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US Competitiveness Chief Immelt's GE Tax Bill: $0 436

Posted by samzenpus
from the gaming-the-system dept.
theodp writes "'He understands what it takes for America to compete in the global economy,' President Obama said of GE CEO Jeff Immelt, as he announced Immelt would chair the President's Council on Jobs and Competitiveness. On Friday, the NY Times reported that one trick Immelt employs to keep GE competitive is paying no American tax bill. In fact, GE claimed a 2010 tax benefit of $3.2B on worldwide profits of $14.2B, $5.1B of which came from US operations. According to the NYT, GE's extraordinary tax-avoidance 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. GE's giant tax department is led by a former Treasury official whose 975-member team includes former officials not just from the Treasury, but also from the IRS and virtually all the tax-writing committees in Congress. GE's return to rock-bottom tax rates marks a dramatic reversal from the mid-80's when President Reagan reacted to corporate accounting gamesmanship and supported a change that closed loopholes and required GE to pay a far higher effective rate, up to 32.5%. 'That GE can almost set its own tax rate shows how very much we need reform,' said Rep. Lloyd Doggett. '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.'"
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US Competitiveness Chief Immelt's GE Tax Bill: $0

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  • by shellster_dude (1261444) on Monday March 28, 2011 @01:23AM (#35635432)
    I'd like to point out that GE used to (and still does) fund MSNBC which continually loves to deride corporations and the so called "Fat Cats" on Wallstreet. Oh the irony... Apparently it's okay to not pay taxes as long as you're friends of the current Administration. May I also be the first to ask why is this story on Slashdot, and why is it a weeks late?
    • Just like people hire hackers and crackers to improve their security, maybe higher tax evaders to reform tax laws is a good thing.

      • Hire retired tax evaders, maybe. Ones who are looking for work next year in tax evasion should not be hired to write the tax code this year.

      • by c0lo (1497653)

        Just like people hire hackers and crackers to improve their security, maybe higher tax evaders to reform tax laws is a good thing.

        His job is to improve "Jobs and Competitiveness", not to plugs the holes in taxation. And he's showing a big promise: one way to be competitive is to avoid taxes.

        The paradox of "partial optimization" ("divide and conquer" methods applied to optimization) - one may end hurting the overall objective even if the partial objectives are met.

    • by (startx) (37027)
      May I also be the first to ask why is this story on Slashdot, and why is it a weeks late?

      samzenpus

      3 dupes already this shift. That's what happens when your Sunday "editor" doesn't read the site the rest of the week.
  • by nido (102070) <{moc.oohay} {ta} {65odin}> on Monday March 28, 2011 @01:36AM (#35635504) Homepage

    The reason wealth concentrates more and more is because of the Federal Reserve system, where the banks (NOT the government) create the money supply by making loans.

    And now "Deficit Terrorists" are campaigning to slash federal spending. The real reason the federal debt is skyrocketing is because the banking system can't make loans like it used to, so the Federal Government has to be the "borrower of last resort", taking out loans from the "lender of last resort" (the Fed) and everyone else.

    I don't remember the exact figure, but 40-50% of the Federal Government's debt is either held by the Federal Government (in the Social Security "trust fund"), or by the Federal Reserve (which is held to "back" the money supply). 100% of the interest paid to the ss trust fund is returned to the government, as are most of the Federal Reserve's profits (after operating expenses and a fat dividend to its owners, the private banking system).

    If the debt were to be instantaneously paid off, all money would instantly vanish from the economy.

    If the federal reserve system was nationalized, and the Department of the Treasury could issue debt-free "greenbacks" (like Abraham Lincoln used to pay for the Civil War), wealth would be much less concentrated that the current status quo.

    Required reading:
    Money and the Crisis of Civilization [realitysandwich.com]
    A Bailout for the People [richardccook.com] (pdf).

  • by Lord_of_the_nerf (895604) on Monday March 28, 2011 @02:00AM (#35635614)
    (Financial) Imagination at Work
  • GE's response . (Score:5, Informative)

    by sdiz (224607) on Monday March 28, 2011 @02:10AM (#35635672)

    http://www.gereports.com/setting-the-record-straight-ge-and-taxes/ [gereports.com]

    - GE paid almost $2.7 billion in cash taxes in 2010 on a consolidated basis (almost 19% of pretax income from continuing operations).

    • by jhoegl (638955)
      So what it says is, it got a bunch of tax breaks during our worst financial issues ever.
      It does not deny their lobbying efforts, instead they say they "comply with laws"...well no shit, if you write them..
      What does "2.7 billion in cash taxes" even mean?
      • by Cederic (9623)

        Tax they had to pay, rather than tax they offset against expenses (at a guess).

        It also doesn't state that those taxes were paid in the US, and it doesn't state that those taxes were income taxes, rather than the employment, property, etc taxes that they refer to later in their response. Check their financial report, it'll give you that clarity.

        Sounds like they accrued tax in prior years, and are using current losses from GE Capital to write off that accrual rather than paying it. That is a tax loophole, but

        • So corporate taxes are not needed? Why not turn things around and abolish personal taxes.

          Any personal income will still get taxed, either through sales tax or through inheritance tax, and you could eliminate at least half of the paperwork the IRS has to do.

      • by GrumblyStuff (870046) on Monday March 28, 2011 @06:12AM (#35636664)

        "Cash taxes" probably means "fines for breaking the law but with no admittance of guilt nor change of plans because this is a pittance compared to the profit we're making".

        I could be wrong though.

      • If you read the fine print you will discover why GE got such a large tax credit:
        http://www.sec.gov/Archives/edgar/data/40545/000119312510246292/d10q.htm [sec.gov]
        http://www.sec.gov/Archives/edgar/data/40545/000119312510173396/d10q.htm [sec.gov]
        http://www.sec.gov/Archives/edgar/data/40545/000004054509000071/frm10q.htm [sec.gov]

        Corporations pay taxes in the countries they operate in. They report financials for each of those countries, and they file taxes in each of those countries. GEFS also known as GE Capital is based in the US
  • A Little Quick Math (Score:5, Interesting)

    by Plekto (1018050) on Monday March 28, 2011 @02:20AM (#35635724)

    3.2 Billion - 320 million people in the U.S. Roughly half pay taxes (unemployed, children and so on of course don't). That works out nicely to: $100 refund for 20% of the U.S. population who pays taxes.

    From one company working the system. ONE. Out of several hundred such companies that are manipulating things to their benefit.

    You want a tax cut for the working people? How about making the corporations pay their fair share. There's more than enough money in their coffers to make taxes a thing of the past for the poor and middle class, as well as for small business owners and the self-employed. How does "if you make less than $50K a year, you don't have to file taxes at all" sound? You want to spur growth at the lower levels and create a solid foundation? Get rid of this burden. Doubly so on small businesses. You should get a tax *rebate* for starting a new business at this point. Instead it costs hundreds in taxes and fees. And that's if you aren't in California or some other state that really sticks it to you.

    In fact, this is one thing I cannot fathom. How the RNC and big business (which are essentially one now - with the other party quickly being subverted as well) have managed to still get support from the very people that they shaft over and over again. Big business won't trickle-down. They won't save us. They won't create jobs here at home. What's good for big business is not good for the rest of us. It never has been. We need to wake up and stop letting them get away with this. Because all we're doing is strangling the very people and small businesses that we need to create the next generation of jobs and innovation.

    In case you weren't paying attention, big business and small business are diametrically opposed at this point. So when they say "we're all for business" - you have to ask the greaseball politician who's mouth is flapping which "business" they are talking about. You probably won't like the answer, though.

    • by Black Parrot (19622) on Monday March 28, 2011 @03:23AM (#35635994)

      In fact, this is one thing I cannot fathom. How the RNC and big business (which are essentially one now - with the other party quickly being subverted as well) have managed to still get support from the very people that they shaft over and over again.

      That's why they brought us the Southern Strategy, the bedding-down with the Religious Right, and the new Southwestern Strategy.

      I.e., they figured out that if they can make someone's knee jerk, they can make their finger twitch in the voting booth.

      We've got a country full of citizens who will gladly vote away their freedoms, their privacy, their financial well-being, and their health, for the chance of foisting their prejudices and religious scruples off on the rest of society.

      If Republicans ran on their real platform - making sure the rich get richer faster than they would without a Federal government - they wouldn't draw 1% of the votes. There just aren't enough rich people to get anyone elected, so they appeal to the basest instincts of the masses.

      • by hey! (33014)

        Well, I don't know if you can blame everything on the southern strategy and the religious right.

        I think the more general strategy is fear-mongering. Fear is especially useful to a politician because it removes any need to be consistent. One can use fear of foreign terrorists to lead people by the nose into foreign entanglements then soon after use fear of foreign entanglements to lead them in a completely inconsistent direction. Fear focuses people on a single outcome, not the big picture. The big pictur

    • How about making the corporations pay their fair share

      Define "fair".

    • by Shivetya (243324) on Monday March 28, 2011 @06:00AM (#35636578) Homepage Journal

      Pay their fair share, oh my. However am I going to survive the kharma hit for this one.

      YOU IDIOT, CORPORATIONS DO NOT PAY TAXES EVER!

      Now for the nice side. Tell me, where does a corporation get its money to operate?

      From consumers of its products.

      Now, where does a corporation get the money it pays in taxes?

      From consumers of its products.

      What we have here and the class warfare ideologues always miss whether on purpose for redirecting ire from their favorite politicians or because of self ignorance which was beaten into them by the same politicians is one simple fact.

      A tax on a corporation is an indirect tax on the consumer of that corporations product. This tax can be buried many levels deep as obviously not everyone makes use of every corporations services but someone does somewhere and eventually we all hit each other.

      You an I pay taxes. We do it on every purchase we make whether or not there is direct sales tax on the purchase. We pay indirectly every tax bill of every corporation we do business with. This is how it has always has been.

      The real crime in this story about GE is that they NEED 975 tax accountants just to pay or not pay taxes. Think about that, nearly a thousand people who produce nothing but instead are there to make a system work. Now while not all companies are as large as GE think of how many tax accountants are required to operate businesses in the US. Now think how much more production we could have if just half the people involved in taxation were instead producing goods and services.

      THINK ABOUT THE FACT THAT THE IRS'S BUDGET IS NEARLY AS LARGE AS NASA'S!

      So why not stop this taxation of corporations. Because politicians know the holy hell they would be in for if people saw just how much they really paid. See we can kid ourselves and believe that 20 to 30% is OK for taxes. We can guilt ourselves into it. We cannot however guilt ourselves into accepting that plus nearly 20% more indirect taxes we pay. A progressive tax system with a "corporate tax" layer is all about deflecting attention from the tax load the people actually pay. There is nothing fair about it and never can their be fairness because it is purposefully obfuscated.

      Still there is an answer, a consumption tax. Drop income taxes, drop fake corporate taxes, and tax consumption. Determine the proper costs to feed, shelter, and cloth a person or family and refund that the first of each month to all heads of households. A consumption tax will get the people who spend money. It will get those who have millions and want to spend it. They won't have their offshore accounts to hide their profits because there is no tax benefit to do so.
       

      • by rwv (1636355)

        A consumption tax will get the people who spend money.

        Not if they take their business (luxury purchases) offshore. If I were rich, I'd go to London, Paris, or Milan to buy fancy jewelery and clothes if America taxed 20-30% on the things I buy. This is small potatoes for $100-200 items, but the rich can afford to spend $10,000 to $100,000 on luxury goods. It's a simple matter to compare the cost of things in America (with hefty consumption taxes) versus the cost of things elsewhere (without aforementioned taxes). You can't regulate this type of consumption

      • by tyrione (134248)
        Write law that overturns the 1934 Supreme Court ruling that a Corporation is a Single Individual Entity with the right to "lobby" for grievances and not take responsibilities like a human being and you'll see corporations shitting their pants. Corporations deserver NO RIGHTS that are those of the Individual. They are a synthetic construct created by Man to get human beings working. That's it.
  • Just push the global community of governments for higher corporate taxes all around. It'd be like price fixing, except with tax rates. That increases the income in these emerging economies and ensures that companies pay taxes SOMEWHERE. If a country refuses, impose trade restrictions. That gives gov't control of how taxes are collected, even if not within their borders.
  • With even the "do no evil" Google doing major tax evasion [businessweek.com], is anyone surprised an old boy's club like GM is doing even fancier tricks? I'm at the point now where I don't even consider companies that are net tax neutral to be that bad. You have to actively be siphoning money away from the taxpayers via bailouts and unprosecuted financial fraud [rollingstone.com] to register on my radar nowadays.

  • Any time you have a 975-member team to do your taxes - I don't care how big a company you have - something is broken. That's an immense waste, mirrored by similar wastes on the IRS's side.

    That waste runs all the way down to the smallest scale. I shouldn't need to hire a professional to handle my individual tax return.

  • by sycomonkey (666153) on Monday March 28, 2011 @01:16PM (#35641642) Homepage
    The tax system is a mess, but I think the key issue here is innovative accounting. I'm sorry, but accounting is supposed to be, by definition, crystal clear and straightforward. Innovation is this field is more properly described as "accounting in such a way as to hide money we've made while still (maybe) following the rules". Which says to me that the rules are not complete enough.
    Unless GE gave every dime of profit they made to charity, they should be paying taxes. A lot of taxes. THIS is why we have a budget deficit.
  • by ChrisMaple (607946) on Monday March 28, 2011 @01:16PM (#35641644)

    TFA states that GE has 950 employees dedicated to navigating the tax laws. Think how much productive good those 950 could do if laws were not such that GE is better off employing them in that manner. OUR tax money is being used by people in government to make and enforce laws so that GE employs unproductive people to avoid those laws.

    These games are played with humans whose efforts come to no good and make everyone else's lives worse. Wasted lives making waste.

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