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Obama on Corporate Taxes – “Whatever GE wants”
Jeff Immelt, the boss at GE and the President's Best Executive Friend Ever ("BEFE") had this to say about reforming corporate taxes:
Our
system is old, it’s outdated, it’s complicated -- and all of us are for
closing the loopholes. Absolutely, a lower corporate tax rate, and a territorial system, just like our global competitors have.
I love it when 'Jeff Boy' says “all of us”. Who is he referring to with that? American citizens in general? Not the case. Employees of big companies like GE? No, not them either. The “Us” that Jeff is referring to is America’s CEO’s and top exec’s. That lucky group comes to about 0.01% of the population.
Unfortunately, guys like Immelt have the President’s ear. That Jeff Boy
is actually a formal adviser to the president while at the same time he
is pushing a tax plan to benefit himself and another 30,000 execs is over the top. From GE’s top bean counter, Gary Sheffer:
GE favors closing loopholes, a lower corporate tax rate, and a territorial system in line with every other developed country in the world.
So GE and the rest of the execs are willing to give up loopholes, but in exchange they want a lower marginal rate and they want a territorial system.
This territorial system that is being pushed means that companies like
GE will not be taxed at all on any of their foreign income. These
companies will be tax motivated to build new productive facilities in
the lowest tax haven. A territorial system will just push productive
assets (and jobs) offshore until the US tax rate falls to a level that
is equal to (or less than) another country. As a result of this proposal, the big US companies will hold the country hostage. Either they get the lowest marginal tax rate, or they just ship off some more jobs abroad.
Truly global companies like GE will be able to drive a truck through
these new rules. They will push profits offshore so they will not be
subject to even the new lower US rates.
This chart from the CBO shows the tax contributions of US corporations.
Does it surprise you that all of our successful companies combined pay
about 1/8th the amount that individuals do? If the proposals put forward by Immelt are adopted, the amount that those companies will contribute will fall further.
Lower taxes is exactly what the “Us” crowd wants. That’s understandable, they are Us’s. But for the life of me I can’t understand why Obama has joined with the Us’s. If voters actually figure out who is calling the shots on tax and economic policy they will turn on the big O. Having Jeff Boy as the President’s BEFE is the worst conflict of interest I can think of.
Note:
As an individual (and US citizen) you are subject to taxation on a
global basis. If you invest in Australia and make a buck, you owe taxes
to Uncle Sam. If you went over the border to Canada to work for a year,
you would owe taxes in the US.
Assume that individuals had a territorial system on tax as the Execs are
pushing for. What might you do? You might be inclined to work outside
of the US and you certainly would have a motivation to put your money to
work some other place.
These tax motivations would be very much to the disadvantage of the US. The economy would suffer and tax receipts would fall. Of course there is no discussion for individuals to be taxed on a territorial system. That carve-out is only for the big shots in the S&P 500.
If it’s not reasonable or fair for individuals to be taxed on a
territorial basis how could it possibly be fair for the S&P 500? Answer: it can’t be.
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Immelt, the jobs czar from hell by Debra Saunders | SF Chronicle | April 5, 2011
The New York Times reported last month that General Electric earned $14.2 billion in international profits, including, $5.1 billion in the United States. Yet GE did not pay a dime in federal income taxes last year. Oddly, President Obama chose GE Chairman and chief executive Jeffrey Immelt to head his President's Council on Jobs and Competitiveness.
According to the Associated Press, Immelt's compensation package doubled to $15.2 million last year, while this year, GE is seeking major concessions from the unions that represent its shrinking American workforce. That makes Immelt the wrong guy for the job of jobs czar
Or as former Democratic Sen. Russ Feingold wrote, "Someone like Immelt, who has helped his company evade taxes on its huge profits -- and is now looking to workers to take major pay cuts after his compensation was doubled -- should not lead the administration's effort to create jobs."
No lie.
After all, what kind of economic advice can Immelt give?
Probably advice like this:
Don't push for lower corporate tax rates. Reformers want Washington to lower the U.S. corporate tax rate of 35 percent, so that America can compete with low-tax countries like Ireland and Singapore, where GE offshored significant profits. Immelt says corporate tax reform "deserves a healthy debate," but he knows the big money is in loopholes.
Hire an army of tax lawyers. GE's tax department has 975 employees -- and make no mistake, they contribute to the economy.
Never stint on lobbyists. In the last decade, GE spent more than $200 million on lobbyists, many of them tax-law specialists. Remember, the best way to play by the rules is to ghostwrite them.
If Washington wants to spend money, support the spending. It doesn't matter if legislation involves economic stimulus, clean energy or health care -- if your operation is large enough, it will get a cut.
There are some things you can't outsource. For example, CEOs, pet members of Congress and Washington lobbyists.
Donate to candidates from both parties. Republicans talk up lower, simpler taxes, but it's just talk. Last year, Obama hectored what he calls the rich for "shirking" their duty to pay higher taxes. But Obamaland has sincere sympathy for those shirkers. Look at Obama's pick for Treasury Secretary, Timothy Geithner, who failed to pay $34,000 in Social Security and Medicare payments due on income earned while working for the International Monetary Fund.
When Obama appointed Immelt to his jobs and competitiveness council, the president said that Immelt "understands what it takes for America to compete in the global economy."
Unfortunately, Immelt seems to have learned that the best way to increase GE's profits was to eliminate a fifth of its American workforce, ship jobs overseas and hire a small army of tax attorneys.
A generous person might argue that GE's experience makes Immelt the smart choice to reform the tax code.
But Immelt can't be in charge of GE and reform a tax system it helped pervert. Obama must know that. Obama must not care.
http://www.realclearpolitics.com/articles/2011/04/05/immelt_the_jobs_cza...
Never stint on lobbyists. In the last decade, GE spent more than $200 million on lobbyists, many of them tax-law specialists. Remember, the best way to play by the rules is to ghostwrite them.
The $200 million figure neglects the fees paid to their top and most effective lobbyist - Jeff Immelt.
A significant number of the most powerful lobbyists in Washington are one-man shops, not the infamous lawyer factories that draft the litigation. The individual lobbyist will gain the support of the President, Cabinet Officer, or Congressional Committee Chairman, then the legwork of drafting the remaining details of the bill will be outsourced to the larger shops, who pay big dollars for the privilege of screwing the taxpayers even more.
You don't own yourself -- the Federal Reserve does.
http://www.viewzone.com/collateralx.html
There is a simple test to apply when Immelt and folks of his ilk propose anything: who does this benefit, and who profits? Too long the system has been rigged in favor of the multinationals, and not enough in favor of the American taxpayer, wage-earner and worker and entrepreneur. This is not hard. Tell the multinationals to fuck off and pick the options before us that benefit the core of our society, the common good, and let these pricks go packing off to some other locale - if we do it right, newcos will take their place before long.
Grrr......
actually, it's 'Best Ever Executive Friend' or BEEF!
Why didn't I see that??
"Of course there is no discussion for individuals to be taxed on a territorial system." I don't see why there would even need to be. Corporations are now "people", just ask the Supremes, so if it is good enough for those people, it must be good enough for all people, otherwise somebody is being discriminated against, and that just wont do.
I'd prefer that we launch a literal genocide upon the corporate "Legal Person" . . . psychopaths, whether natural or created by statute, must be stamped out before it's too late for the rest of us . . .
The Movie: http://www.youtube.com/watch?v=MxAJ4g84xzE
The Corporation has no soul to save, nor any body to incarcerate.
a good old, GE advertising, funny video for those who dont have seen it :
http://www.culturepub.fr/videos/general-electric-ge-tokyo
seems to resist to richter 7 but not 9 :/ the anti-tsunami wall was to small too :/
"we make your daughters dance.. lalalala"
I don't think it will happen any time soon ... people have misunderstood the pledge of allegiance to the flag as a pledge to the current economic system ... having been conditioned since kindergarten, they believe that this rigged system is what made USA great.
Exactly. It's called "freedom" and it absolutely depends upon that "free enterprise."
Just ship the management and the families of these corporations out of the USA. If they won't be good citizens, then they do not deserve the protection provided by the American people.
While I believe that corporations shouldn't pay any income tax, I also believe that we should align all income/capital gains/investment taxes at the same rate. Labor and capital are both necessary for a successful economy and we extract a disproportionate amount of taxes from the up and coming hard workers who are dedicated to building families and businesses.
We could easily be the home to many mulitnational businesses by not taxing their income. As a good friend of mine who owns a business frequently says, he is a tax collector for the state and the feds (because he is a successful business owner).
Obama Bin Lyin' is as worthless as they come...
I never thought I would see a cock sucker so worthless that he makes George "Dunce Cap" Bush look good...
Oh, the wailing and gnashing of teeth.
Game over.
These are but the machinations of the end game.
If we roll into and then out of a true depression, if these folks get their way today, they will emerge as the true rulers. Could it all be a calculated remaking of the country into the oligarchy/corporatocracy that it appears to be? Establishment of private armies is already done. Sometimes it pays to be conspiratorial.
All seems to be going as planned.
I fear you are right. Bruce's question "But for the life of me I can’t understand why Obama has joined with the Us’s" can be answered easily if you stop listening to his words and look only at his actions. The man talks like a progressive/socialist but his actions are those of a corporatist/fascist. The only thing he's done that was even mildly anti big-business is DoddFrank and that was pretty anemic. The stimulus package and Obama-care were both extremely friendly to big business. He lies.
You're right -actions tell us about the man, the words distract us from seeing this. My other Pet theory is that he is simply a well-paid janitor who does not have the authority to tell Tim Geithner what to do - I doubt they ever even speak. I think Presidents have little actual authority. If they were inclined to buck the system, they are spotted early one and are eliminated as candidates. Only people who play ball, and follow orders, get to sit in the Oval Office. 'Fraid that's how it is. So maybe we're beating on a janitor who has a couple of pails, some good cleanser, and is just minding the store for the real boss.
Fred, Fred, Fred, Fred, Fred. You sound like this shit just started yesterday.
C'mon, dude. You're better than this.
Blaming Obama for THIS situation is truly sick -- and narrow minded.
Expecting him (or McCain, or any of the panoply of fools) to actually DO something is indeed naive.
I don't intend to be mean, but if you can't see this crap going back since Eisenhower, then you need to do some reading up.
Ditto... the furry critter.
Joining with the smelly, pissed masses and hitting the streets looking for a target or a "cause" for all this -- when it finally rolls over -- is just buying into the fantasy created by the usual instigators. How blatant does DIVIDE and CONQUER have to be before we cut the chains?
It is now too late for elections to matter; we've passed that threshold. The only satisfying thing now will be simple revenge. And it won't be like the Arab world is now. My crazy fellow Americans have a shit-load of guns.
And don't preach to me about how a trained platoon can take out a few farmers. Tell it to the British drum and fife. These farmers have automatic weapons and are determined -- a salary and shitty benefits can't buy that.
Come on into the Ozarks, the Piedmont, the Rockies, the Appalachians and get us, you pussies.
Despite minor philosophical differences...,
+ 1 billion gazillion to you Rocky!
I am not in the Ozarks, but they will come under semi-auto fire from THIS machine component if they come for my stuff...
SURE you can have my guns and my gold, when I run out of ammo!
John Wayne said it best: "When they come to get my guns they will be cold and loaded. When they get my guns they will be hot and empty."
His election cost $1B. He's got a lot of payments left to make.
If you are a citizen, earn income but pay no tax, should you really be considered a citzen?
If you are destitute and pay no tax, you can still be a citizen. You can still contribute.
But Transnational Corporations that earn income, pay little to no tax? GE is not the Church. It's not in the business of helping others. It's in business for profit and it benefits mightily from the Strategic Umbrella that the US Military provides. Free of charge?
If you are a citizen, earn income but pay no tax, you are a deadbeat.
Or worse, you are a thief. The worst, low down thief. You are stealing from future generations.
Or, another way of looking at it:
If you are a citizen, earn income but...
manage to have little or none of it stolen by a pack of kleptocrats with an insatiable appetite for other peoples' property which they use to fund all manner of destruction and suppression across the globe
...you are a clever humanitarian.
Be careful there .... taxation goes well beyond income ... even the poor pay taxes and many different ones.
Why doesn't Immelt use his title given him by the most impressive outfit of all, Managing Director of the New York Federal Reserve Bank? You'd think he doesn't want anyone to know.
BEFE = Best Executive Fuckbuddy Ever...
If you want access to the American market then pay your taxes in America.
If you have no sales in America, then you pay no taxes.
Obama sold his (tiny) soul to Hank Paulson, now GE's leasing division has taken over.
All the more reason to simply not tax corporate profits at all, and tax all income to owners, dividends and capital gains, at the stock owner's normal income tax rate. Sure, it will put a ton of accountants and lawyers out of business, but it would level the playing field between US based companies that do most of their business domestically and US based corporations that do a lot of their business overseas. In addition, you would advantage the US worker by making it more attractive to locate new businesses in the US.
The goal should be to attract jobs & capital investment while decreasing the outflow of wealth through a negative trade balance.
For each job that is created that takes someone off unemployment, there is the double benefit of eliminating the government subsidy while creating a new taxpayer.
However, if the government merely stimulates the domestic consumption of foreign goods- it is facilitating and expediting the export of diminishing national wealth into a globalized economy.
In order to create or amass wealth you must either produce a good or perform a service and then sell it. Significant wealth creation and tax revenue can be achieved by promoting the international expansion of domestic enterprises, and counter-intuitively, by promoting the domestic expansion of foreign manufacturers. If Government identifies the specific foreign products which Americans desire to consume, and provides tax incentives for relocation and domestic operations of these enterprises; domestic jobs are created and the export of national wealth is reduced. It is reduced from the entire wholesale import cost of the good to the share of net profit which is allocated to foreign owned equity. In addition, the Treasury collects revenue on both the manufacturing wages and the gross profit of the now-domestic enterprise.
From a tax policy standpoint one can argue that regardless of how big the tax cut for relocation is, such an initiative is still revenue positive. Currently these enterprises are simply not part of the United States tax base, so any taxes paid are new and additional revenue. You can further foster growth by providing an intermediate tax benefit between the standard marginal rate and promotional relocation rate for reinvesting foreign owned profits in the domestic economy.
Corporate tax rates don't necessarily need to be 0% to be attractive to businesses, but need to be competitive and coupled with a hospitable business and regulatory environment, which is sorely lacking at the current time.
YW you are a man of reason...good point...no more shell games....
While this may put a few lawyers and accountants out of business, they may quickly find a niche in forming offshore corps for those of us seeking to move our jobs offshore. Why produce anything here? You simply manufacture in Mexico, Singapore, etc. and import for US sales. All other sales are completed from an offshore corp. Many of those with white sand beaches and clear water who, by the way, also do not tax offshore income. Sounds good to me. This is a game any small business owner with overseas sales and the knowledge and desire can take advantage of.
Produce in USA and pay no corporate tax ... however income and wealth are taxed .... you wanna move abroad, be my guest ... at some point this coutry will realize that we are a market of over 300 million people and we do not need anybody ...
in fact, if we were to wake up tomorrow and the only country left on earth were to be the USA, what would we do? would we spend our time cryng about how much we miss China or India, or would we just do what needs to be done?
"Free" trade sounds a lot like "free" market ... there is nothing free in life ... I prefer fair trade and fair taxes ....
Our way of life as we know it is coming to an end. We have built a facade of wealth but the structure is rotting. There is no political will to pull the plug, take our medicine and get back on track as a productive society. We will ride this train wreck into the ground.
96% of the worlds consumers live outside the borders of the US. Immelt is no dumb ass. He's got a front row seat next to the conductor. He knows that corporate growth for the next 20+ years will be outside the US. He just wants to be able to repatriate the profits.
My statement above was simply to imply that if a bill like this were to pass, why would I have any more incentive than GE to produce or sell from a US based facility. I can avoid the regulations I don't like, sell to whomever I choose and repatriate the Corp profits, tax free.
How can we get back to a productive society if we keep worrying about the people who can leave, keep looking at what happens abroad ... in the end we have lost sight of what we need to do here
We lost sight a long time ago and the Citizens United case will define us for generations to come.
+1
:-(
+1
I think we should put a Puertorican maid behind every corporate CEO. I'm sure the marginal corporate tax rate would explode as it has for the IMF.
I'm sure you meant:
I think we should put every CEO behind a Puertorican maid
Of course I agree with the gist of the article.
However there is something to be said in favor of lowering corporate tax rates, while raising rates on multi-millionaires and billionaires. In my opinion, though, lower rates should be tied to investment here in the USA
Anyway, the Joint Committee on Taxation has calculated that each percentage point decrease in corporate tax rates will cost the nation $8 billion i revenues.
If you don't write me a check for $10,000 then you just cost me $10,000. Damn you
with this, and other astute ZH articles, somebody please make a case that there is no world ruling elite cabal going on, and Obummer is just a puppet. There is goin to be paupers and princes, and no in between. And great work Bruce, and unlike JW, you stuff as always worthy of reflection.
Bruce,
It seems that getting anything done on reducing the corporate rate would have to be accompanied by elimination or reduction in some/all loopholes. This seems an impossible task these days. Perhaps we should introduce Mr. Immelt to the joys of a corporate AMT with the only offset being foreign taxes paid. I can't understand why some corporate exec's aren't calling out Immelt and GE and their likes and demanding they start paying their freight. Maybe it's time for an us/them corporate schism to be a campaign highlight. Comparisons between corporations in the SP500 might be useful this time around.
If the government can just print whatever money it needs then i would think that taxation becomes nothing more than a punitive system to hold back individuals and businesses dressed up in the guise of 'fairness'.
So the US should have a tax system that is less competitive than the rest of the world?
How does that foster long term growth?
I closed my US businesses, moved to Switzerland and started a new one. Uncle Sam now receives zero dollars from my business, and will not be creating any new jobs in the US for the foreseeable future.
@ Urban R,
I am still here in the USA, but our business is in Peru (my wife and I are majority owners). Why? The reasons you cite.
We pay PERUVIAN taxes...
You are happy living over there.. so be it.