pandoraPremium
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| GE $0 tax on $14 billion profit I keep reading about people wanting to increase taxes. One problem with that is those who can hire lobbyists, and have political connections with government are able to get exemptions or rules established that allow them to avoid most or all taxes.
To the best of my understanding the U.S. tax rate for corporations is 30%. GE made $14 billion and paid $0. If they paid 30% our government would have about $4 billion more than it does today (enough to operate for 6 hours at our current spending rate).
»www.nytimes.com/2011/03/25/busin···?_r=1&hp
General Electric, the nation’s largest corporation, had a very good year in 2010.
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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 lolwhatYou're getting warmerPremium
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PonziWorld
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| You know what's even better? Jeffrey Immelt, GE's capo di tutti capi, is now chief of a certain someone's jobs council. In fact, that certain someone is defending his choice, despite his being "bothered" by companies that take advantage of the exact same loopholes as GE. I'm surprised that people who voted for him haven't had their heads explode yet.
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 r81984Fair and BalancedPremium
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Why do companies only pay (or sometimes not pay) taxes on only profit for the year while individuals have to pay taxes on revenue?
Anyways it seems like the more money you make the less you pay in taxes.
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pandoraPremium
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| Raising corporate tax rates will only adversely affect small and medium sized companies. Those large enough to afford millions for lobbyists, and to purchase people with political connections, won't have to worry about the tax rate.
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 SnakeoilIgnore Button. The coward's feature.Premium
join:2000-08-05
Mentor, OH
kudos:1 | reply to pandora
I fail to see the problem. They aren't doing anything illegal. Don't like it, then call or write the powers that be to change it so GE pays taxes.
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pandoraPremium
join:2001-06-01
Outland
kudos:1 | Nope, they aren't doing anything illegal. Not paying taxes on billions of income is normal. |
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Zoder
join:2002-04-16
Miami, FL | reply to pandora
said by pandora:Raising corporate tax rates will only adversely affect small and medium sized companies. Those large enough to afford millions for lobbyists, and to purchase people with political connections, won't have to worry about the tax rate.
That's true. When politicians say that the 35% rate causes compaines to move out of the country, the only ones that can effectively do that are the large corporations and they already have a lower rate due to all of the loop holes. |
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SnakeoilIgnore Button. The coward's feature.Premium
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Look to the law.. as long as they are conforming to the law, then what are they doing wrong?
BTW, where were you like 10-20 years ago when this was first known about GE?
This is really old news.
Is it GE fault if they follow the policy and manage not to pay taxes?
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 dogmaXYZPremium
join:2002-08-15
Boulder City, NV
kudos:1 | reply to r81984
said by r81984:Why do companies only pay (or sometimes not pay) taxes on only profit for the year while individuals have to pay taxes on revenue?
Anyways it seems like the more money you make the less you pay in taxes.
I think the easy answer is that an individuals revenue is considered profit. What a person gets to spend anyway s/he likes.
A corporation has business expenses that MUST be paid, such as employee salaries, office space, equipment, executive salaries, marketing, etc. Once all of that is paid from a corporations gross income/revenue, then whats left over is considered profit (or net profit/retained earnings) as well. Like an individual, the corporation can spend it any way they see fit.
In defense of GE, It has gross revenues of $150 Billion/year. It employs over 287,000 people worldwide, it employs 133,000 Americans. Much of this employment is domestic manufacturing. Each of those 133,000 American employees pays income taxes. I can only guess, but GE probably generates over $10 Billion in income taxes to the government from its employees.
GE is an old company. No single shareholder owns more than 3.67% of the company. And those that hold the most are large institutional investors that are managing pension/retirement funds.
The CEO of GE, Jeffrey R. Immelt, has 1.5 Million shares (all of which he can not convert) valued today at $19.75/share. Assuming all of these shares were given to him for free (which they weren't), he has about $31,145,750.00 worth of GE stock. Derek Jeter of the
New York Yankees makes more in a single year, and Derek isn't responsible for 133,000 American workers. (Just a little perspective)
Immelt, nor none of the executives or major shareholders can put that GE profit in their personal pockets. Typically, the corporation will INVEST it's profits back into the company in some fashion, and its this investment that is a tax write off in some form. Thus reducing their tax liability. It's important to point out that GE isn't some innocent player in all this. Most of that investment is executed offshore. GE is a global player. They can, and will, left-hand/right-hand enough profits into lower tax rate countries to achieve an outcome that is beneficial to them .
IMO, I'm with Snakeoil  . There's not a reader here that would exclude any legal deduction that reduces their individual tax liability on their own personal income taxes in the name of patriotism or good citizenship, or whatever other nonsense. |
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DannyZGentoo FanboyPremium
join:2003-01-29 | said by dogma:IMO, I'm with Snakeoil . There's not a reader here that would exclude any legal deduction that reduces their individual tax liability on their own personal income taxes in the name of patriotism or good citizenship, or whatever other nonsense.
I've donated my return for the past 5 years to the US Govt. to help pay down the debt. Granted it's only been a couple hundred each year, but it's something.
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1 edit | At what pittance it may be you should use it and put it in savings or investments, whatever you can do to earn more with that money/keep up with inflation.
Don't worry about the government, their credit card limit is only as high as they say it is, other countries' willingness to buy debt, cotton fiber & green dye supply, fossil fuel power to print the money, and will always outspend even if they increase taxes.
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 The PigBazinaPremium
join:2009-09-11 | reply to pandora
Deductions! |
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| Can I name my cockroaches and silverfish as dependents?  |
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pandoraPremium
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Outland
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| reply to Snakeoil
said by Snakeoil:Look to the law.. as long as they are conforming to the law, then what are they doing wrong?
BTW, where were you like 10-20 years ago when this was first known about GE?
This is really old news.
Is it GE fault if they follow the policy and manage not to pay taxes?
The law is written to make GE happy. Sadly I can't get my Congress to write laws that give me billions of dollars. How unfortunate. How many laws did Congress write for you last year?
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pandoraPremium
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No, not just deductions, but deductions specifically passed into law for GE by GE lobbyists.
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r81984Fair and BalancedPremium
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| reply to dogma
said by dogma:I think the easy answer is that an individuals revenue is considered profit. What a person gets to spend anyway s/he likes.
A corporation has business expenses that MUST be paid, such as employee salaries, office space, equipment, executive salaries, marketing, etc. Once all of that is paid from a corporations gross income/revenue, then whats left over is considered profit (or net profit/retained earnings) as well. Like an individual, the corporation can spend it any way they see fit. That make no sense as people have expenses that MUST be paid.
Rent, mortgage, food, water, electricity, car/transportation, kids, family, tuitions, clothes, etc. After all of that then the individual has a profit or expendable income.
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| reply to r81984
said by r81984:Why do companies only pay (or sometimes not pay) taxes on only profit for the year while individuals have to pay taxes on revenue?
err they don't - both US corporations, and US individuals/couples pay tax on gross income minus allowable deductions
gross income, for both corporates and individuals, is defined as:
quote:
(a) General definition
Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items:
(1) Compensation for services, including fees, commissions, fringe benefits, and similar items;
(2) Gross income derived from business;
(3) Gains derived from dealings in property;
(4) Interest;
(5) Rents;
(6) Royalties;
(7) Dividends;
(8) Alimony and separate maintenance payments;
(9) Annuities;
(10) Income from life insurance and endowment contracts;
(11) Pensions;
(12) Income from discharge of indebtedness;
(13) Distributive share of partnership gross income;
(14) Income in respect of a decedent; and
(15) Income from an interest in an estate or trust.
»www.law.cornell.edu/uscode/html/···00-.html
only difference between the income a corporate has to pay on, and that an individual pays on is that:
a) the concept of AGI does not exist for a corporate {i.e. there is a whole bunch of exclusions from tax that a corporate doesn't benefit from but an individual can.....}
b) there are a bunch of itemised deductions that are only for individuals
»www.law.cornell.edu/uscode/html/···VII.html
c) there are another bunch of itemised deductions that are only for corporates
»www.law.cornell.edu/uscode/html/···III.html
all articles that suggest that tax is levied on "profit" are simply wrong - even a corporate with simple affairs and no wish to "underpay" has, for example, a legal requirement to use a specific rate of depreciation for US tax..... but may choose instead to use a more realistic (or more flattering) rate of depreciation in it's accounts - indeed compliance with GAAP (Generally Accepted Accounting Principles) may force it to do so if the rate the IRS demands does not actually reflect reality -otherwise the accounts would be misleading
crucially a corporate has a requirement to include (it's share of) all profits from overseas subsidiaries in it's accounts - but they only form part of it's "gross income" if they are actually income for the parent i.e. the subsidiary pays them out to it as a dividend {and very few corporations ever pay out their entire profit as dividends - retaining at least some is normal, and some major corporates pay no dividends at all as a matter of policy - eg apple ceased doing so in 1995} - the "paper profit" in an overseas subsidiary is no more income for the parent than the little bit of apple's earnings attributable to a particular apple shareholder (about $6.43 per apple share in Q1 2011 alone) is income for the shareholder that the IRS can tax on their personal tax return.
even the most aggressive tax code conceivable could never get the US the full corporate tax rate times worldwide income.... because other countries, quite reasonably, want their taxes on local operations by a US company in exactly the same way as the IRS wants US taxes on the US operations of foreign companies - and those foreign taxes are an allowable deduction for a corporate in exactly the same way as they are for a US individual who pays foreign income tax {and if they weren't, then the corporates would all cease to be us corporations quicker than you can say "double taxation"} |
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 drslashGoya AsmaPremium
join:2002-02-18
Marion, IA | reply to Snakeoil
said by Snakeoil:Look to the law.. as long as they are conforming to the law, then what are they doing wrong?
BTW, where were you like 10-20 years ago when this was first known about GE?
This is really old news.
Is it GE fault if they follow the policy and manage not to pay taxes?
GE and the lobbyists write the laws. That is the way is has worked for decades.
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SnakeoilIgnore Button. The coward's feature.Premium
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| We'll have to agree to disagree.
Lobbyists and private sector can introduce items for bills/policy. But it takes an act of congress to get it closer to be policy or a law.
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pandoraPremium
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| said by Snakeoil:We'll have to agree to disagree.
Lobbyists and private sector can introduce items for bills/policy. But it takes an act of congress to get it closer to be policy or a law.
GE paying nothing in taxes on it's multi billion dollar income indicates a failure of our tax system to work with large corporations.
Any large corporation will hire lobbyists and legally avoid most taxes and a ton of bothersome regulation that will adversely affect any smaller competitor. The advantage goes to the large at the expense of small and medium sized corporations.
This is an example of crony capitalism. GE isn't alone, but is a very outstanding example. Another company that more or less does the same but is hidden from view (most of the time) would be ADM. Others like IBM or Microsoft were dragged into lobbyist partnerships with government to maintain viability.
Anyone who complains about tax rates being too high for U.S. corporations, is telling a truth, but only part of a truth, it is too high only for non Fortune 1,000 (or so) corporations.
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