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The ultimate corporate welfare queen?


Despite what the talking heads in the news media may be trying to tell us, the economy is still in the dumps:


On the other hand, isn't it nice to know that during such hard times, a few folks are still raking in money hand over fist?   Or maybe not so nice ...

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.

That may be hard to fathom for the millions of American business owners and households now preparing their own returns, but low taxes are nothing new for G.E. The company has been cutting the percentage of its American profits paid to the Internal Revenue Service for years, resulting in a far lower rate than at most multinational companies.

Of course this is no accident.  G.E. has spend hundreds of millions during the last few years on massive lobbying efforts, particularly those involving green energy initiatives.  This has resulted in G.E. being first in line for billions of dollars worth of grants, rebates, tax credits, and other government largess more commonly known as "corporate welfare." 

In his annual Letter To Shareholders from G.E.'s 2008 annual financial statement, which was published shortly after the inauguration of Barack Obama, G.E. CEO Jeff Immelt wrote:

[W]e are going through more than a cycle. The global economy, and capitalism, will be 'reset' in several important ways. The interaction between government and business will change forever. In a reset economy, the government will be a regulator; and also an industry policy champion, a financier, and a key partner.

If you believe in entrepreneurship and the free market, that ought to scare the living hell out of you.  Because what this means is that any company wanting to business on a scale beyond the local level will have to deal with a bought-and-paid-for Federal Government  -- and its cadre of highly subsidized, too-big-to-fail corporate cronies -- as its single biggest competitor.

The next time you hear a liberal bashing Wal-Mart or a health insurance company, ask them why it is fair for G.E. to pay zero corporate income tax while the government is struggling through the worst period for tax revenue collections during the last 50 years.  I'm sure their responses will be very entertaining.

Oh, and one other thought.  A few years back there was another other billion dollar corporation specializing in energy-related business innovations that became a D.C. darling.  It had a rock star CEO and deep financial ties to a friendly Democratic presidential administration.  Each year it was the recipient of hundreds of millions of dollars worth of tax breaks and government-underwritten sweetheart deals.  Its lobbyists pushed for (and got) major changes in federal laws governing energy trading.  And year after year it posted billions in profits, yet payed zero Federal income taxes.

The name of this company?  You may have heard of it -- ENRON.


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Comments (19)

GE did nothing wrong they j... (Below threshold)
hcddbz:

GE did nothing wrong they just took advantage of the Tax code. Each year corporations spend 40B in tax avoidance. With the 2nd highest tax rate in the world it what shareholders expect.

Now if we could just be smart about this and reduce the rate to 15% with not loop holes and write off of capital expenditures.

Simplify Tax code.
Reduce rate to attract business
Stop double taxation let companies over sea pay taxes just once.
I want increased revenues lower rates no loop holes.
that the answer

The thing people don't real... (Below threshold)
cirby:

The thing people don't realize is that when large corporations "don't pay taxes" like this, they really are.

They're doing things the government wants, but doesn't want to cut a check to pay for. The government then makes a policy, or defines a rule, of creates a tax cut to convince a bunch of people to do that thing, and they do it, receiving a tax cut or a tax exemption or a direct rebate for whatever it is.

GE got a pile of rebates and exemptions because of all of the "green energy" things the government wanted, but didn't want to pay for directly.

They also lost a lot of money in GE Capital - their financial services group. They had a lot of low-performing or bad loans that they were holding on to, but the government leveraged them into writing them all off in one year - which happened to be last year.

So - not exactly something the Democrats should whine about. They got their taxes, they just didn't get them as cash - more in "services rendered."

Now if we could just be ... (Below threshold)
jim m:

Now if we could just be smart about this and reduce the rate to 15% with not loop holes and write off of capital expenditures.

I think you will find precious few politicians that will find this to be the "smart" alternative. After all, without the ability to grant special tax deductions and exemptions where will they get money for their Presidential/Congressional/Senatorial campaigns? Who will they lobby for after the public gets sick and tired of their corruption? Where will they find jobs for their wives/sons/daughters/nieces/nephews?

The tax system is designed for two purposes: to be a vehicle for class envy and to provide opportunity to use political influence to enrich friends and family. Generating revenue for the government is a side benefit.

"GE got a pile of rebates a... (Below threshold)
jim m:

"GE got a pile of rebates and exemptions because of all of the "green energy" things the government wanted, but didn't want to pay for directly. "

No GE got a bunch of tax breaks because they lobbied and spent money to buy politicians and bureaucrats to reward them for doing something that they were already doing. It wasn't that the government said, "Do this and we will give you tax breaks" GE made those breaks happen through lobbying. Sure other interest groups want so-called "green energy" but GE is just playing the government tax code game.

A lot of their tax breaks are not related to green energy at all. The biggest tax breaks are the ones that allow them to say that profit earned overseas does not get taxed at all if it stays overseas. In other words obama is rewarding GE for sending hundreds if not thousands of US jobs overseas because GE is a big donor while at the same time excoriating other companies for doing the same thing.

hcddbz is correct, we have ... (Below threshold)
Brucepall:

hcddbz is correct, we have the 2nd highest corporate tax rate in the world... problem is, the American multinationals don't pay near the 35% statutory rate. That's how come you and I are paying more in personal income tax that GE pays in Corporate tax. Hell, the woking stiffs of America pay more that all the Trillion Dollar capitalized Corporations combined! WTF is wrong with this picture?

cirby, is onto something pointing out the incestuous relationship between big multi-billion dollar businesses and Congress. The US tax code grows by 10s of thousands of pages every year -because of it.

jim m, picks-up and continues to run with this, and points further to peon cronyism, and offers a 15% solution.

According to the world of Brucepall: Individuals act, governments react, and the military defends. If one boils it down to the basics - thats all there is.

Thus, Bill Gates can hire an army of 800$ an hour lawyers to set up a trust that pays him 97 million bucks tax free, while he (through his foundation) donates 3 million to charity... for a total of 100 million smackers... all the while, making a fool of the encyclopedic tax code, which can't change fast enough to catch up.

That's why companies like GE, and persons like Mr. Gates, pay less in taxes than you and I...#*[email protected]?!#^!... Feel like a chump yet?

Its time to scrap the whole damn thing (every tax and supporting code there is) and start over with just a single page. A post card size flat-tax... for everyone... individuals AND corporations. State all your income (from any source), multiply by the flat tax rate, and the resultant sum is what you owe. Everyone pays. No deductions - No exceptions. Period.

Sure, it would upset a lot of politicians - they will not willingly want to give up their rice bowl. Ditto for powerful multi-national corporations.
But we the people out number them, and have the final say... its time to take away the cookie jar, and put our national finance house in order.

A pipe dream you might say? Not really... Whats fair is fair... and fighting the good fight is always worth it. We the people out number them (the special interest)... and we have the final say.

FWIW, Semper Fidelis-


The finances of our governm... (Below threshold)
Brucepall:

The finances of our government are a joke. Just go to treasury.gov and read through it - if you don't believe me. There are multiple sets of books (on and off budget) chalk-full of trust accounts and slush funds shifting money (assets and liabilities) back and fourth which you probably have never heard of (and many other which you may have).

We, the United States, need a unified budget. No more off the book expenditures allowed, no more generational financial shenanigans, no more smoke and mirrors. No more! Every expenditure, every liability, and every obligation has to go into it. Everything!

We must have one budget and one set of books. Just one. Clearly showing where we as a nation stand financially.

FWIW, Semper Fidelis-

You want to balance the bud... (Below threshold)
jim m:

You want to balance the budget? Pass a law that requires a balanced budget and that if the budget is in deficit that the salaries of Congress and the White House and all political appointees are cut to make up for it. If the deficit exceeds their combined salaries then they earn nothing.

Conversely, for every dollar in surplus a fraction shall be paid to Congress.

We will run a surplus starting with the next budget, guaranteed.

Jim m, I do. But its more t... (Below threshold)
Brucepall:

Jim m, I do. But its more than that. We have a President and many more canndy-ass congressmen (and women) who will not tell the people the truth.

See the half million Brits marching in the streets today - protesting budget cuts? Thats cause their politicians have been bare-faced lying to them for years. Ours are no different. They are running out of our money - to blow on whatever they thought they could get away with. When the jig is up, real pain will be felt across the land.

Americans are going to be pissed off too, and I expect tens of millions of Americans will take to the streets (making the Brit protest look like a Sunday church picnic). Its going to happen... I can see it.

I'm clearing the decks, the taxes are done... and I'm preparing for the road on Monday. Hawaii beckons. Be back as a commentator in a couple of months.

Semper Fidelis-

This liberal is in complete... (Below threshold)

This liberal is in complete agreement with you. It's a travesty that any huge corporation gets to pay zero income taxes, while all of us, both liberal and conservative, have to pay ours.

What's really needed is to close the Cayman Island loopholes and all the other nonsense, and make the corporations all pay their fair share. Of course, it's easier right now for both parties to cut funds for the poor to have fuel oil than to cut **subsidies** - that's right, SUBSIDIES - to our own oil companies. Who even without those subsidies are making more money than any companies in human history.

This is seriously something that conservatives and liberals could both work together on, and make it happen. If the Tea Party would actually be about closing this and other loopholes, it would gain more votes than the Democractic or Republican parties - and maybe more than both combined.

Until then, expect more distraction with symbolic issues while corporations continue to get paid **by taxpayers** while our infrastructure crumbles, education suffers and our future is hung out to dry.

Jim X #9. - I spent hours... (Below threshold)
Brucepall:

Jim X #9. - I spent hours and hours with you a week or so ago, pounding this very same theme over and over and over. Now your agreeing with me completely!

Great Moogly-Googly! Jim X agrees with Brucepall.

Wonders will never cease.

I better call it quits and hit the rack while I'm ahead.

Semper Fidelis-

jimx:This liberal is in ... (Below threshold)
cirby:

jimx:This liberal is in complete agreement with you. It's a travesty that any huge corporation gets to pay zero income taxes, while all of us, both liberal and conservative, have to pay ours.

Yup. But when that happens, a LOT of other things have to go away first. Like the insane amount of requirements for corporations to do things that qualify as tax writeoffs. So no "green energy requirements." Et bloody cetera.

Of course, a lot of things would go away. Almost all of the "green energy" companies. Public Broadcasting would die (no more tax deductions from the various huge foundations set up for tax breaks). No "research and experimentation" tax break (one of Obama's favorites). No deduction for corporate contributions to employee retirement plans (which will end up costing a lot of employees a bunch of money when they finally retire).

Kiss the 501(c)(3) deductions in general goodbye, while you're at it - pretty much all charitable contributions will stop when you can't deduct them from corporate taxes.

You can imagine how long this list is going to be...

I'd be happy to do away wit... (Below threshold)

I'd be happy to do away with the green energy requirements, if that was the price to pay to do away with the Cayman Island tax dodges and the non-green-energy subsidies to oil companies.

Maybe something like that could actually happen. That would be wonderful.

This liberal is in compl... (Below threshold)
Jay Guevara:

This liberal is in complete agreement with you. It's a travesty that any huge corporation gets to pay zero income taxes, while all of us, both liberal and conservative, have to pay ours.

I thought liberals only paid taxes when they were nominated for Cabinet positions. /kidding

Seriously, though, I'd really like liberals to quit bitching about how corporations collude with their Republican cronies to screw us, while Democrats are "fighting" for the little guy.

If anyone is in the pocket of big organizations (corporations and unions alike), it's the Dems. Check out OpenSecrets.org, which compiles FEC filings, to see that this is true.

GE? Check.
Goldman Sachs? Check.
Fannie Mae? Check.
Freddie Mac? Check.
Every effing union in the country? Check.

The GOP is primarily the party of small business, not so much big business, left-wing propaganda notwithstanding.

Think about it. Dems want big government. That suits big corporations, who have the muscle to influence big government in their favor (witness GE and the "green" crap) and against small business and the taxpayers.

Small business - the bedrock of the GOP - doesn't have that kind of clout, and would prefer smaller government and lower taxes.

I'd be happy to do away ... (Below threshold)
Jay Guevara:

I'd be happy to do away with the green energy requirements, if that was the price to pay to do away with the Cayman Island tax dodges and the non-green-energy subsidies to oil companies.

Sounds great to me!

How about we go for the whole burrito, and give up using the tax code as an instrument of social policy? Instead, we just use it to generate revenue for absolutely needed items (and entirely leave out the "nice to haves?").

15% with no loop holes was ... (Below threshold)
hcddbz:

15% with no loop holes was two fold.
1. Congress is made up of lawyers. They like to make sure there brothers have good jobs in finding ways to avoid Taxes.
2. Congres uses the Tax code to enforce behavior.
That why I want 15% tax rate across the board. On companies and then on individuals. Every body pays the same rate from dollar $1 to 1P.
No subsides, I might even say no tax breaks at all.
A simple transparent code makes that much harder for special interest to manipulate.
I would also gut rid estate taxes and all taxes on savings.
Instead of waisting time on tax avoidance let companies concentrate on building better products. Growing market share profitable companies expand and create jobs. The people working in the private sector to more revenue the government can collect. The less regulations and rules the smaller the IRS has to be and the less government has to spend on oversight, printing and maintaining all those stupid rules.

Also this is the only fair way to be. If everyone pays the same % of income everyone is equally invested in the government.

The funny thing is it was in the NYT. A company that had the state of NY use Emanate Domain to move a bunch of Store Owners out so that they could get their space dirt cheep. Thus deriving federal and local governments of revenue form Taxes.

How about we go fo... (Below threshold)
How about we go for the whole burrito, and give up using the tax code as an instrument of social policy? Instead, we just use it to generate revenue for absolutely needed items (and entirely leave out the "nice to haves?").

Nope - we had life without those "nice to haves". We have them because they aren't "nice to haves", they are need to haves for our society to function properly.

A public education system gives us a workforce and a future. Social Security keeps old people from starving, which also means not being a burden on their families, which also benefits the economy. And on and on and on.

I'll settle for corporations having to pay their fair share just like I do. Nothing else is really needed.

Seriously, though,... (Below threshold)
Seriously, though, I'd really like liberals to quit bitching about how corporations collude with their Republican cronies to screw us, while Democrats are "fighting" for the little guy.

Well, the day the Republican party does one damn thing for the little guy, liberals will no longer have a right to bitch about it.

Both parties are in the grip of corporations, no question. The only difference is that Democrats at least owe a little bit of allegiance to the poor and middle class. So for the poor and middle class, it's a choice between getting cheated and being robbed blind, then mugged, and locked out of the hospitial.

It's not a fun choice. Believe me, the second the Republican party actually does more to support the poor and middle class, I'm out of the Democratic party. But that would take a candidate like Eisenhower or back to Teddy Roosevelt. Since both are often considered sellouts by Republicans, I won't hold my breath.

Jim X #9. - I spen... (Below threshold)
Jim X #9. - I spent hours and hours with you a week or so ago, pounding this very same theme over and over and over. Now your agreeing with me completely!

Great Moogly-Googly! Jim X agrees with Brucepall.

Well, I recall that exchange a bit differently. I don't recall us going into corporations getting away scot free.

I think the wealthy can pay more as individuals too, but that is a separate point to me.

At least here, we can agree.

.... In a "reset" (modified... (Below threshold)

.... In a "reset" (modified) economy, the government will be a regulator and will also be an industry policy champion, a financier and a key "partner" ....

Welcome to definitive, Mussolini-modeled, modified Marxism.

Or, as its inventor called it: To Fascism.

Welcome to Fascism.

But how come we get all the governmental bad luck?

At least before the decadent, degenerate and/or dead Europeon barbarians' major (1930's) charismatically-narcissistic fascist pretended to power, he'd already had a job, had made Corporal -- and could hang paper.




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