Posts Tagged ‘Corporate Taxes’

I haven’t been posting as much recently, so I hope you all saw this. G.E. claimed a $14.2 billion profit in 2010, and they claim $5.1 of it came from American operations. They used what the Times calls “innovative accounting.” Oh, and they also claimed a $3.2 billion tax benefit.

Corporations argue that their tax rates are too high, but loopholes like this make that a moot point. It seems like notorious scumbag Rep. Charlie Rangel (D-NY) may have even had a part in making the law so easy to step around. He was going to let a lucrative tax break expire, but changed his mind. And $30 million went to New York schools, $11 million for his district.

Here are some of the results:

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.

“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.”

If we want to get serious about fiscal responsibility, we need to end things like this. Perhaps we should consult Mr. Small Government himself for the solution:

As it has evolved, the company has used, and in some cases pioneered, aggressive strategies to lower its tax bill. In the mid-1980s, President Ronald Reagan overhauled the tax system after learning that G.E. — a company for which he had once worked as a commercial pitchman — was among dozens of corporations that had used accounting gamesmanship to avoid paying any taxes.

“I didn’t realize things had gotten that far out of line,” Mr. Reagan told the Treasury secretary, Donald T. Regan, according to Mr. Regan’s 1988 memoir. The president supported a change that closed loopholes and required G.E. to pay a far higher effective rate, up to 32.5 percent.

Did I mention that Jeffrey Immelt, G.E.’s chief executive, is the leader of President Obama’s Council on Jobs and Competitiveness?

Enjoy wondering how G.E. has the same rights as a U.S. citizen, yet can’t be thrown in jail for this.

Adam Feser