Posted on 03/25/2011 6:39:41 AM PDT by RobertClark
In today's NYT, in a surprising critique of the company that is the right arm of Obama's administration, there is finally an extensive focus piece on how GE, which made $14.2 billion in 2010 ($5.1 billion of which came from the US), paid, wait for it, zero taxes in 2010. NYT summarizes this odd quandary as follows: "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." In fact, it is far, far worse. As Zero Hedge disclosed, when we looked at GE's tax allergy six months ahead of the NYT, or as early as October 2010, we observed that "between 2002 and 2009, during which timeframe the firm made a generous $164.4 billion in pretax net income (not to mention $639 billion in domestic revenue, just over half of total revenues of $1.2 trillion) it paid only $5 billion in domestic current taxes, or a 3.17% tax rate!" In other words, GE has now made over $700 billion in domestic revenues, and has paid $5 billion in the period 2002-2010. Truly tax evasion Imagination at Work.
Back in October, with Geoffrey Batt, we observed:
One of the more popular topics recently is the collapse in corporate tax revenues, and the resultant push by the administration to ramp up taxation at the corporate level. As Zero Hedge has been disclosing for two months now, it all has to do with the now discredited concept of the "wall of money", which is mostly accumulated offshore and is thus not only available domestically, but is not taxed by the US. However, one company which has somehow managed to slip through the cracks is the infamous General Electric: the company, that in addition to the banks, has been the biggest beneficiary of Obama's taxpayer largesse. Here are the numbers: in the period between 1991 and 2009 GE's pretax income is cumulatively $293 billion on which however the firm has paid only $25.2 billion in current domestic taxes, or a 8.58% cumulative tax rate. Yet where it gets wild is the narrower period between 2002 and 2009, during which timeframe the firm made a generous $164.4 billion in pretax net income (not to mention $639 billion in domestic revenue, just over half of total revenues of $1.2 trillion) it paid only $5 billion in domestic current taxes, or a 3.17% tax rate! So our question to the administration is how does $639 billion in domestic revenue, and $164 billion in total net income, result in $5 billion in taxes? Perhaps if the desperately broke administration is so concerned about refilling its empty coffers, it should first of all look at the most profitable (presumably) company in America... And perhaps CNBC can share some coverage on the topic of its parent company's taxation strategy.
Note the red line below which shows the cumulative domestic current taxes paid by GE in the period 2002-2009, and compare it to the blue line, or total pretax income.
It is good to know that the company headed by the man who is head of Obama's job's panel, is finally getting the tax avoidance spotlight it so truly deserves.
In the meantime, we can't wait for Immelt to head Obama's corporate tax collection task force. After all, as we disclosed previously, the man's job creation track record is truly second to none: "[Immelt] runs a big company, but Immelt has shown more skill at cutting jobs, frankly, than creating. GE finished 2009 with 18,000 fewer US workers than it had at the end of 2008, and US headcount is down 31,000 since Immelt's first full year in 2002. During his tenure, GE workers based in the US as a percentage of total employees has fallen to 44% from 52%."
Surely Immelt can repeat his "jobs miracle" in the corporate tax realm where a broke America is truly desperate for at least some corporate tax receipts.
GE = ENRON
Pretty stupid generalization and one not supported by the facts of either GE or Enron.
I don't fault GE for aggressive tax avoidance - that's every American's duty. I fault them for acting as a de facto arm of government in return for a semi-guaranteed market share, a tactic which most of our major corporations engage in and a vile perversion of free market ideals.
I have no love lost for GE, but I’m afraid this is part of an even bigger strategy that the Left is about to spring on us. “Corporations and the Wealthy are not paying their FAIR SHARE! These budget cuts are unnecessary if ONLY they would make these people PAY what they OWE!”
They’ve prepared similar charts and graphs on virtually every major corporation in the country. Look for a major rollout as we had towards 2012.
Crony Capitalism at its finest.
For the record, I’m for GE and everyone else in this country paying a reasonable amount of tax. That includes all the people currently getting EITC as well.
Good post, ZeroHedge is an interesting site, the commenters @ZH in general suck.
Looking at the chart I would gather that the Democrat whores are more willing or more able to twist the tax laws for GE?
The German Fascist government under Hitler also favored big companies who helped do their biding: ie: I.G. Farben, Volkswagen, Krup etc. etc. Its what Fascist governments do.
Perhaps Steve Leisman, the chubby Lefty on CNBC, can explain how Jeffrey Immelt and GE can pay NO income taxes and get more billions from BO’s “stimulus” scams, while the unemployed have to pay taxes on their unemployment checks. This government stinks.
With the campaign contribution limit lifted. It be interesting to see how much money GE donates to Obama campaign
I agree. Most of the commenters are like juveniles, but some seem to have a pretty firm grasp on finance and macroeconomics despite their churlish demeanor. Tyler and Marla (there are several 'Tylers') do some of the best reporting and commentary out there. It is the site I check first each morning and frequently throughout the day - I have found over the past couple of years that more often than not, they are dead on accurate.
But here's Emmelt on a "task force" with Obama while NBC reporters get thrills up their legs and GE reaps billions from selling "ecomagination" wind turbines formerly produced by Enron, to highly leveraged, tax-incentive-heavy shell companies majority owned by GE.
Perhaps Steve Leisman, the chubby Lefty on CNBC, can explain how Jeffrey Immelt and GE can pay NO income taxes and get more billions from BO’s “stimulus” scams, while the unemployed have to pay taxes on their unemployment checks. This government stinks.
BRAVO!!
Refundable tax credits like the EITC just chap my backside. They should be eliminated as they are nothing more than an annual lump sum welfare handout. I have nothing against them being a tax credit - to lessen tax liability for those who actually earn income, but to make them eligible to be be refundable like a payment is just ludicrous. Darn it! Now I need to take something to lower my blood pressure and it is only 9am.
In order for a corporation to 'pay' a tax, it must first generate revenue by selling goods or services that are eventually consumed by people. The money comes from people.
Corporate taxes are merely a way to hide taxes on people so that individuals can not easily determine how much they are paying in taxes.
Garde la Foi, mes amis! Nous nous sommes les sauveurs de la République! Maintenant et Toujours!
(Keep the Faith, my friends! We are the saviors of the Republic! Now and Forever!)
LonePalm, le Républicain du verre cassé (The Broken Glass Republican)
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