I posted this a while ago (update follows): GE has over 900
tax attorneys and employees who are involved in the preparation of its tax
returns and they regularly file over 7,000 returns of some 24,000 pages.
In 2010 alone, GE reported worldwide profits of $14.2
billion – with $5.1 billion of that total coming from its operations in the
United States.
GE’s 2010 American tax bill was zero. In fact, GE claimed a tax benefit of $3.2 billion (credit off their following tax return).
How can
that be you probably ask (just like me)?
GE, like most other giant American corporations use an assortment of tax breaks gained from congressional insiders.
That has provided them a significant short-term gain for their company executives and shareholders.
All their breaks and loopholes allow them to avoid taxes on
profitable overseas lending but also to amass tax credits and write-offs that
can be used to reduce taxes on billions of dollars of profits domestically.
That strategy not only shortchanges the U.S. treasury, but
it also harms the economy by discouraging investment and hiring in the United
States.
The basic reason GE has been able to keep its tax bill so
low here at home is that they structures
its businesses so that it takes a loss in the U.S. and earns its profits
elsewhere where the rates are lower.
Thus they can skip any U.S. obligation while they enjoy
their tax break or credit for massive foreign profits.
UPDATE ON THAT IN A SUPER ARTICLE FROM THE NY TIMES in “The Morning” by David Leonhardt –
with this headline:
“Corporate Taxes Are Wealth Taxes”
Their decline has led to a steep drop in tax rates for the
affluent.
Highlights follow (with my emphasis
to fit the blog) – full
story here with more topics, too:
Key Part (as if we didn’t know or suspect):
The main cause of the
radical decline in tax rates for very wealthy Americans over the past 75 years
isn’t the one that many people would guess.
It’s not about lower
income taxes (though they certainly play a role), and it’s not about lower
estate taxes (though they matter too).
The biggest tax boon for
the wealthy has been the
sharp fall in the corporate tax rate (see the chart above).
In the 1950s, ’60s, and ’70s, many corporations paid about
half of their profits to the federal government. The money helped pay for the
U.S. military and for investments in roads, bridges, schools, scientific
research, and more.
Richard Clarida, an economist who’s now the vice chairman of
the Fed, once said: “A dirty little
secret is that the corporate income tax used to raise a fair amount
of revenue.”
But, since the mid-20th century, politicians of both political parties have supported cuts in the corporate-tax rate, often under intense lobbying from corporate America.
The cuts have been so large — including in Trump’s 2017 tax overhaul — that at least 55 big companies paid zero federal income taxes in 2020 (cite: Institute on Taxation and Economic Policy). Among the top: Archer-Daniels-Midland, Booz Allen Hamilton, Charter Communications, FedEx, HP, Interpublic, Nike, Nucor, and Xcel Energy.
“Right now, the U.S. raises less corporate tax revenue as a share of economic output than almost all other advanced economies,” Alan Rappeport and Jim Tankersley of The Times write.
My 2 cents: From the article
is this statement, which I agree 100% and I suspect millions of others feel the
same way:
The justification for the tax cuts has often been that the
economy as a whole will benefit —
that lower corporate taxes would lead to company expansions, more jobs and
higher incomes. But
it hasn’t worked out that way. Instead, economic growth has been mediocre since the 1970s. And
incomes have grown even more slowly than the economy for every group except the
wealthy.
I hope you enjoyed this
review – I sure did … keep it handy and add to later on (and hope the GOP does
not regain the majority in Congress otherwise: “Katy Bar the Door.”)
Thanks for stopping by.
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