Here’s How General Electric (GE) Got Away With Paying Zero Taxes
Lost in the current political fuss about lowering the corporate tax from “35%” is the fact that corporate profits as a % of GDP are at record lows in the U.S. With armies of accountants (many former government officials) and tax havens across the globe our largest corporate citizens play games of “ Double Irish ” and “ Dutch Sandwich ” (what are these? see here), in between lobbying for loopholes galore in the U.S. tax system. Yes we do have socialism in America … but it’s mega corporate socialism. Who are the suckers actually paying 35%? Small business. This is why there is actually resistance on Capital Hill to changing the corporate farce that is the “35%” rate to something lower – because it’s nothing more than a talking point for our multinationals to whine about.
The New York Times (NYSE:NYT) has a fantastic expose on the nation’s largest welfare recipient corporation - General Electric (NYSE:GE) . I will give the CEO Jeffrey Immelt credit though – at least he admits what GE (NYSE:GE) does – here is a quote I’ve posted a few times the past few years on the site when discussing the “free market” in the U.S.:
It’s never been a free market; it’s never gonna be a free market. That’s just the way it is. The fact that I’d like GE to work in concert with where government policy is in the U.S. doesn’t mean that I’m a traitor or a bad guy, I think it’s just being practical that that’s gotta happen.
That quote speaks more to ‘winning’ business, but the NYT (NYSE:NYT) piece today focuses far more on the financials of the company. For example:
•General Electric (NYSE:GE), the nation’s largest corporation, had a very good year in 2010. 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 . It all has become a bit of a farce – we’ve posted many stories on this subject ….who can forget the public housing companies who banked record profits due to the Greenspan/Berananke bubble – but lobbied to get all those taxes credited back during the downturn? When they did not get what they wanted, they rescinded lobbyist dollars …..and within weeks they got the legislation they demanded. Who says Congress can’t move fast? I believe it is called bribery in other countries, but we just call it “the political process”. I could go through a litany of examples in almost every industry, but I prefer to keep my breakfast down…
As speculators in the market – this is a ‘good thing’. After all paying a tiny fraction in taxes increases profits. So we can slap a PE ratio on that lightly taxed profit base and apply an appropriate price, which obviously would be much higher than if these corporations paid what was due under the spirit of the tax code. However, in terms of a $1.6T annual federal deficit … it’s not quite so bright of an outcome
SNIP
