Saturday, April 17, 2010
After Getting Bailed Out By American Taxpayers, General Electric Pays ZERO U.S. Taxes, Pretending that All of Its Profits are Overseas
General Electric got bailed out by American taxpayers.
Specifically, it was given $139 billion in FDIC guarantees and support by the Federal Reserve for it's commercial paper (see this).
So you'd think that GE would return the favor by paying American taxes, right?
Wrong. GE paid no U.S. taxes for 2009.
As CNN points out:
GE had plenty of earnings last year -- just not in the United States. For tax purposes, the company's U.S. operations lost $408 million, while its international businesses netted a $10.8 billion profit.
Indeed, as Forbes notes:
Last year the conglomerate generated $10.3 billion in pretax income, but ended up owing nothing to Uncle Sam. In fact, it recorded a tax benefit of $1.1 billion.
Unfortunately, GE is not alone.
As I wrote in November:
The Washington Post notes:
About two-thirds of corporations operating in the United States did not pay taxes annually from 1998 to 2005, according to a new report scheduled to be made public today from the U.S. Government Accountability Office...
In 2005, about 28 percent of large corporations paid no taxes...
Dorgan and Sen. Carl M. Levin (D-Mich.) requested the report out of concern that some corporations were using "transfer pricing" to reduce their tax bills. The practice allows multi-national companies to transfer goods and assets between internal divisions so they can record income in a jurisdiction with low tax rates...
[Senator] Levin said: "This report makes clear that too many corporations are using tax trickery to send their profits overseas and avoid paying their fair share in the United States."Indeed, as Pulitzer prize winning journalist David Cay Johnston documents, American multinationals pay much less in taxes than they should because they use a widespread variety of tax-avoidance scams and schemes, including:
- Selling valuable assets of the American companies to foreign subsidiaries based in tax havens for next to nothing, so that those valuable assets can be taxed at much lower foreign rates
- Pretending that costs were spent in the United States, so that the companies can count them as costs or deductions in the U.S. and pay less taxes to the American government
- Booking profits as if they occurred in the subsidiary's tax haven countries, so that taxes paid on profits are at the much lower safe haven rate
- Working out sweetheart deals with certain foreign governments, so that the companies can pretend they paid more in foreign taxes than they actually did, to obtain higher U.S. tax credits than are warranted
- Pretending they are headquartered in tax havens like Bermuda, the Cayman Islands or Panama, so that they can enjoy all of the benefits of actually being based in America (including the use of American law and the court system, listing on the Dow, etc.), with the tax benefits associated with having a principal address in a sunny tax haven.
As Johnston documents, the American economy is hurt by the massive underpayment of taxes by the huge multinationals.
- And myriad other scams
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The phenomenon discussed -is all-too-likely worse than reported here.
ReplyDeleteIn the small northern Maine town I live in, the agricultural product is potatoes. There's nothing sexy about the potato business, except that its price is also determined by the credit economy and commodities futures indexes run off Wall Street and the Chicago Board of Trade where all the crooks make a living.
Regardless. The largest potato farmer in this town has gotten a deal this past winter that cuts their receipts (per hundred weight) 12.5%
This is catastrophic financial calamity enough to cause a dire hurt without any added problems. But there are other problems.
It's nearing planting season and more than half last year's crop is still in storage unbought and unpaid-for too. It's not going to get bought or paid-for either.
If -business- isn't making money growing potatoes, then you can draw a parallel to Jeffrey Immelt's squirrelly collection of businesses, and assume the profit GE is reporting is a connived fraud, and one for which they cannot afford to pay income taxes -regardless- the phony numbers Jeffrey has cooked up for public consumption.
An 8-K restatement of income is likely baking right now in one of those many GE ovens used by the CFO to make Jeffrey Immelt's GE appear almost profitable enough to keep GE's stock price up -as if floating in mid-air-.
Jeffrey Immelt is tall, if clearly a dimmer bulb than the company requires during these harsh economic times. I doubt Jeffrey Immelt would make a decent potato farmer in these rough economic times.
I strongly suspect by the time Jeffrey is through -though- that GE will be sold off to the Chinese for chump change in yet another damaged-goods-swindle of the easily-duped Orient.
Stranger things happen quite regularly now.
It's being widely rumored -someone has figured how to smuggle gold out of Fort Knox. The scheme cleverly involves filling hollowed-out Tungsten ingots with the yellow metal.
why are we the american people not protesting daily in the streets about this?!?
ReplyDeletethis is exactly what is wrong with our tax system.
these corporations (and the 'groups of people' running them) have the ability to demand and get constitutional protections like free speech, yet do not have to adhere to any sort of tax code.
what is the logical conclusion?
what happens when EXXON decides it is going to arm it's employees ('security contactors' like Xe or Raytheon for example) to go to war against G.E.?
what are we going to do when Goldman Sachs decides that our Federal Government is a threat, or say a specific State of the Union is a threat and decides a 'preventative strike' is necessary?
Can anyone say 'United Fruit' for a good example in the recent past???!!?
....just wait til these 'too-big-to-fails' decide that United States Citizens are a threat.
whether you're a rural farmer type or an urbanite, this is good cause for us all as americans to rise up in protest.
Follow the money...oops..its offshore
ReplyDeleteJailed Whistleblower: US Lawmakers Held Offshore UBS Accounts
Democracy Now! co-host Juan Gonzalez discusses his interview with UBS whistleblower Bradley Birkenfeld one day after Birkenfield’s Tax Day clemency request to President Obama.
http://tinyurl.com/y64ce28
Exxon also paid zero income tax. I filed it all under "what fascism looks like". I also linked this article for my subscribers, thanks.
ReplyDeleteAs an American living in Switzerland for the past 15 years, I still have to pay US taxes in addition to Swiss taxes. I do not own property in the US, own no US stocks, bonds, etc. I have no US derived income, yet I am required by law to pay US taxes. Something is wrong when the big corporations can "legally" hide their profits offshore.
ReplyDeleteThe corporate tax rate should be low enough that the companies don't waste their money trying to find loopholes and simply pay the tax. We don't want to drive them offshore.
The Republicans sure set us up with all their tax breaks for rich Corporations and now they don't want the taxes raised on them. And they blame President Obama, unreal and criminal!
ReplyDelete