes

    http://www.nytimes.com/2011/03/25/bu...omy/25tax.html
    G.E.’s Strategies Let It Avoid Taxes Altogether

    In January, President Obama named Jeffrey R. Immelt, General Electric’s chief executive, to head the President’s Council on Jobs and Competitiveness. “He understands what it takes for America to compete in the global economy,” Mr. Obama said.

    The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States.

    Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.

    That may be hard to fathom for the millions of American business owners and households now preparing their own returns, but low taxes are nothing new for G.E. The company has been cutting the percentage of its American profits paid to the Internal Revenue Service for years, resulting in a far lower rate than at most multinational companies.

    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. G.E.’s giant tax department, led by a bow-tied former Treasury official named John Samuels, is often referred to as the world’s best tax law firm. Indeed, the company’s slogan “Imagination at Work” fits this department well. The team includes former officials not just from the Treasury, but also from the I.R.S. and virtually all the tax-writing committees in Congress.

    While General Electric is one of the most skilled at reducing its tax burden, many other companies have become better at this as well. Although the top corporate tax rate in the United States is 35 percent, one of the highest in the world, companies have been increasingly using a maze of shelters, tax credits and subsidies to pay far less.

    In a regulatory filing just a week before the Japanese disaster put a spotlight on the company’s nuclear reactor business, G.E. reported that its tax burden was 7.4 percent of its American profits, about a third of the average reported by other American multinationals. Even those figures are overstated, because they include taxes that will be paid only if the company brings its overseas profits back to the United States. With those profits still offshore, G.E. is effectively getting money back.

    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.

    Yet many companies say the current level is so high it hobbles them in competing with foreign rivals. Even as the government faces a mounting budget deficit, the talk in Washington is about lower rates. President Obama has said he is considering an overhaul of the corporate tax system, with an eye to lowering the top rate, ending some tax subsidies and loopholes and generating the same amount of revenue. He has designated G.E.’s chief executive, Jeffrey R. Immelt, as his liaison to the business community and as the chairman of the President’s Council on Jobs and Competitiveness, and it is expected to discuss corporate taxes.

    “He understands what it takes for America to compete in the global economy,” Mr. Obama said of Mr. Immelt, on his appointment in January, after touring a G.E. factory in upstate New York that makes turbines and generators for sale around the world.

    A review of company filings and Congressional records shows that one of the most striking advantages of General Electric is its ability to lobby for, win and take advantage of tax breaks.

    Over the last decade, G.E. has spent tens of millions of dollars to push for changes in tax law, from more generous depreciation schedules on jet engines to “green energy” credits for its wind turbines. But the most lucrative of these measures allows G.E. to operate a vast leasing and lending business abroad with profits that face little foreign taxes and no American taxes as long as the money remains overseas.

    Company officials say that these measures are necessary for G.E. to compete against global rivals and that they are acting as responsible citizens. “G.E. is committed to acting with integrity in relation to our tax obligations,” said Anne Eisele, a spokeswoman. “We are committed to complying with tax rules and paying all legally obliged taxes. At the same time, we have a responsibility to our shareholders to legally minimize our costs.”

    The assortment of tax breaks G.E. has won in Washington has provided a significant short-term gain for the company’s executives and shareholders. While the financial crisis led G.E. to post a loss in the United States in 2009, regulatory filings show that in the last five years, G.E. has accumulated $26 billion in American profits, and received a net tax benefit from the I.R.S. of $4.1 billion.

    But critics say the use of so many shelters amounts to corporate welfare, allowing G.E. not just to avoid taxes on profitable overseas lending but also to amass tax credits and write-offs that can be used to reduce taxes on billions of dollars of profit from domestic manufacturing. They say that the assertive tax avoidance of multinationals like G.E. not only shortchanges the Treasury, but also harms the economy by discouraging investment and hiring in the United States.
    What is Perseverance?
    -Perseverance is commitment, hard work, patience, endurance.
    -Perseverance is being able to bear difficulties calmly and without complaint.
    -PERSEVERANCE IS TRYING AGAIN AND AGAIN.


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  • #2
    As a GE shareholder, I heartily approve.
    Facts do not cease to exist because they are ignored. -- Aldous Huxley
    Two things are infinite: the universe and human stupidity. -- Albert Einstein

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    • #3
      Originally posted by DAL View Post
      As a GE shareholder, I heartily approve.
      man. it was a good buy back when it was in the $14-$16 range. I wished I'd been able to scoop up more

      Comment


      • #4
        What do you expect? "Green energy" isn't cheap and why whould they want to be taxed at the highest rate in the world?

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        • #5
          This is reason #2765 why a flat tax makes sense. The current tax code rewards mega corporations like GE who can afford full time tax attorneys and specialist who can help them avoid paying taxes while the rest of us get stuck picking up the slack.

          As long as GE doesn't violate any laws, I personally don't have a problem with GE; they are just playing the game. Tax reform is the only solution.

          Comment


          • #6
            Actually, this has nothing to do with the flat tax, which is for individuals.

            From an economic perspective, a corporate income tax makes no sense.
            Facts do not cease to exist because they are ignored. -- Aldous Huxley
            Two things are infinite: the universe and human stupidity. -- Albert Einstein

            Comment


            • #7
              So here's what I find confusing...

              - Republicans constantly whine about how high the corporate income tax is - and how it must be reduced....
              yet the truth is for some corporations (like GE) and many more, the de facto tax is actually quite low
              In fact, taxes from corporations only constitute about 6.6% of the federal budget, down from 30% in the 50's
              And corporations record historically high profits - yet private industry job growth is anemic over the past 10-15 years

              - The Tea Party complains they are "Taxed Enough Already"...
              yet taxes on Americans are actually quite a bit lower over the past 20 years... and very low compared to other industrialized nations

              - Republicans constantly whine that we must reduce income tax on top earners, so it will 'trickle down'
              yet over the past 20 years, wealth is exponentially concentrated amongst the top earners, and real wages growth remains stagnant among the "middle class"

              So if the facts contradict the political rhetoric, why does the marketing and jingoism continue to work ?

              Comment


              • #8
                I think that what is really going on is that conservatives think that we are spending money on the wrong things, and the easiest way to stop that is to cut off the flow of money to the government.

                The high corporate tax probably does discourage new business that are not large and sophisticated enough to exploit the loopholes (or incentives) in the tax system. However, many of those businesses can be formed as LLCs or elect to be taxed as S corporations.

                I know that the taxes (including business taxes), employment-related taxes, insurance costs and regulations dissuaded me from operating a small law firm because it is just too complicated. In order to avoid being caught up in the mess, I would have had to hire someone else to handle all the administrative and personnel details.
                Facts do not cease to exist because they are ignored. -- Aldous Huxley
                Two things are infinite: the universe and human stupidity. -- Albert Einstein

                Comment


                • #9
                  Originally posted by dlo View Post
                  man. it was a good buy back when it was in the $14-$16 range. I wished I'd been able to scoop up more
                  and I wish I had had the nerve to jump in big when it was at the $7ish range during the melt down a couple of years ago....
                  The posts on this forum by this poster are of his personal opinion, and his personal opinion alone

                  "Politicians are like diapers. They need to be changed often and for the same reason"

                  "We fight not for glory; nor for wealth; nor honor, but only and alone we fight for freedom, which no good man surrenders but with his life"

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                  • #10
                    Originally posted by ArcticCop View Post
                    This is reason #2765 why a flat tax makes sense. The current tax code rewards mega corporations like GE who can afford full time tax attorneys and specialist who can help them avoid paying taxes while the rest of us get stuck picking up the slack.

                    As long as GE doesn't violate any laws, I personally don't have a problem with GE; they are just playing the game. Tax reform is the only solution.
                    + !,0000!!! Everybody pays 10-15% max- the millionaire pays $150,000.00/ on his $ 1mil. and Paco the dishwasher pays $3k on his $20K/yr- No B.S. tax breaks unless you can LEGITIMATELY SHOW you gave to charity,or did something beneficial to the community( and even then the deduction should be very limited)- taxes would go to infrastructure( roads ,schools, gov't emergency hospitals) and STRICTLY short term, limited unemployment or welfare......
                    "we're americans ! We don't quit because we're wrong, we just keep doing it wrong UNTIL it turns out Right"...

                    Comment


                    • #11
                      Originally posted by LA DEP View Post
                      and I wish I had had the nerve to jump in big when it was at the $7ish range during the melt down a couple of years ago....
                      yeah. so true

                      Comment


                      • #12
                        Originally posted by DAL View Post
                        I think that what is really going on is that conservatives think that we are spending money on the wrong things, and the easiest way to stop that is to cut off the flow of money to the government.

                        The high corporate tax probably does discourage new business that are not large and sophisticated enough to exploit the loopholes (or incentives) in the tax system. However, many of those businesses can be formed as LLCs or elect to be taxed as S corporations.

                        I know that the taxes (including business taxes), employment-related taxes, insurance costs and regulations dissuaded me from operating a small law firm because it is just too complicated. In order to avoid being caught up in the mess, I would have had to hire someone else to handle all the administrative and personnel details.
                        true.
                        and I fully believe the tax code needs correcting to fix issues like that.

                        However, the extreme position that the "right" takes completely misses the actual problem and only reinforces the position of the GE's of the world, at the expense of every taxpayer

                        Comment


                        • #13
                          Originally posted by dlo View Post
                          However, the extreme position that the "right" takes completely misses the actual problem and only reinforces the position of the GE's of the world, at the expense of every taxpayer
                          It would not be my strategy, but my strategy would doubtless fail, because it would depend upon people understanding and evaluating the issues. Given that the typical American has no understanding of economics (having been "educated" in our public schools and lived either in abundance or on handouts) and the typical politician has no interest in doing the right thing, there is no way to present the issues in a way that they would be understood.
                          Facts do not cease to exist because they are ignored. -- Aldous Huxley
                          Two things are infinite: the universe and human stupidity. -- Albert Einstein

                          Comment

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