General Electric Paid Nothing in Corporate Taxes for the Second Year Running

Nightly News Stays Mum on GE’s $0 Tax Bill and $1.5 Billion 'Tax Benefit'

March 30, 2011

The Cutline - As the New Yorker's former press critic, A.J. Liebling, famously said,

"Freedom of the press is guaranteed only to those who own one."

Perhaps that quotation is framed somewhere in a boardroom at the General Electric Corp., which owns NBC News.

In spite of robust profits of $14.2 billion worldwide, GE has calculated a corporate tax bill for 2010 that adds up to zero, via a creative series of tax referrals and revenue shifts. (This was, indeed, the second year running that the company—which has an enormous, and famously nimble, 975-employee tax division, led by former Treasury official John Samuels—paid nothing in U.S. taxes; indeed by claiming a series of losses and deductions, GE came up with a negative tax of 10.5 percent in the admittedly dismal business year of 2009, and realized a $1.5 billion "tax benefit.")

The curious thing about this year's tax story is that it turned up in many major news outlets, with one key exception: NBC News. As the Washington Post's Paul Farhi notes, the network's

"Nightly News" broadcast, hosted by Brian Williams, has not mentioned anything about its corporate parent's resourceful accounting, even though the story has been in wide circulation in the business and general-interest press for nearly a week."

"This was a straightforward news decision, the kind we make daily around here" network spokeswoman Lauren Kapp told the Post.

One press critic who begs to differ: Daily Show host Jon Stewart, who noted that the Nightly News found the time for a dispatch on the inclusion of slang expressions in the Oxford English Dictionary, such as "LOL" and "OMG." Of course, Comedy Central's corporate parent, Viacom, is also no slouch when it comes to tax strategy: Earlier this year it sold its struggling videogame unit Harmonix for $50—so that it could claim a tax credit of $50 million.

G.E. Paid No Taxes on $5.1 Billion in Profits

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. While General Electric is one of the most skilled at reducing its tax burden, many other companies have become better at this as well. Although the top corporate tax rate in the United States is 35 percent, one of the highest in the world, companies have been increasingly using a maze of shelters, tax credits and subsidies to pay far less. - G.E.’s Strategies Let It Avoid Taxes Altogether, New York Times, March 24, 2011

March 25, 2011

The Lookout - As Washington worries about the United States' growing deficit problem, there's mounting evidence the government is failing to collect taxes from wealthy individuals and corporations.

A piece in today's New York Times by David Kocieniewski outlines how G.E. skirted paying any taxes on $5.1 billion in profits in 2010--in addition to claiming a $3.2 billion tax credit.

The main reason G.E. is so adept at avoiding paying taxes, Kocieniewski writes, is because it's compiled an all-star team of in-house tax professionals plucked from the Internal Revenue Service, the Treasury Department, and "virtually all the tax-writing committees in Congress."

G.E.-- whose slogan is "Imagination at Work"-- has in-house, Kocieniewski writes, what is considered by many to be the best tax law firm in the world. Their secret to success is a familiar one, though G.E. appears to have perfected it: "fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore."

Writes Kocieniewski:

In a regulatory filing just a week before the Japanese disaster put a spotlight on the company's nuclear reactor business, G.E. reported that its tax burden was 7.4 percent of its American profits, about a third of the average reported by other American multinationals. Even those figures are overstated, because they include taxes that will be paid only if the company brings its overseas profits back to the United States. With those profits still offshore, G.E. is effectively getting money back.

Such strategies, as well as changes in tax laws that encouraged some businesses and professionals to file as individuals, have pushed down the corporate share of the nation's tax receipts — from 30 percent of all federal revenue in the mid-1950s to 6.6 percent in 2009.

In an interesting twist, President Obama recently asked G.E. CEO Jeffrey Immelt to be his chief outside economic adviser, and the company recently came under fire for being the manufacturer of the faulty reactors that sparked Japan's nuclear crisis in the wake of the devastating earthquake and tsunami.

Does the U.S. Live Under Capitalism?

History Proves Living Under Capitalism in the United States is Impossible Because we Have no Control Over Our Banking System; Our Financial Future is Run by Elites.

March 20, 2011

Truth-It.net - Living under capitalism, in its pure state, allows manufacturers and consumers to work together, encouraging a free market in which competition is the primary component.

Comedian Lewis Black jokes about many issues in his popular stage act, but one area in which he makes quite a relevant point is the economy. He dissects the senselessness of the issue and clearly points out that no one really knows what is going on.

His way of expressing this is far more colorful, but fundamentally he says that any nation under capitalism is going to be relatively unpredictable. With his finger he draws the course of the markets in the air, as they “go up and down and up and down …”

The thing is that what he, and millions of others, consider to be capitalism is totally wrong. Where Lewis Black and others ARE correct, is that capitalism fails due to manipulation by a greedy few who create their own special arrangements and partnerships.

For example, how can we say that we are living under capitalism when we have no real money? The United States financial system is a “fiat” system, which is controlled by a privately run central bank which manipulates interest to stimulate credit and not capitalism.

FREE MARKETS

The primary needs of a society that hopes to thrive under capitalism are quite simple-- sound money and free markets. Unfortunately free markets are frequently eliminated by government intervention, corporate collusion and pure greed.

The way in which free markets are eliminated requires the full participation of the government, which works with “special interest” groups or powerful corporations to prevent realistic trade from occurring. They instill barriers to competition and create near-monopolies for a select few.

This is the first disastrous step towards the destruction of capitalism. When all willing and interested players are kept out of the market, true capitalism can’t occur. Trade barriers usually include the protectionist policies set in place for certain industries.

REGULATION

Trade barriers can often fall under the term regulation. This is a dream system for government agencies in collusion with big business. The corporate lobbyists push, bribe and coerce members of Congress to help put rules, laws and regulations in place.

Because it becomes too complicated or costly for any government agency to continually enforce such rules, there are "professional " organizations given the authority to do so. These organizations are usually under the control of the very people who pushed for their creation.

Using their power to penalize or prevent competitors, they suppress any real free market activities. This, in turn, means that no one is actually operating under capitalism.

EXAMPLES?

If you haven’t heard of Enron, you were probably in a coma for the last few years. This epic of greed and corruption was only possible through cooperation between a few powerful politicians (i.e. the President) and a few crooked businessmen (i.e. Lay and Skilling).

Kenneth Lay was the poster child for deregulation, but his version of it didn’t allow for any type of free market, it simply allowed his corporation to become a modern day “robber baron.” A good example of this is in the California energy crisis, during which time Enron was able to rake in billions and nearly bankrupt the state.

Under real and functioning capitalism, such a thing would not have transpired. It was government intervention and involvement that allowed for fraudsters to have their way. The role of government is to stay out of the way of ALL players, which just isn’t happening.

Should a day arrive in which no special interests benefit from government policies or corrupt behaviors, we can finally hope to live in a world of free markets and true capitalism.



The problem we face now is that our “Capitalism” is corrupt and only serves the Elite. Those with the political connections get bailed out of their failure and spread the cost among those who were prudent or worse, those that succeeded. In reality we have a two tiered system in which most of America gets the failure of Capitalism and the Elite get the Socialism of being bailed out on our backs. In essence we privatize profits and socialize loses. This creates a moral hazard where those that are alleviated of the risk of failure, take more and more risk, in search of greater profits. This ultimately leads to a crisis which, is where we are today. - Silver Shield, The Two Coming American Revolutions, Dont-Tread-On.me, March 25, 2011