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

[Chadman]

I think this is a very revealing article in thinking about conservatives claims about the high tax burden on big business in this country, job creation, etc. I hear commentary all the time about how tough it is for corporations to compete, and how helping them here will allow them to hire, expand, etc. This article certainly shows a different picture - and one I doubt would change if they were "helped out" even more than they have been already. There's also some content here that shows this to be a corruption issue with the likes of Charlie Rangel (and many others), and how the conservative Reagan realized how damaging this could be to the economic welfare of our country.

I've highlighted some of the key points here. The link takes you to the story:

http://www.nytimes.com/2011/03/25/business/economy/25tax.html?hp

Key points:

G.E.?s Strategies Let It Avoid Taxes Altogether
By DAVID KOCIENIEWSKI
NY Times Online

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.
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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.
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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.
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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.
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... 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.
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Martin A. Sullivan, a tax economist for the trade publication Tax Analysts, said that booking such a large percentage of its profits in low-tax countries has ?allowed G.E. to bring its U.S. effective tax rate to rock-bottom levels.?
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G.E. spends heavily on lobbying: more than $200 million over the last decade, according to the Center for Responsive Politics. Records filed with election officials show a significant portion of that money was devoted to tax legislation. [Think things will get better now that The Supreme Court opened the flood gates for GE and others to control our political process?]
--------------------------
While G.E.?s declining tax rates have bolstered profits and helped the company continue paying dividends to shareholders during the economic downturn, some tax experts question what taxpayers are getting in return. Since 2002, the company has eliminated a fifth of its work force in the United States while increasing overseas employment. In that time, G.E.?s accumulated offshore profits have risen to $92 billion from $15 billion.

 

[Duff Miver]

But...but...but - the right-wingnuts keep telling us that lower taxes creates more jobs.

GE pays 0 taxes and lays off 20%.

'splain THAT, Boehner, Randy Paul, Maggot, teabaggers and doggie.

 

[Duff Miver]

THE RICH PAY TOO MUCH TAX!!!!


There, does that qualify me as a teabagger?

 

[ssd]

This is laughable. Two Democrats blasting conservatives for tax rates, linking to an article about GE and Immelt. Immelt is a huge Dem and he is one of Obama's closest advisors.....and here, Obama is asking this guy for help on corporate tax rates when this guy has made his career about minimizing corporate tax an art form.

When the corporate tax rate is too high and the structure is complex, companies will find ways not to pay it. They will do what GE is doing. They will 'hide' profits in offshore subsidiaries and show losses on in-country subsidiaries. The US has the highest corporate tax rate in the WORLD as of this April when Japan will cut its rates.

Chadman - u highlighted a bunch of text from the article that you thought was important. please read the ones I have added. You are trying to make this an argument that conservatives want a lower corporate tax rate to stimulate job growth and in a way, are painting corporations as greedy, evil Republicans. Obama is in GE's back pocket, my friend. The last piece of text that I pulled out and highlights is in my mind the best and most important piece from the whole article (and it was said by a Democrat)

How about these:
Cracking down on offshore profit-shifting by financial companies like G.E. was one of the important achievements of President Reagan?s 1986 Tax Reform Act,? said Robert S. McIntyre, director of the liberal group Citizens for Tax Justice, who played a key role in those changes. ?The fact that Congress was snookered into undermining that reform at the behest of companies like G.E. is an insult not just to Reagan, but to all the ordinary American taxpayers who have to foot the bill for G.E.?s rampant tax sheltering.?
At a tax symposium in 2007, a G.E. tax official said the department?s ?mission statement? consisted of 19 rules and urged employees to divide their time evenly between ensuring compliance with the law and ?looking to exploit opportunities to reduce tax.?
After the World Trade Organization forced the United States to halt $5 billion a year in export subsidies to G.E. and other manufacturers, the company?s lawyers and lobbyists became deeply involved in rewriting a portion of the corporate tax code, according to news reports after the 2002 decision and a Congressional staff member.
By the time the measure ? the American Jobs Creation Act ? was signed into law by President George W. Bush in 2004, it contained more than $13 billion a year in tax breaks for corporations, many very beneficial to G.E
By 2008, however, concern over the growing cost of overseas tax loopholes put G.E. and other corporations on the defensive. With Democrats in control of both houses of Congress, momentum was building to let the active financing exception expire. Mr. Rangel of the Ways and Means Committee indicated that he favored letting it end and directing the new revenue ? an estimated $4 billion a year ? to other priorities.

G.E. pushed back. In addition to the $18 million allocated to its in-house lobbying department, the company spent more than $3 million in 2008 on lobbying firms assigned to the task.

Mr. Rangel dropped his opposition to the tax break. Representative Joseph Crowley, Democrat of New York, said he had helped sway Mr. Rangel by arguing that the tax break would help Citigroup, a major employer in Mr. Crowley?s district.

?That G.E. can almost set its own tax rate shows how very much we need reform,? said Representative Lloyd Doggett, Democrat of Texas, who has proposed closing many corporate tax shelters. ?Our tax system should encourage job creation and investment in America and end these tax incentives for exporting jobs and dodging responsibility for the cost of securing our country.?

:0074

And in conclusion - companies do not pay taxes. Consumers do - corporate taxes go up? Prices go up to compensate and the end consumer pays the tab.

 

[yyz]

And in conclusion - companies do not pay taxes. Consumers do - corporate taxes go up? Prices go up to compensate and the end consumer pays the tab.

Do we not anyway? No matter how you slice it?

The bottom line still remains:


You have guys making 7 and 8, and yes.....NINE figure salaries telling people making $25-50,000 a year, "Times are tough.........your job has to go", and the consumer: "Sorry, there is nothing we can do".


These fuckers are at the buffet knowing full well they can eat everything, but they still run around trying to knock the plates out of everyone elses hands, because they don't want THEM getting any!


It's sad, it's sick, and it's true.

 

[Trench]

This is laughable. Two Democrats blasting conservatives for tax rates, linking to an article about GE and Immelt.

The US has the highest corporate tax rate in the WORLD as of this April when Japan will cut its rates.

Make that three, SSD (although, I'm not a Democrat).

I think you're being disingenuous here. The corporate tax rate is meaningless. What is meaningful is what corporations pay after their armies of corporate tax lawyers have exploited every tax loophole and shelter on the books and in many cases, some that aren't on the books.

 

[ssd]

Trench:
I really don't think so. I think that they are mis-interpreting the article.

This is what needs to be done:
?That G.E. can almost set its own tax rate shows how very much we need reform,? said Representative Lloyd Doggett, Democrat of Texas, who has proposed closing many corporate tax shelters. ?Our tax system should encourage job creation and investment in America and end these tax incentives for exporting jobs and dodging responsibility for the cost of securing our country.?

 

[pd1]

Looks like google did even better.


http://www.bloomberg.com/news/2010-...illion-u-s-revenue-lost-to-tax-loopholes.html

 

[DOGS THAT BARK]

Certainly agree on this one Chad-


<HR>
GE pulls in $14B, makes $5B profit, pays $0 US taxes...

WH defends embrace of GE's CEO...

Immelt, Rangel in 'Harlem Horse Trade'...

 

[Chadman]

Two points (or maybe three): I don't think I'm misunderstanding the article at all. My point was to comment on the conservative theory that these companies are overtaxed and due to that they cannot compete or hire more people. This is JUST ONE example of how I think this is disingenuous at best and outright bullshit at worst. This shows JUST ONE company that paid zero in taxes and still moved jobs overseas and reduced jobs in this country.

Let me be clear, SSD. I DEFINITELY think we need to close the loopholes that allow these companies to do exactly what G.E. has done - along with many other corporations. I completely agree with what you highlighted. I thought it would be a little much for me to comment on the entire content of the article. I think we need to close tax loopholes for corporations and for individuals in this country. You could see countless individuals in the U.S. that bitch about the high income tax rates and use whatever means possible to avoid their responsibilities. Do I blame them? I suppose not. Do I think it's hypocritical to complain about things and then not have to actually suffer from what they are complaining about - I definitely do.

And to both SSD and Wayne, I certainly don't consider all this to be only a conservative problem - we certainly see the Obama and Rangel connections and favoritism to supporters. I think that's wrong - and Rangel for one lost his job and a lot of respect in the process.

 

[Trench]

And to both SSD and Wayne, I certainly don't consider all this to be only a conservative problem -

As with most problems afflicting our political system Chad, it's a money problem first. General Electric's spent more than $238 Million lobbying members of Congress over the past 12 years alone.

 

[ssd]

Exactly, Trench. What I find funny is Obama is essentially asking the fox to guard the henhouse - he wants Immelt to help on revamping the corporate tax system?

I understand, the guy who knows how to cheat the system the best might have some great insight on how to fix it......but the guy is still the CEO of GE and will be damn sure that he still knows how to cheat the system to his benefit even if it gets changed.

 

[The Sponge]

u could drop that corporate rate to 15 percent and these companies still would stay abroad because they don't want to pay dick if they can get some people who are forced to work for pennies to do the job. In an honest world i wish these guys had no tax to pay and hired all of our people but if the corporate rate was zero it still wouldn't be enuf money for them. It never ends. Never can make enuf. 60 minutes had a nice piece on this last night. That dirty liberal 60 minutes.

 

[Trench]

60 minutes had a nice piece on this last night. That dirty liberal 60 minutes.

I saw that piece. All they want is "a level playing field", Sponge... that's all. Is that really too much to ask? I mean, how's a greedy corporatist supposed to make ends meet in this crazy old world without a government that's willing to capitalize him, subsidize him and bail him out?

 

[The Sponge]

I saw that piece. All they want is "a level playing field", Sponge... that's all. Is that really too much to ask? I mean, how's a greedy corporatist supposed to make ends meet in this crazy old world without a government that's willing to capitalize him, subsidize him and bail him out?

Trench, i can see it now. I know u lowered our taxes to 10 percent but overseas in our sweet shop, we don't have any regulations. We can throw our toxic chemicals right in the ocean. We need these regulations voided immediately. Also we need armed guards to stand by while we force people to make our products. That is how we roll at our sweatshop.
i honestly think it is a priveledge to have someone hire ya and pay ya money and benefits, but then we got these no good fukers who just can't make enuf no matter how they get it.

 

[StevieD]

The damn freeloaders are killing this country.

 

[Duff Miver]

It's not just GE -


1) Exxon Mobil made $19 billion in profits in 2009. Exxon not only paid no federal income taxes, it actually received a $156 million rebate from the IRS, according to its SEC filings.
2) Bank of America received a $1.9 billion tax refund from the IRS last year, although it made $4.4 billion in profits and received a bailout from the Federal Reserve and the Treasury Department of nearly $1 trillion.
3) Over the past five years, while General Electric made $26 billion in profits in the United States, it received a $4.1 billion refund from the IRS.
4) Chevron received a $19 million refund from the IRS last year after it made $10 billion in profits in 2009.
5) Boeing, which received a $30 billion contract from the Pentagon to build 179 airborne tankers, got a $124 million refund from the IRS last year.
6) Valero Energy, the 25th largest company in America with $68 billion in sales last year received a $157 million tax refund check from the IRS and, over the past three years, it received a $134 million tax break from the oil and gas manufacturing tax deduction.
7) Goldman Sachs in 2008 only paid 1.1 percent of its income in taxes even though it earned a profit of $2.3 billion and received an almost $800 billion from the Federal Reserve and U.S. Treasury Department.
8) Citigroup last year made more than $4 billion in profits but paid no federal income taxes. It received a $2.5 trillion bailout from the Federal Reserve and U.S. Treasury.
9) ConocoPhillips, the fifth largest oil company in the United States, made $16 billion in profits from 2007 through 2009, but received $451 million in tax breaks through the oil and gas manufacturing deduction.
10) Over the past five years, Carnival Cruise Lines made more than $11 billion in profits, but its federal income tax rate during those years was just 1.1 percent.
Sanders has called for closing corporate tax loopholes and eliminating tax breaks for oil and gas companies. He also introduced legislation to impose a 5.4 percent surtax on millionaires that would yield up to $50 billion a year. The senator has said that spending cuts must be paired with new revenue so the federal budget is not balanced solely on the backs of working families.
"We have a deficit problem. It has to be addressed," Sanders said, "but it cannot be addressed on the backs of the sick, the elderly, the poor, young people, the most vulnerable in this country. The wealthiest people and the largest corporations in this country have got to contribute. We've got to talk about shared sacrifice."

Of course these great capitalists used all that money they dodged taxes on to create hew jobs in the USA.

And if you believe that, I've got this beautiful piece of oceanfront property in LA....

 

[ssd]

Good statement from Sanders. Hope it gets some traction in Congress.

Have I ever mentioned how much I hate the big banks? Corrupt to the core and they control the world.

 

[Mags]

Two points (or maybe three): I don't think I'm misunderstanding the article at all. My point was to comment on the conservative theory that these companies are overtaxed and due to that they cannot compete or hire more people. This is JUST ONE example of how I think this is disingenuous at best and outright bullshit at worst. This shows JUST ONE company that paid zero in taxes and still moved jobs overseas and reduced jobs in this country.

Let me be clear, SSD. I DEFINITELY think we need to close the loopholes that allow these companies to do exactly what G.E. has done - along with many other corporations. I completely agree with what you highlighted. I thought it would be a little much for me to comment on the entire content of the article. I think we need to close tax loopholes for corporations and for individuals in this country. You could see countless individuals in the U.S. that bitch about the high income tax rates and use whatever means possible to avoid their responsibilities. Do I blame them? I suppose not. Do I think it's hypocritical to complain about things and then not have to actually suffer from what they are complaining about - I definitely do.

And to both SSD and Wayne, I certainly don't consider all this to be only a conservative problem - we certainly see the Obama and Rangel connections and favoritism to supporters. I think that's wrong - and Rangel for one lost his job and a lot of respect in the process.

Chad - did you see the 60 minutes story this past Sunday on this very issue?

The focus of the story was companies that are doing exactly this - taking business offshore to avoid US taxes....

One of the points made in the story - they said the US corporate tax rate is 35% - which is well above "most, if not all" other countries corporate tax rate.....

IF that was true (and I have no reason not to believe it), why is our corporate tax rate so high? I'm assuming it is because our personal tax rates are lower (part of it, of course, is due to us not having universal healthcare, which is a big part of other countries personal tax burden)......

Is that how other countries' have a lower corporate burden - by taxing individuals more?

Forgive me if I'm assuming you have the answers - but you usually do. :0074

But, if our corporate tax rates are much higher relative to the rest of the world - I can understand why companies do what they do. In fact, for most public corporations, the CFO would be negligent to their shareholders if they did not use these strategies.....

It was an interesting piece on 60 Minutes - and very relevant to this discussion thread....

 

[Duff Miver]

Chad - did you see the 60 minutes story this past Sunday on this very issue?

The focus of the story was companies that are doing exactly this - taking business offshore to avoid US taxes....

One of the points made in the story - they said the US corporate tax rate is 35% - which is well above "most, if not all" other countries corporate tax rate.....

IF that was true (and I have no reason not to believe it), why is our corporate tax rate so high? I'm assuming it is because our personal tax rates are lower (part of it, of course, is due to us not having universal healthcare, which is a big part of other countries personal tax burden)......

Is that how other countries' have a lower corporate burden - by taxing individuals more?

Forgive me if I'm assuming you have the answers - but you usually do. :0074

But, if our corporate tax rates are much higher relative to the rest of the world - I can understand why companies do what they do. In fact, for most public corporations, the CFO would be negligent to their shareholders if they did not use these strategies.....

It was an interesting piece on 60 Minutes - and very relevant to this discussion thread....

Maggot is spouting the party line - corporate taxes are too high. Here's the truth -


Conservatives think they?ve found a way to sell middle-class voters on a corporate tax cut. John McCain has been touring the country telling displaced factory workers that their jobs will come back if corporations get to keep more of their profits. According to McCain, ?America has the second highest business [tax] rate in the entire world. It's any wonder that jobs are moving overseas. We're taxing them out of the country.? [John McCain]

That might be a compelling argument? if it weren?t completely false. Progressives can?t let conservatives distort the facts. We need to tell the truth about corporate taxes and lead on a real plan to strengthen the American economy.

The Facts

The problem is not that corporations are overtaxed. In fact, a whopping two-thirds of American corporations and foreign corporations doing business in the United States pay absolutely no federal income taxes?despite taking in $2.5 trillion in sales. [Government Accounting Office] In 2005, 28 percent of large foreign companies doing business in the United States (those with more than $250 million in assets or $50 million in sales) paid no taxes.

Compared to our competitors? corporate tax rates, the U.S. rate is low. According to the World Bank and PricewaterhouseCoopers, the United States? total corporate tax burden ranks 76th of over 100 countries. [World Bank] When conservatives claim that the U.S. tax rate is high, they?re talking about the ?statutory rate.? But corporations treat the statutory rate as just a guideline?they use offshore tax havens and accounting loopholes to pay much lower actual rates. The tax rate corporations actually pay is lower than the rates of economic competitors such as China (15th highest tax rate), India (19th), and Mexico (51st). [World Bank]

The U.S. collects less in corporate taxes than other wealthy countries do. Measuring tax collections as a share of GDP is a good way to put a country?s tax rate in the context of its economy?s size. In the last seven years, the U.S. has collected an average of 2.4 percent of its GDP in corporate taxes?less than the average 3.4 percent collected by other industrialized nations. If laws remain the same, U.S. corporate taxes will be only 1.9 percent of GDP in less than ten years. [U.S. Treasury Department]

Corporations should pay their fair tax share. American workers increasingly carry more of the tax burden than corporations do. In the 1950s, corporate income taxes accounted for about a quarter of federal tax revenues; now they account for just one-tenth, leaving workers to pay the difference. [Economic Policy Institute]

http://www.ourfuture.org/makingsense/alert/2008093603/truth-about-corporate-taxes

Maggot - Liar, liar, pants on fire.