Friday, March 25, 2011

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

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.

That may be hard to fathom for the millions of American business owners and households now preparing their own returns, but low taxes are nothing new for G.E. The company has been cutting the percentage of its American profits paid to the Internal Revenue Service for years, resulting in a far lower rate than at most multinational companies.

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. G.E.’s giant tax department, led by a bow-tied former Treasury official named John Samuels, is often referred to as the world’s best tax law firm. Indeed, the company’s slogan “Imagination at Work” fits this department well. The team includes former officials not just from the Treasury, but also from the I.R.S. and virtually all the tax-writing committees in Congress.
Read the rest here.

This is morally repulsive. The tax code is an abomination. It needs to be abolished and we need to start over with a very simple premise. If money changes hands from person or entity A to person or entity B, it is subject to taxation. We need to get rid of 99% of all the deductions. Charity, college tuition and one (1) household mortgage if the owners actually live there, that's it. No, I do not support medical deductions because very reluctantly I have come to the conclusion that we need some form of universal health insurance.


gdelassu said...

I am almost with you in your prescriptions, except that I think that tuition and mortgage interest deductions need to go as well. Nevertheless, I find it encouraging that a thorough-going statist like myself can see nearly eye-to-eye with a whig like you. One hears talk of grand bargains on tax reform in the works. Here's hoping that such common sense can prevail.

Michael said...

Two things, John;

First, I no longer think political reform is possible in the U.S. The plutocracy has an unbreakable hammerlock on all the institutions of society. There is no longer any "front" on which such battles can even be fought. Look at Wisconsin. Despite all the protests and unified political opposition, the plutocracy got exactly what it wanted. The same thing goes for all the bailouts a few years back. Banks and corporations have more rights than people do (the Supreme Courts says so, after all). Votes are irrelevant, and politics is simply theater.

Only a "clean slate" will change anything. Given all the Biblical floods and earthquakes lately, I am tempted to ask if Nature (and Natures's God) may be about to supply the "eraser." I honestly don't know, but I am sure that any time spent trying to "reform" this system is time and energy wasted.

The second point, is that politics follows culture, not the other way around. The response of different societies to natural disasters is instructive. In both Japan and in New Zealand (where I now live), there was either no looting at all (Japan) or only isolated, sporadic instances of it (Christchurch), in response to the recent earthquakes. In the U.S., New Orleans decended into something worse than the law of the jungle after Katrina. In Chile, after their big earthquake, the army had to be brought in to restore order. Haiti's earthquake resulted in a state of near civil war.

Violent, sociopathic, lawless people require violent, sociopathic, arbitrary governments to restrain them and keep them from killing each other. When (not if) the current plutocracy collapses of its own corrruption, arrogance and ineptitude, what will replace it? Thomas Jefferson and New England town meetings? Methinks not! A Yugoslavian-style breakup and an "N-way" civil war (with a potentially unlimited number of gangs and armed factions) is a more likely scenario.

If I were still in the U.S., that is what I would be thinking about, far more than political reform. A "failed state" is nothing compared to a failed society.

rabidgandhi said...

The Anti-Gnostic said...
The private sector can't create jobs so long as government maintains its huge and heavy footprint in the capital markets and consumes people's incomes via taxation.

3/25/2011 5:30 PM