By Henry Blodget
GE is a global corporation with 287,000 employees, $150 billion of revenue, and $12 billion of net profit. But last year, this massive and wildly profitable company paid less in U.S. income taxes than you did, says the New York Times.
Specifically, the New York Times says GE's U.S. tax bill last year was "none." And the paper is sticking by that statement even as GE declares it "simply not true" and "misleading" and points out that GE paid state, local, payroll and other taxes.
But how can it possibly be that GE pays no U.S. taxes even with U.S. income of $5.1 billion and a federal tax rate of 35%?
Because GE employs an army of tax experts whose job is to figure out how to make sure the company pays not a single penny in taxes more than it has to. And because our byzantine tax laws allow multi-national companies not to pay U.S. taxes on overseas profits, carry forward losses, depreciate equipment, and do dozens of other things, smart companies like GE figure out how to structure themselves to pay the absolute minimum in taxes each year.
And you can't blame GE for that: Companies have a duty to their shareholders to run their businesses as efficiently as possible, and taking full advantage of loopholes and laws that reduce one's tax bill is an important part of that efficiency.
So who (or what) can you blame?
Our absurdly complicated tax laws (and the folks who wrote them).
The fact that companies (and people) that can afford to hire the best tax experts pay vastly lower taxes than companies and people that can't is deeply frustrating. And it's a direct result of the tax code being so complicated that you need to hire highly compensated experts to figure it out.
No wonder folks like money-manager Peter Schiff are advocating abolishing our current corporate and personal tax codes in favor of implementing a simple consumption tax.
- consumption tax
- U.S. income taxes