Sallow
The Big Bad Wolf.
A very good and eye opening story about the pandering of politicos with big business.
Great article. Highly recommended.
But Nobody Pays That
G.E.s Strategies Let It Avoid Taxes Altogether
By DAVID KOCIENIEWSKI
Published: March 24, 2011
General Electric, the nations largest corporation, had a very good year in 2010.
In January, President Obama named Jeffrey R. Immelt, General Electrics chief executive, to head the Presidents Council on Jobs and Competitiveness. He understands what it takes for America to compete in the global economy, Mr. Obama said.
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.
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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 worlds best tax law firm. Indeed, the companys 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.
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The head of its tax team, Mr. Samuels, met with Representative Charles B. Rangel, then chairman of the Ways and Means Committee, which would decide the fate of the tax break. As he sat with the committees staff members outside Mr. Rangels office, Mr. Samuels dropped to his knee and pretended to beg for the provision to be extended a flourish made in jest, he said through a spokeswoman.
That day, Mr. Rangel reversed his opposition to the tax break, according to other Democrats on the committee.
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As it has evolved, the company has used, and in some cases pioneered, aggressive strategies to lower its tax bill. In the mid-1980s, President Ronald Reagan overhauled the tax system after learning that G.E. a company for which he had once worked as a commercial pitchman was among dozens of corporations that had used accounting gamesmanship to avoid paying any taxes.
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G.E. subsequently ramped up its lending business.
As the company expanded abroad, the portion of its profits booked in low-tax countries such as Ireland and Singapore grew far faster. From 1996 through 1998, its profits and revenue in the United States were in sync 73 percent of the companys total. Over the last three years, though, 46 percent of the companys revenue was in the United States, but just 18 percent of its profits.
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By the time the measure the American Jobs Creation Act was signed into law by President George W. Bush in 2004, it contained more than $13 billion a year in tax breaks for corporations, many very beneficial to G.E. One provision allowed companies to defer taxes on overseas profits from leasing planes to airlines. It was so generous and so tailored to G.E. and a handful of other companies that staff members on the House Ways and Means Committee publicly complained that G.E. would reap an overwhelming percentage of the estimated $100 million in annual tax savings.
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While G.E.s declining tax rates have bolstered profits and helped the company continue paying dividends to shareholders during the economic downturn, some tax experts question what taxpayers are getting in return. Since 2002, the company has eliminated a fifth of its work force in the United States while increasing overseas employment. In that time, G.E.s accumulated offshore profits have risen to $92 billion from $15 billion.
That G.E. can almost set its own tax rate shows how very much we need reform, said Representative Lloyd Doggett, Democrat of Texas, who has proposed closing many corporate tax shelters. Our tax system should encourage job creation and investment in America and end these tax incentives for exporting jobs and dodging responsibility for the cost of securing our country.
http://www.nytimes.com/2011/03/25/business/economy/25tax.html?pagewanted=4&_r=1&ref=todayspaper
Great article. Highly recommended.