News $14 billion profit and zero tax to pay

cHodAX

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General Electric, buttbuddies with President Obhama and now getting away with not having to pay it's 35% corporation tax on profits. Utterly disgusting at a time when America has 7.5 million more unemployed than it had 4 years ago, so much with this guy being the people's president, he is all about big business.

DailyTech - GE: $14B USD Profits, Pays No Taxes For Last Year, Gets $3.2B Tax Benefit

s savvy tax-wise as General Electric Comp. The tech giant earned a sweet $14.2B USD in profit in 2010. And now the U.S. government has given it a hefty gift -- a year completely free of taxes and a $3.2B USD tax benefit.

The U.S. tax rate for corporations is supposedly 35 percent. But over the years crafty politicians have collaborated with business allies to work more holes into the tax code than a block of Swiss cheese. But even in today's era of free flowing corporate tax loopholes few companies have perfected the art to the degree GE has -- making massive profits, paying no taxes, and getting a tax benefit.

Part of how it snuck its way into such a sweetheart deal is the company it keeps. President Barack Obama anointed GE's chief executive as the head of his new Council on Jobs and Competitiveness. Among the council's key roles? Discussing corporate taxes.

According to The New York Times, which first broke news of GE's incredible feat, GE spent years of "innovative accounting" and fierce lobbying to slowly slim its tax bill. But when it really started experiencing windfall gains was when it hired a former Treasury official to lead its tax department and filled its team with former IRS employees and Congressional tax specialists.

Ultimately GE's massive profits mean a load of money for the company's executives and top shareholders.

For the rest of the U.S., the situation is less rosy. Today corporations only account for 6.6 percent of the federal government's tax revenue. Small businesses and taxpaying citizens have to make up the remainder of the tax deficit. And in GE's case citizens and smalls businesses find themselves in the strange situation of financing a special bonus for the government's favorite wildly successful corporation.

GE owns a number of assets, mostly in the high tech and communications field. It owns a number of utilities, supplies power grid electronics, sells vehicle components, and even owns cable TV properties, such as NBC Universal.

Updated: March 26, 2011 10:10 a.m.

To add a few more specifics on the origins of these tax breaks, GE is largely able to get them via a clever game of disguising profits in lucrative untaxed offshore holdings.

President Ronald Reagan in the eighties tried to eliminate this kind of behavior with the 1986 Tax Reform Act. Describes Robert S. McIntyre, director of the liberal group Citizens for Tax Justice, "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. 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."

In the wake of the Reagan era, the loopholes to the bill's strict provisions were added during the George Bush and Bill Clinton eras. Then in 2004 President George W. Bush cooked up the American Jobs Creation Act, perhaps the biggest blow to President Reagan's policy yet. The AJCA handed GE what would amount to $1B USD in tax savings a year. Many of its provisions were reportedly custom-tailored to GE.

While President Obama and his Democratic Congress contemplated trying to roll back those provisions, a concerted $21M USD lobbying effort convinced them to drop the effort. The most vocal critic, Representative Charles B. Rangel (D-N.Y.) decided to pull back, though, killing the effort. That same year GE, at his request, donated $30M USD to New York City public schools.

While President Obama hasn't added much to the loopholes, he's done little to fight them. And his decision to install GE's CEO on his Jobs board, which plays a role in formulating corporate tax policy, is arguably a step towards preserving the company tax breaks. In that regard President Obama is following in his immediate predecessor's questionable footsteps, and continuing the rejection of President Reagan's tax reform.
 

Helme

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But don't you see, the wealth will trickle down to the poor!
 

cHodAX

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I will take all the major broadsheets over the word of a scumbag corperation, those papers would be taking massive risk printing those numbers if wrong, they would be liable for huge damages.
 

Embattle

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Not forgetting that news papers are corporations as well, some owned by lovely people like Rupert Murdoch :p
 

old.Tohtori

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Don't trust either of them personally.
:iagree:

I stopped giving a toss at "But over the years crafty politicians have collaborated", which just put the whole article into a paranoid and preachy category.

Helme is right though, in order for everyone to benefit, someone has to get rich first. Old saying, completely misquoted i'm sure.

Only time will tell if this is a godo thing, or rich abstard assholes thing, either way...well..doesn't really bother me now does it :p
 

Helme

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Actually I was being sarcastic, that saying is one of the ways the right wing politicians have tricked the public into voting for them, despite countless years of studies proving the exact opposite. America is so fucked up because the public actually believes they'll all be rich some day, so they let things like corporations and the rich cheat out of taxes slide because someday, they'll join them - which of course is utter bullshit and is why despite being the richest country on earth they've got some of the biggest income gaps, no proper healthcare for ~40 million people and huge unemployment while companies reap record profits.
 

cHodAX

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Actually I was being sarcastic, that saying is one of the ways the right wing politicians have tricked the public into voting for them, despite countless years of studies proving the exact opposite. America is so fucked up because the public actually believes they'll all be rich some day, so they let things like corporations and the rich cheat out of taxes slide because someday, they'll join them - which of course is utter bullshit and is why despite being the richest country on earth they've got some of the biggest income gaps, no proper healthcare for ~40 million people and huge unemployment while companies reap record profits.
My god, someone else on this forum sees it.
 

cHodAX

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Yes i know you were being sarcastic, doesn't make you less wrong :p
Makes him absolutely right. Capitalism with proper regulation works and delivers benefit for all, rampant capitalism with close to zero regulation is a disaster constantly waiting to happen and all at the expense of the hardworking taxpayer who pays his mortgage and saves his money.

I never liked Regan but he saw this more clearly than any American polititian in decades, he wanted everyone to pay their way and not just the workers because he knew that was the only way America could grow effectively and sustain growth over the long term.
 

old.Tohtori

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Meant to say less right, not less wrong. Hangover posting fail.

Agree there, but also, taxing more the more you earn is a sham anyway.

Tax equally, let hard workers, or smart individuals get their reward.
 

cHodAX

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Meant to say less right, not less wrong. Hangover posting fail.

Agree there, but also, taxing more the more you earn is a sham anyway.

Tax equally, let hard workers, or smart individuals get their reward.
I have no problem with hard workers and smart people getting thier reward, what I don't like is smart people who fuck the economy over then take even more money out of the taxpayers pocket in bailouts or massive tax breaks. That is just rewarding failure and yet it is exactly what governments around the world did during the credit crisis and continue to do even now because it helps feather their own nest at the expense of the ordinary taxpayer who cannot dodge tax.
 

old.Tohtori

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Think the main question should be; would you if given the chance?

I doubt many would give up billions just for clear conscious.
 

cHodAX

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Think the main question should be; would you if given the chance?

I doubt many would give up billions just for clear conscious.
I would settle for being moderately rich and have a clear conscious over obscenely rich and utter souless, definately.
 

old.Tohtori

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Well, usually it's "get by with a clear C", getting rich means stepping on people.

Not to mention, just by living, yoiu're probably already contributing to someones misfortune.

For example; say you get a new job, someone else doesn't, that person could be in debt and now lose a house, with family of three. Just because you got the job. Maybe you even fibbed a bit in the CV, did some interview tricks and so forth. That trickery means little jimmy is eating ratstew tonight.

Would make "havta pay some taxes boohoo" kind of pointless and selfish ;)
 

cHodAX

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Well, usually it's "get by with a clear C", getting rich means stepping on people.

Not to mention, just by living, yoiu're probably already contributing to someones misfortune.

For example; say you get a new job, someone else doesn't, that person could be in debt and now lose a house, with family of three. Just because you got the job. Maybe you even fibbed a bit in the CV, did some interview tricks and so forth. That trickery means little jimmy is eating ratstew tonight.

Would make "havta pay some taxes boohoo" kind of pointless and selfish ;)
Not always, I know a few people who started businesses, worked hard, employed lots of people and built nice lives for themselves without crushing anyone underfoot or ripping people off. I guess it all comes down to how you were raised but for many people 'dog eat dog' is not how they want to live thier lives.
 

Fafnir

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Well our old CEO got 800.000.000 SEK Bonus a few years ago and said on TV that he deserved more. And big buinsess can today buy a seat in the goverment via contributions to the candiates. Just look at how much Murdoch power really wields with all his channels.
 

Marc

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GE have done nothing that every other multinational company try and do every year. The only reason its hit the news is the scale of the profits and the nil AMERICAN corporation tax charge. Nothing to see here, just the media on a crusade to cause some shit. Is what GE have done legally ok? For sure it is. Is it morally right? Probably not, but most companies of a similar size with operations around the world are all doing similar. Move the tax liability to a country that pays a lower percentage of tax. GE is a business and you look after yourselves. Sad, but true. Its no different to the way clubs like manchester united reorganise their various companies to ensure minimal tax liabilities. You are just manipulating the laws that are available to you and correct me if im wrong chodax, but on the football thread, you even stated that this is what businesses do and its ok cos legally they can do it and now you want to argue that what GE is doing is wrong? (If It wasnt you, i apologise)

"Significant losses at GE Capital during the financial crisis, largely in the United States, reduced GE’s overall tax rate below historic levels the past few years. Those losses and the subsequent reduction in taxes owed is not a “tax avoidance” The fact the media even thought that this was tax avoidance shows how utterly clueless their researches are.

*Edit, if GE are lying about the various overseas operations and the amounts involved then this is wrong yes, but im not privy to the information until the audit (LOL) is completed*
 

rynnor

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Is it so bad? The profits will boost their share price and secure many jobs, lots of peoples pensions have shares in GEC that will benefit, the company can use the profit to expand and create more jobs and all these people will pay tax.

Its just a different philosophy of taxation - if you can attract big business in you gain more jobs for your country which is a win.
 

DaGaffer

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Is it so bad? The profits will boost their share price and secure many jobs, lots of peoples pensions have shares in GEC that will benefit, the company can use the profit to expand and create more jobs and all these people will pay tax.

Its just a different philosophy of taxation - if you can attract big business in you gain more jobs for your country which is a win.
First of all, there's no correlation between a boosted share price and job security, and increased profits don't necessarily correlate with job creation. The jury is definitely out on whether low corporate tax rates do anything for real job creation. Here in Ireland the view was always that it did, but in reality plenty of US companies have a small presence in Ireland (often an office full of tax accountants) but the jobs are all elsewhere, or certainly in no way guaranteed or protected (Dell for example). Ireland is desperate to protect its low corporate tax rates, but that's mainly to make sure things don't get worse, rather than any genuine belief these days that tax alone creates jobs.

Personally I think low corporate tax rates may make sense for small countries that don't have much of an employment problem in the first place, but aren't going to do much for larger countries where a local presence is probably required anyway. Think about it this way, if corporate tax rates were harmonised in the manner of GATT, the ability of corporates to play these games would go away, with no adverse effect on share price because the rates would be the same for everyone, everywhere.
 

Helme

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I'd be inclined to agree that more profits lead to more jobs but I've seen far too many lay-offs while the company has record profits, or the extra money being paid out in bonuses to CEO's to have any faith in that idea.
 

rynnor

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I'd be inclined to agree that more profits lead to more jobs but I've seen far too many lay-offs while the company has record profits, or the extra money being paid out in bonuses to CEO's to have any faith in that idea.
Your surely not suggesting they will pay the extra few billion in profits they made from the lack of corporation tax out as bonuses??

As I said above if you have a pension this is probably good news for you - I also thought they got this deal partly for investing in renewable energy projects which is another win.
 

rynnor

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Ireland is desperate to protect its low corporate tax rates, but that's mainly to make sure things don't get worse, rather than any genuine belief these days that tax alone creates jobs.
Ask yourself if they didnt think it worked why would they bother?
 

Helme

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Because the lawmakers are pretty much owned by corporate interests?
 

rynnor

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Because the lawmakers are pretty much owned by corporate interests?
Thats silly though - their policy of low corporation tax was working for them - the celtic tiger economy.

If it hadnt been for the enormous property bubble that eventually burst and the global recession they would still be doing well.
 

DaGaffer

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Ask yourself if they didnt think it worked why would they bother?
I said it there; because if they took it away, the companies that are here (like Google), would be gone about 30 seconds later. At the moment, keeping the tax rate is just so there are at least some shots in the Irish economic locker. But I don't think anyone here believes the tax rate on its own creates jobs or inward investment; it was always the combination of English Speaking / educated workforce / access to EU / low tax / relatively low wages that brought investment. Problem is the wages ramped up and actually shot past the UK, the educated workforce isn't necessarily educated in the right subjects, which leaves English speaking, tax, and access to the EU, so you can understand why they want to keep the tax rates, while they get busy reforming education and deflating wages.
 

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