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After Getting Bailed Out By American Taxpayers, General Electric Pays Zero U.S. Taxes, Pretending that All of Its Profits are Overseas
General Electric got bailed out by American taxpayers.
Specifically, it was given $139 billion in FDIC guarantees and support by the Federal Reserve for it's commercial paper (see this).
So you'd think that GE would return the favor by paying American taxes, right?
Wrong. GE paid no U.S. taxes for 2009.
As CNN points out:
GE
had plenty of earnings last year -- just not in the United States. For
tax purposes, the company's U.S. operations lost $408 million, while
its international businesses netted a $10.8 billion profit.
Unfortunately, GE is not alone.
As I wrote in November:
The Washington Post notes:
About
two-thirds of corporations operating in the United States did not pay
taxes annually from 1998 to 2005, according to a new report scheduled
to be made public today from the U.S. Government Accountability
Office...
In 2005, about 28 percent of large corporations paid no taxes...
Dorgan
and Sen. Carl M. Levin (D-Mich.) requested the report out of concern
that some corporations were using "transfer pricing" to reduce their
tax bills. The practice allows
multi-national companies to transfer goods and assets between internal
divisions so they can record income in a jurisdiction with low tax rates...[Senator]
Levin said: "This report makes clear that too many corporations are
using tax trickery to send their profits overseas and avoid paying
their fair share in the United States."Indeed, as Pulitzer prize winning journalist David Cay Johnston documents,
American multinationals pay much less in taxes than they should because
they use a widespread variety of tax-avoidance scams and schemes,
including:
- Selling
valuable assets of the American companies to foreign subsidiaries based
in tax havens for next to nothing, so that those valuable assets can be
taxed at much lower foreign rates
- Pretending that
costs were spent in the United States, so that the companies can count
them as costs or deductions in the U.S. and pay less taxes to the
American government
- Booking profits as if they
occurred in the subsidiary's tax haven countries, so that taxes paid on
profits are at the much lower safe haven rate
- Working
out sweetheart deals with certain foreign governments, so that the
companies can pretend they paid more in foreign taxes than they
actually did, to obtain higher U.S. tax credits than are warranted
- Pretending they
are headquartered in tax havens like Bermuda, the Cayman Islands or
Panama, so that they can enjoy all of the benefits of actually being
based in America (including the use of American law and the court
system, listing on the Dow, etc.), with the tax benefits associated
with having a principal address in a sunny tax haven.
- And myriad other scams
As Johnston documents, the American economy is hurt by the massive underpayment of taxes by the huge multinationals.
- advertisements -
Lets see: the only good taxes are dead taxes. No, a bit stupid.
The only acceptable taxes are when I tax you and you dont tax me.
Sounds better...
Sorry, but GE does not have an obligation to pay a single dime more than it legally owes in taxes. Has anyone on this board overpaid their taxes after say collecting unemployment for a period? After all the US tax payer just bailed you out with some unemployment benefits? No, you don't voluntarily over pay? Didn't think so. If GE did elect to over pay their tax bill folks would be screaming about how they are violating their fiduciary duty to shareholders.
If GE is legally gaming the tax code take it up with the douche baggery that created a system that can be gamed.
Of course, GE is among those thieves who corrupted the system, douchey!
They can call bribery and payoffs incentivizing all day long, but its still the same crime and fraud.
They can call the perversion and compromising of laws regulatory arbitrage all day long, but its still the same crime and fraud.
If nobody has an obligation to get along in a society, then its time to do to GE, JPMorgan and GS what they did to them over in Greece (and attempted, but failed, to do to Citi's offices over there).
"Protective tarrif is a great idea too. Raise revenues with a 15-20% tax on imported goods of all types. end NAFTA and WTO, restart American industry with American wages."
For 30yrs, I have been pissed over this scenario.
THIS is the only possible way to even remotely have a shot at not dying a death by a thousand cuts.
But, this was sold to the world, as THE ONLY way, to End All Wars..............Interdependence.
They left off, total Global Economic Meltdown...............
Yeah, and when a real war starts, your interdependence could cost you victory.
Just think if we had been interdependent on the countries overran by Nazi Germany for our war material during WWII.
Perfectly legal, for GE.................
Try not filing your earnings off an overseas account, and see if it's perfectly legal............NOT.
I know the IRS would never question that,ever.
Oh, yeah, let's not forget the reach around buddies Immelt and Big "O".
The corporate tax of about 35% is just about right. Just apply it regardless of where they hide. If they try to flee with their loot, seize the assets and jail them for sedition. Repeal the income taxes on people, and actually tax the corporations. Protective tarrif is a great idea too. Raise revenues with a 15-20% tax on imported goods of all types. end NAFTA and WTO, restart American industry with American wages.
Tariffs are not a good idea. Why punish the consumers with higher prices to "restart American industry with American wages." A much simpler and efficient (read less costly) way of accomplishing this would be to lower federal level business taxes and reduce or eliminate the nearly countless intervening, meddling regulations at the federal level, i.e., return to the states the regulating power that has unconstitutionally accumulated in Washington. A command and control economy from an out of touch central government will result in uncertainty, and economic apathy and entropy. While I'm enjoying this pipe dream, perhaps Congress could consider reducing the Federal budget, and pay down some of that national debt with the tax receipts they presently confiscate...
http://www.creators.com/opinion/walter-williams/trade-deficits-good-or-bad.html
Negative! Check again, dude!
http://www.economicpopulist.org/content/one-thousand-names-fraud
Even those corps who are supposed to pay 35%, still unethically and illegally, avoid it.
Thanks to 100% corrupt corporate-congressional-america...
Really dumb idea, afterall corporations don't pay taxes they simply pass them on to people. All corporate taxes are paid by a combination of: 1) higher prices passed on to consumers, 2) lower wages for employees and 3) lower returns to shareholders. That's it. There is no other source of monies for a corporation to pay taxes. The better idea is to eliminate all taxes on business which will attract capital to the US and broaden the economic base. Far better off applying no tax on your source of capital and jobs and a low rate on a wide economic base than what would amount to a necessarily high rate on capital and job creation. Look at how much money is held and invested off shore by US corporations responding rationally to the US tax code. One of the biggest revenue-neutral economic stimulus measures Congress could pass would be a 0% tax on income repatriation it would bring $100s of billions of capital into our economy and cost the Treasury nothing since the Treasury collects nothing on the money kept offshore as it is.
One more time. This is why taxes on corporations are stupid. Tax them and they leave. If the Federal government wants to tax something, let them tax imports and nothing else.
Check how many US industrial corporations have set up corporate HQs in Bermuda, not just offices.
We tax things that we want to make disappear: Tobacco, alcohol, businesses, profits and jobs. And all but the first two are ready to disappear. But we don't tax imported oil, most imported goods, and imported services.
Gee, you mean we should uphold the consitution? How would we finance our empire?
this just cant be right, GE earned 10 billion overeas and nothing in the US? Does this mean that GE is no longer a US company? Where are its largest shareholders? If they are not US resident, why is the Federal Government guaranteeing its debt? How many other non-US companies are not paying US taxes using a transfer pricing model on cash flows generated in the US? ugh
What happened to the alternative minimum tax?
Three people walk into a drugstore....
Already your proposition has failed. The tax doesn't change whether you do or don't go into the drugstore, and whether you do or don't buy toothpaste.
If I could have all my income posted to a 401K/IRA first, and then only have the income tax invoked on money that I take out of the 401IK/IRA for consumption, you'd have a point. But if all my income comes from muni bonds, you don't.
Only for the retired who spends every cent of taxed income every year will the effect of an income tax and a sales tax be what you suggest. I hope to get there myself, as most of my income at that point will be inside a 401K/IRA, and I'll only withdraw will be for spending.
(Note: Unless of course I have to pull it all out to avoid the theft of IRA/401K funds suggested by Obama's pals at SEIU).
One in three US corporations still pay income taxes?
Clean out Congress. Or the rape and torture of Middle America will continue until death.
It is standard practice.Different rules apply to the ruling class.
Not fair or ethical.But it is what it is....another example of the exceptionalism of wealth.
Keith O. and his gang of dimwits will be right on the case, I'm sure, as well as the shrewd analysts on CNBC.
Most excellent post, your excellency!
This is a perfect microcosm example of the how and why of US national debt and deficit spending (teabaggers, pay attention!!!).
GE profits as a death profiteer and war profiteer (like so many others) -- deriving profits from that war spending, not to mention the bailout funds.
Then, they pay zero in taxes by profit shifting, sheltering profits offshore, and a host of other tax evasion schemes practised by 70 percent of other US-based corporate thieves.
A site which explained this (not particularly well-written, but it gets the point across) I happened upon here:
http://www.economicpopulist.org/content/full-spectrum-inequality
Thanks again, General Washington!
And this is news, how?
I love the outrage towards a defunct system that has been in place for years.
Its so twisted. Taxpayers being hounded, fined, and jailed. Meanwhile corporations use our money (bailouts, grants, incentives) and pay nothing to the system which they manipulate with the help of our politicians who are payed by us.
Welcome to the United States of Tax Serfs.
Now cough up 50% of your income to the taxman.
GW,
Here is the issue.
Taxes should be about fairness and competitiveness.
Today's system is not fair. Why ?
The US already has a Consumption Tax.
Three people walk into a drugstore to buy a tube of toothpaste that has a $1 pricetag..
1) Person one is in the 38% tax bracket and pays $1.38
2) Person 2 is in the 25% tax bracket and pays $1.25
3) Person 3 is in the 10% tax bracket and pays $1.10
So is it fair that one person pays $1.38 and one pays $1.10 ?
Fair would be when each person pays $1.15.
Fair is when everybody pays the same price for what they consume.
...........................................
But the problem is much more severe.
Taxes are just one of the components of prices. The higher the taxes, the higher the prices for everyone, no matter what the tax structure type.
What is at hand is efficiency with respect to competitiveness in a global marketplace, as well as the construct of a sound economy and thus its currency.
....................................
The US is on course to ruin its own competitiveness by failing to make its tax structure more efficient and more fair.
A maximum tax component of price should be no more than 15%.
Also, in a democratic way, the voters should vote on how they want the 15% to be spent categorically, not lobbyists.
MarketFox,
Great post, but you have a little bit of a math error in there. The actual costs for the three brackets are as follows:
1) Person 1 is in the 38% tax bracket and pays $1.61
2) Person 2 is in the 25% tax bracket and pays $1.33
3) Person 3 is in the 10% tax bracket and pays $1.11
I'll just do #1 here to demonstrate this. $1.61 x .62 (how much of your income you have left after giving the robber barons the .38) = $1.00. You could also show this 'the long way' by starting with the $1.61 x .38 = .61, so they take .61 taxes from your $1.61, leaving you $1.00 for the toothpaste. So, it turns out to be much worse than your example showed.
US tax money? Really? It has been done on emitted credits. How is this US american hard earned tax money?
Will we see the phony NBC hosts like Ratigan, Olberman, Richel Maddow, Chris Mathews and so on exposing this case of big corporate running above the laws?
I'm not holding breath for that.
Me thinks you are dissing Radigan un-justly
My opinions on Ratigan have always been mixed. He has both good stuff and some other ... let's say shaky ones.
I remember Ratigan discussing news with other NBC hosts a year ago on a story about a gunman carrying a rifle outside of an Obama townhall meeting. They showed the video with ctitical portions chopped where a guy with an AR15 was among the demostrators. The conclusion was it's a sign that WHITEMEN were upset over a black president in White House.
When the same story was reported on other channels, no portions are chopped off fromt the video, and you could see the gunman WAS A BLACK TO BEGIN WITH. So how did Ratigan find a "WHITEMEN" racial perspective out of this non-event farce? That's why I always take a grain of salt on whatever he reports.
Ratigan was an early and vocal cheerleader for the Goldman bailout. He did change horses after the deed was done but I can't say for sure if that was to protect his market share or out of genuine care for others. The likelihood of any talking head on CNBC having normal human emotion is slim to none, if they must slit throats to keep their face time, show em the knives.