General Electric: tax avoidance at work
General Electric, the nation's largest corporation, paid no federal taxes in 2010. The profitable company, which shaved 20 percent of its U.S. work force in less than a decade, should inspire a hard look at corporate tax rates and how taxes are collected and avoided. Cash-strapped working Americans are paying GE's bill.
OUTRAGE and envy still ripple from a report in The New York Times that General Electric, the nation's largest corporation, paid no U.S. corporate taxes in 2010.
Zero. Zip. Nada. Indeed, the company, with $14.2 billion in worldwide profits, claimed a tax benefit of $3.2 billion from Uncle Sam.
GE did not break the law, but the bill it successfully avoided was picked up by the rest of us, or put on the national credit card.
The top U.S. corporate rate is 35 percent, but virtually no one pays that. GE's tax rate is about a third of what other companies pay, and that the company is vulnerable to pay any taxes is hypothetical. GE would have to return profits to these shores from places it set up to avoid taxes.
Policymakers in Washington, D.C., need to reassess rates to bring them into line with the financial realities of the nation and basic equity. Set lower, unavoidable rates that do not complicate job creation, and have a statutory imperative to collect them. As it is now, the higher the rate, the more creative the credits, shelters and loopholes to avoid compliance.
GE has a team of 975 gilded tax-avoidance professionals in a department working to ensure that the rest of America picks up its tab. Oh, and that default jobs-creation rationale? The Times report also noted that since 2002, GE has eliminated a fifth of its work force in the U.S.
Washington Post columnist Robert J. Samuelson, a veteran financial journalist, would cut corporate tax rates, not increase them, and make up the difference by increasing individual tax rates on corporate dividends and capital gains, which he sees as a giveaway to the rich.
U.S. corporate rates are chasing profits offshore, and the only jobs created are for tax lawyers. Set and collect realistic rates.