G.E.’s Strategies Let It Avoid Taxes Altogether

[OzmO]

Because increased costs of doing business, including higher taxes, gets passed right along to the consumer.  We suffer.   

They aren't paying taxes, that's the issue, it's Not the rate, because if a company like GE can profit 5 billion and pay no taxes the 35% figure is not real.

[Dos Equis]

They aren't paying taxes, that's the issue, it's Not the rate, because if a company like GE can profit 5 billion and pay no taxes the 35% figure is not real.

It's as real as the individual income tax rate.  Some individuals pay zero or a low amount of taxes because their itemized deductions are so high.  Doesn't mean the ridiculously high individual rates are not high. 

GE is the exception.  I doubt most corporations pay no taxes (although the good ones know to end the year with the smallest amount of income possible after shareholder distributions).  All we're going to do by trying to close loopholes is make consumers pay more for goods and services.

[Skip8282]

nonsense

increased costs can not automatically be passed along to the customer

they can try but ultimately if they raise prices too high the customers will make alternate choices

if this were not the case then every company that was faced with rising costs would never go out of busines or see their bottom line effected and we all know that's not true

Nonsense.  First, they can't just raise taxes on GE alone.  A tax rate would hit all corporations or corporations in a given industry, etc.  And the cost will get passed on to the consumer.

At most you could reasonably argue that the full tax increase might not get passed off to the consumer.  But in the end, they get their money from the consumer and that's what they pay their taxes with.

[Straw Man]

Nonsense.  First, they can't just raise taxes on GE alone.  A tax rate would hit all corporations or corporations in a given industry, etc.  And the cost will get passed on to the consumer.

At most you could reasonably argue that the full tax increase might not get passed off to the consumer.  But in the end, they get their money from the consumer and that's what they pay their taxes with.

they can just close all the loopholes that let corporations manipulate the tax code in the first place

[OzmO]

It's as real as the individual income tax rate.  Some individuals pay zero or a low amount of taxes because their itemized deductions are so high.  Doesn't mean the ridiculously high individual rates are not high. 

GE is the exception.  I doubt most corporations pay no taxes (although the good ones know to end the year with the smallest amount of income possible after shareholder distributions).  All we're going to do by trying to close loopholes is make consumers pay more for goods and services.

I don't disagree with a lot of what you are saying. 

But how can we be ok with a company profiting 5 billion and not paying any taxes at all?

[Soul Crusher]

Opinion Return to Article General Electric's Harlem Horse Trade
Dan Freed
03/25/11 - 06:02 PM EDT
(GE story updated to clarify reference to taxes.)

http://www.thestreet.com/print/story/11060496.html





NEW YORK (TheStreet) -- General Electric(GE) Chairman and CEO Jeff Immelt and Rep. Charles Rangel (D., N.Y.) might seem like an odd pairing.


 
GE CEO Jeff Immelt got a big tax break from U.S. Rep. Charles Rangel (D., N.Y.), then gave $11 million to schools in Rangel's district. 

Immelt is a Republican who leads a giant corporation based in Fairfield, Conn. -- a town named as one of the preppiest places to live in the U.S. in the 1980 bestseller The Preppy Handbook.

Rangel has represented the decidedly unpreppy neighborhood of Harlem in the U.S. House of Representatives for 40 years.

What the men have -- or at least had -- in common were two things: immense power and a keen interest in tax policy.

Last year, Rangel was censured by his fellow House members and stripped of his chairmanship of the Ways and Means Committee, which oversees tax policy. He isn't even allowed to vote on subcommittees.

His censure came as the result of ethics violations, including the underreporting of assets, failure to pay taxes and using government stationery to solicit donations from companies that had business before him.

General Electric is not thought to be among the companies that received these solicitations on government stationery, but a front-page article in Friday's The New York Times raises some troubling questions about the relationship between Rangel and Immelt, and, by extension, about corporate lobbying and U.S. tax policy.

In May 2008, while Rangel still held his chairmanship, he met with GE tax chief and former U.S. Treasury official John Samuels. Samuels dropped to one knee and begged Rangel to extend a tax break that is especially important to GE, according to the report, which notes that a GE spokeswoman said Samuels was joking.

Rangel was presumably not joking, however, when he changed his position on the issue, known as "active financing," the same day. The chairman's reversal allowed GE and other companies, including Caterpillar(CAT), JPMorgan Chase (JPM), Ford(F) and IBM(IBM) to save an estimated $4 billion annually in taxes.

A month later, Rangel and Immelt were together in Harlem announcing a $30 million donation to benefit New York City schools, $11 million of which would go to institutions in Rangel's district.

Rangel and GE told the Times there was no connection between GE's donation and the tax break, though the article points to what appear to be conflicting statements by Rangel about whether he discussed the donation with GE or Immelt.
These latest suggestions of influence-peddling may mean relatively little to Rangel at this point, because he already has lost much of his authority.

Immelt, on the other hand, has become a central figure in President Obama's recent efforts to reach out to business. The president recently named Immelt to a high-profile post as chairmran of the President's Council on Jobs and Competitiveness, which, the Times notes "is expected to discuss corporate taxes."

 
Rep. Charles Rangel, stripped of power for ethics violations. 

Depending on your point of view, Immelt and GE either know everything about taxes or they know very little. Certainly they know very little about paying them. This year's bill for General Electric? Zero. Correction: GE will get a benefit of $3.2 billion.

(What's a tax benefit? GE, which emailed me after this story published (and posted a reply in the comments section below), says it didn't receive a refund. Here is GE's explanation.)

Bank of America(BAC) may be getting nearly $1 billion back for the 2010 tax year, but at least it lost $5.4 billion. GE, on the other hand, earned $14.2 billion.

Asked in 2009 during an investor presentation about how much influence he expected to have in a newly Democratic-controlled government, Immelt suggested GE shareholders shouldn't get their hopes up.

"I'm a Republican," Immelt said. "I mean, let's get that out there. I'm way over here, baby. So, not even close. So, I'm not sure, how much influence."

A look at GE's tax bill, though, suggests he's doing just fine.


E-Mail This Article to a Friend >>
-- Written by Dan Freed in New York.

[Dos Equis]

I don't disagree with a lot of what you are saying. 

But how can we be ok with a company profiting 5 billion and not paying any taxes at all?

The profits are distributed to shareholders, and we (the public) are the shareholders, so it really doesn't bother me.  Shareholders pay taxes on their distributions. 

Also, keep in mind that the government collects taxes twice, from both the corporation and the shareholder.   

[Soul Crusher]

White House defends embrace of G.E. CEO despite report company didn't owe taxes in 2010
Posted by Brian Montopoli 131 comments .

http://www.cbsnews.com/8301-503544_162-20047212-503544.html


 .In January, President Obama named General Electric CEO Jeffrey Immelt to head the President's Council on Jobs and Competitiveness, an economic advisory board focused on job creation.



In his State of the Union address that same month, meanwhile, he called for the closure of corporate tax loopholes in conjunction with a lowering of the corporate tax rate, which stands at 35 percent.



"Over the years, a parade of lobbyists has rigged the tax code to benefit particular companies and industries," he said. "Those with accountants or lawyers to work the system can end up paying no taxes at all. But all the rest are hit with one of the highest corporate tax rates in the world. It makes no sense. It has to change."


Mr. Obama's choice of Immelt came under scrutiny Friday in the wake of a front-page story in the New York Times reporting that despite $14.2 billion in worldwide profits - including more than $5 billion from U.S. operations - GE did not owe taxes in 2010.


In fact, the story said, G.E. claimed a tax benefit of $3.2 billion.


 GE CEO Jeffrey Immelt applauds at right during President Barack Obama's visit to the birthplace of the General Electric Co., to showcase a new GE deal with India and to announce a restructured presidential advisor, Friday, Jan. 21, 2011, in Schenectady, N.Y.
(Credit: AP) G.E. subsequently pointed out what it says is a significant flaw in the story: That the Times did not take into account the impact of its GE Capital losses in the financial crisis. G.E. said that if you exclude GE Capital its tax rate has been about 21 percent.


At his press briefing Friday afternoon, White House press secretary Jay Carney was asked to square Mr. Obama's call for corporate tax reform with his embrace of Immelt. Asked if the story bothered the president, Carney responded that "he is bothered by what I think you're getting at, which is that Americans, I'm sure, who read that story or heard about it are wondering, you know -- you know, how this could be."


Carney went on to make the case for corporate tax reform, noting that companies pay "armies of tax lawyers to understand how it works and to take advantage of the various loopholes that exist."


He stressed, however, that he was "not addressing this specific company because I don't know independently about that." (According to the Times, "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.")


Carney was asked why, if the president wants corporate tax reform, he appointed "to the head of the Competitiveness and Jobs Council a person who is now the poster child for abusing the system to get out of paying taxes."


"The jobs and competitiveness council is designed for just that," Carney responded. "And he has brought together a lot of voices on that. And he wants to hear the opinions of every member of that council. And we have said, with regard to questions about other members who have been appointed, that the president obviously doesn't want a council of people who agree with him on every issue; he wants to hear diversity of opinion."


"In the end, the decisions that are made about which policy to pursue on corporate tax reform will be the president's decision and his policy," he added.


Carney said later that Mr. Obama continues to have faith in Immelt to run the council.


Overall, the Times notes, the share of U.S. taxes paid by corporations has fallen from 30 percent of federal revenue in the 1950s to 6.6 percent in 2009.

BNET: GE's Scandalous Tax Breaks Are Rooted in Politics

[OzmO]

The profits are distributed to shareholders, and we (the public) are the shareholders, so it really doesn't bother me.  Shareholders pay taxes on their distributions. 

Also, keep in mind that the government collects taxes twice, from both the corporation and the shareholder.   

Not in this case.  But I see the point you are making.  I still have a problem with it.  I wonder what the share holders paid.

[Soul Crusher]

Jake Tapper: Today’s Questions for Obama's White House
ABC News ^ | March 25, 2011 | by Jake Tapper



TAPPER: GE paid no taxes last year. Given that the CEO of GE is the head of the president's competitiveness and jobs council, I'm wondering if you have any thoughts on their paying no taxes last year.

CARNEY: I hope so. But the -- look, I -- Jake, I'll just tell you.

TAPPER: Front page of The New York Times.

CARNEY: But I -- but I can -- I've read the story. The president has said that he is committed to corporate tax reform.

TAPPER: Does it bother him?

CARNEY: I haven't spoken to the president about this.

TAPPER: Why appoint to the head of the competitiveness and jobs council a person who is now the poster child for using the system to get out of paying taxes?

CARNEY: The job council and competitiveness council is designed for just that.

TAPPER: But is there a perception problem at all for the president? He says he wants to take on this issue, and yet --

CARNEY: He very much wants to take on this issue.

TAPPER: It's the second year in a row that GE didn't pay any taxes, and yet he appoints the CEO to the head of his competitiveness and jobs council is -

CARNEY: I think the issue, Jake, is --

TAPPER: -- that the American people --

CARNEY: No, because the president is very committed to addressing this issue.

TAPPER: So much so that he puts the CEO of GE at the head of the Jobs and Competitiveness Council?

CARNEY: Look, I think, you know, Jake, we can do this five or six times, but he is committed to corporate tax reform...


(Excerpt) Read more at blogs.abcnews.com ...

[OzmO]

Lip service.

[Bindare_Dundat]

Gods, rulers, the elite don't have to pay taxes, only the ordinary scum slaves have to pay their "fair share". I mean, how would anything run in the country unless you paid out untill your asshole was bled dry? ooops I almost forgot, everything in the country IS going to shit but maybe if they sqeezed us a little more things would improve? The zombie public will gladly fall for that one.


And to think, some people couldnt understand why Wesley Snipes didn't want to pay taxes. Many more should follow his lead.

[Bindare_Dundat]

The profits are distributed to shareholders, and we (the public) are the shareholders, so it really doesn't bother me.  Shareholders pay taxes on their distributions.  

Also, keep in mind that the government collects taxes twice, from both the corporation and the shareholder.    

The aggresive 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. There are more negatives than positves in the system that G.E. has bought itself and no one should be ok with that.

[Soul Crusher]

We need a VERY LOW flat tax with zero exemptions. 

[Dos Equis]

Not in this case.  But I see the point you are making.  I still have a problem with it.  I wonder what the share holders paid.

I wonder too.  I'd like to know how much was distributed, how much in taxes were paid, and how much was reinvested in the company. 

[Dos Equis]

The aggresive 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. There are more negatives than positves in the system that G.E. has bought itself and no one should be ok with that.

See my response to Ozmo.  I don't think we have enough information to say they're shortchanging the Treasury.  I don't like the fact the government can tax corporate income twice.  (Yes, I know that did not happen with GE.)  

It's not enough to get upset over a corporation that paid no taxes.  You have to look at how increased taxes affects consumers. I also don't want to pay more for the goods they provide, like washers and dryers (and I'm in the market for new ones), electronics, etc.    

[OzmO]

We need a VERY LOW flat tax with zero exemptions. 

I think Yes and no.  For example, making it so that charible donates are a tax write off help encourage these donations where there might be far less with zero exemptions.

[MB]

We need a VERY LOW flat tax with zero exemptions. 

Absolutely.  If we lowered the tax rate, the government would collect more money.  Maybe a flat tax of 10% for everyone, no exemptions.   

[Emmortal]

GE is the exception.  I doubt most corporations pay no taxes (although the good ones know to end the year with the smallest amount of income possible after shareholder distributions).  All we're going to do by trying to close loopholes is make consumers pay more for goods and services.

Corporate tax code is not something I'm an expert on by any means, but there are other corporations who paid no taxes, Bank of America didn't pay a single cent in taxes in 2009 either.  

 You can generally deduct income for which you paid taxes in a foreign country. By carefully choosing where to manifest profits and losses, you can pay taxes in countries that charge low rates and take losses in countries that charge high rates. This is especially productive for financial companies, who have no real industrial base: they just move money around. GE Capital, for example, took big losses in the US during 2008-2010, which they are able to use to offset US profits from previous or subsequent years. Meanwhile they materialized big gains in Ireland, which has a much lower corporate rate than here. If they eventually want to bring the money back here, they'll get taxed on it, but they can probably figure out some way to spend it in the meantime that avoids that.

The marginal tax rate for a sizable company is 35%. lots of companies pay it. But they are at a huge disadvantage with multinationals, many of which pay zero or negative (more subsidies than taxes).

Making this fairer would be a good thing, but it's difficult. not the least of which being corporate lobbyists. Multinationals have lots of options. If we try to capture a larger share of their income, they'll figure out ways of making less here, which is bad for us. People are much less mobile than corporate profits.

[Bindare_Dundat]

If we try to capture a larger share of their income, they'll figure out ways of making less here, which is bad for us. People are much less mobile than corporate profits.

I wouldnt be surprised if one these corporations actually had the nerve to rub our faces in it by making their next marketing slogan something like, "We got you by the balls." or "You're fucked with Us". 

[Dos Equis]

Corporate tax code is not something I'm an expert on by any means, but there are other corporations who paid no taxes, Bank of America didn't pay a single cent in taxes in 2009 either.  

 You can generally deduct income for which you paid taxes in a foreign country. By carefully choosing where to manifest profits and losses, you can pay taxes in countries that charge low rates and take losses in countries that charge high rates. This is especially productive for financial companies, who have no real industrial base: they just move money around. GE Capital, for example, took big losses in the US during 2008-2010, which they are able to use to offset US profits from previous or subsequent years. Meanwhile they materialized big gains in Ireland, which has a much lower corporate rate than here. If they eventually want to bring the money back here, they'll get taxed on it, but they can probably figure out some way to spend it in the meantime that avoids that.

The marginal tax rate for a sizable company is 35%. lots of companies pay it. But they are at a huge disadvantage with multinationals, many of which pay zero or negative (more subsidies than taxes).

Making this fairer would be a good thing, but it's difficult. not the least of which being corporate lobbyists. Multinationals have lots of options. If we try to capture a larger share of their income, they'll figure out ways of making less here, which is bad for us. People are much less mobile than corporate profits.

I said "I doubt most corporations pay no taxes," so the fact BOA may have paid no taxes sort of proves my point (that some corporations pay no taxes, but most probably do). 

And what you said in your last paragraph is really the heart of this whole corporate tax issue:  they will make less here and/or raise the price of goods and services.  People need to be careful what they wish for.