How to make $5.1 Billion (US) and not pay federal taxes

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Discussion Overview

The discussion revolves around General Electric's reported $5.1 billion profit without paying federal taxes, raising questions about corporate taxation, fairness, and the implications of tax laws. Participants explore the broader implications of corporate tax strategies, the concept of double taxation, and the potential effects on productivity and quality of goods.

Discussion Character

  • Debate/contested
  • Technical explanation
  • Conceptual clarification

Main Points Raised

  • Some participants express frustration over GE's ability to avoid federal taxes, suggesting that the laws should be changed to prevent such occurrences.
  • Others argue that shareholders still pay taxes on capital gains and dividends, and that GE contributes to the economy through employment and other taxes, thus justifying their tax strategy.
  • There is a proposal for a flat tax system that would eliminate corporate taxes to avoid double taxation, with the belief that this could enhance productivity and economic growth.
  • Some participants challenge the notion of double taxation, stating that it is a common experience for private citizens and questioning the relationship between corporate taxes and product quality.
  • Concerns are raised about the potential for companies to relocate to lower-tax jurisdictions if taxes are increased, suggesting that tax breaks are necessary to retain jobs and industry within the country.
  • A later reply emphasizes the complexity of corporate taxation, noting that corporations are taxed on gross income minus production costs, which includes labor costs.
  • Participants discuss the implications of lobbying and political influence on tax legislation, with some suggesting that corporations may leverage their profits to influence lawmakers.

Areas of Agreement / Disagreement

The discussion contains multiple competing views regarding corporate taxation, the fairness of tax laws, and the implications of tax strategies on the economy. There is no consensus on the best approach to corporate taxation or the fairness of GE's practices.

Contextual Notes

Participants express various assumptions about the relationship between taxes, production costs, and product quality. The discussion also highlights the complexity of tax laws and the potential for differing interpretations of fairness in taxation.

  • #31
@Al68
... those taxes are passed on to consumers, included in the price of their product, just like any other expense of the corporation...The portion of a product's price that goes to government...

G.E. apparently keeps that portion and managed to turn the equation around so they are paid instead. Is that what is meant when the article seems to say G.E. is getting a 'Net Benefit' in some years.
(from article)

...While the financial crisis led G.E. to post a loss in the United States in 2009, regulatory filings show that in the last five years, G.E. has accumulated $26 billion in American profits, and received a net tax benefit from the I.R.S. of $4.1 billion...

Ivan, I second that thank you to Proton Soup.

-bolding mine
 
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  • #32
turbo-1 said:
Thank you! It's time for Americans to catch a clue!

It is time - while GE is outrageous at $5 Billion...the GM tax break (or was it a union bailout?) is MUCH larger - $45 to $50 Billion?

http://www.reuters.com/article/2010/11/03/us-gm-taxbreaks-idUSTRE6A161020101103

"(Reuters) - General Motors Co GM.UL can get a tax break of up to $45 billion as part of its U.S. government-financed restructuring, documents filed with federal regulators earlier this year showed.
The Wall Street Journal earlier reported that GM would not have to pay federal taxes on up to $50 billion in profits. A later version of this story revised this figure to about $45 billion."

The best part is the "claim" that the bailout has been repaid- IMO.
http://abcnews.go.com/Business/general-motors-fire-misleading-bailout-ad/story?id=10513568
http://money.cnn.com/2009/12/15/news/companies/gm_repayment/index.htm

But the good news is the 48,000 auto workers will receive a bonus (in addition to the bailout and restructuring)
http://www.ohio.com/business/116213099.html
" Tom Krisher Associated Press Copyright © 2011 The Associated Press. All rights reserved. This material may not be published,broadcast, rewritten or redistributed.. GM announces bonus program for employees
Most hourly workers at automaker will receive more than $4,000 each"
 
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  • #33
Amp1 said:
@Al68

G.E. apparently keeps that portion and managed to turn the equation around so they are paid instead.
There is no such portion in that case.
Is that what is meant when the article seems to say G.E. is getting a 'Net Benefit' in some years.
It means that GE is one of government's favored corporations. That's what happens when we allow government so much power to tax any way they want to.
 
  • #34
Al68 said:
There is no such portion in that case.It means that GE is one of government's favored corporations. That's what happens when we allow government so much power to tax any way they want to.

Wasn't it we that elected the government? Are they not there by our consent?

Who here wants to reincarnate T. Jefferson? I do. Let's abolish laws more that 20 years old. There is way too much old baggage in our, um, baggage.

hmmm...

Maybe I was wrong it that other thread. Maybe things are the same now as they were a long, long, time ago.

https://www.youtube.com/watch?v=7fqCS7Y_kME
 
  • #35
OmCheeto said:
Maybe things are the same now as they were a long, long, time ago.
Apparently:

https://www.youtube.com/watch?v=VNWIatFCH1Q
 
  • #36
jambaugh said:
The shareholders still pay capital gains and taxes on their dividends. They are just not getting taxed twice.

Note also, in so far as "paying their fair share" GE employs people who pay income tax, produces goods and services which result in sales taxes and tariffs, purchases materials on which they pay sales taxes, and own property on which they pay property taxes.

You can scream about GE getting away with something but they are making that money by productive endeavors and the taxes they do not pay will be reinvested to increase their productivity.

Your argument would be meaningful is this were a debate on the corporate income tax, itself. But this is not.

GE didn't not pay income taxes because the government makes not double taxing earned income a policy priority. The United States has a corporate income tax, on top of its individual income taxes, and the rate is extremely high. Most businesses in America pay these taxes. So, then, why didn't GE? Not because of any business practice of social value, but because it invests considerable investor capital in tax avoidance and tax optimization, and because it has greater access to Washington than perhaps any other corporation in the country, if we measure access by lobbying budget.

http://www.boston.com/news/nation/washington/articles/2006/07/07/lobbying_funds_spiral_to_24b/

That's $21.5M that GE didn't spent designing better lightbulbs, and does not account for the costs GE spent developing worse but government supported lightbulbs (as measured by the markets willingness to pay). This returns profits to GE, granted, but not in the traditional manner (mutually beneficial voluntary exchanges that generate social surplus), but in a public manner - mandated wealth transfers that create deadweight loss (the public values the subsidized product at the quantity supplied less than the price charged by GE, by definition). GE's gain is the nations loss. A quick lesson: consider the "free" electric carts you may or may not have seen advertised after the stimulus legislation was enacted (GE may or may not have been involved here; I'm using it as an example) - the market demand for these carts at the advertised price of "free" is certainly much higher than the demand at the truth price of $7,000 (before public subsidy). The excess demand - people who buy the carts for zero dollars but won't buy the carts for $7,000 - are deadweight loss buyers. The taxpayer is paying more for the carts than the value returned to the purchaser (by his own estimation), and the taxpayer loses the difference (ie, if the subsidized buyer was willing to buy the cart for $1,000, the social deadweight loss was $6,000). This is simplistic; subsidy advocates would argue that there were external benefits to the electric cart not captured by the parties to the sale. Even if true, though, I doubt very much that in any case those benefits could add up to 100% of the transaction cost, and there's almost always an absence of any hard data supporting the claim; nonetheless this is how GE and others operate in a government-dominated market, like energy, finance and healthcare.

On top of it all, the fact that other companies with less clout must both pay business taxes and sell their products without generous public subsidy means that GE has an unfair, anticompetitive business advantage. A company may have an inferior product or a more efficient production technique, but because it faces higher operating costs (tax and regulatory cost) it must charge a higher price. Frankly its a tragedy, and hopefully the attention from the NYT article will lead to meaningful reform (a slashing of the corporate tax rates and the elimination of the vast majority of deductions and credits from the code, especially the targeted deductions for particular firms).

The fault in this isn't even GE's; its just moving investor capital to where it anticipates the greatest return. The failure is governments for creating an environment in which GE can reap greater profits by paying off congressmen than by making and selling useful stuff.
 
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  • #37
talk2glenn said:
The failure is governments for creating an environment in which GE can reap greater profits by paying off congressmen than by making and selling useful stuff.

I work in an environment that made me want to go up and put my hands on the throats of a couple of employees today, and crush their larynx's, and speak to them in a slow, low voice, telling them they should not have messed with me, as they died.

It would have been worth it, but I suppose I should just use the 2 minute coaching method. Summers coming up quick, and I'd rather be on the beach sipping margaritas, than be some bubba's beach.

:rolleyes:

I do not know where that came from.

uh hum...

I sold all my GE stocks today. Put the profits in a small upstart company.
 
  • #38
OmCheeto said:
I work in an environment that made me want to go up and put my hands on the throats of a couple of employees today, and crush their larynx's, and speak to them in a slow, low voice, telling them they should not have messed with me, as they died.

It would have been worth it, but I suppose I should just use the 2 minute coaching method. Summers coming up quick, and I'd rather be on the beach sipping margaritas, than be some bubba's beach.

:rolleyes:

I do not know where that came from.

uh hum...

I sold all my GE stocks today. Put the profits in a small upstart company.

Yeah, that's why I stopped talking politics at work...there just aren't enough dope slaps in the world for every deserving person to get theirs.
 
  • #39
lisab said:
Yeah, that's why I stopped talking politics at work...there just aren't enough dope slaps in the world for every deserving person to get theirs.

I (really) try not to talk politics with clients - even when they are in 100% agreement with me. My best guess is that about 60 small business clients have tried to convince me over the past year that President Obama doesn't know what he's doing. I've actually defended the President a few times - argued that Pelosi, Reid, Barney Franks and Chris Dodd were worse. Please label this entire post - IMO.
 
  • #40
WhoWee said:
I (really) try not to talk politics with clients - even when they are in 100% agreement with me. My best guess is that about 60 small business clients have tried to convince me over the past year that President Obama doesn't know what he's doing. I've actually defended the President a few times - argued that Pelosi, Reid, Barney Franks and Chris Dodd were worse. Please label this entire post - IMO.

Lol, OK, I should also edit my previous post, then: it is my belief that there are not enough dope slaps in the world for every deserving person to get their share. I have no actual proof that there are an insufficient number of dope slaps, and I cannot site any peer-reviewed literature to support my claim.

:wink:
 
  • #41
lisab said:
Yeah, that's why I stopped talking politics at work...there just aren't enough dope slaps in the world for every deserving person to get theirs.

Politics?

You and I really need to sit down one day and discuss the universe, having steak dinners in the space needle, discussing the nicer points of the capitol of Ecuador.

:smile:
 
  • #42
Ok. I'm confused.

How did I get paid dividends for the last two years, if they didn't pay taxes on them?

Have I been collecting foreign GE dividends?
Is France getting screwed again?

I want to see the 24,000 page tax report that GE filed last year.

 
  • #43
OmCheeto said:
Ok. I'm confused.

How did I get paid dividends for the last two years, if they didn't pay taxes on them?
Because they, unlike most private companies, are one of government's "favorites".

As a side note, corporate income taxes are more complicated than just a simple assumption that profits (dividends) are subject to the tax. I'm not an expert, but it's more like a complicated sales tax that varies depending on political factors.

As far as the dividends, no one actually made that profit besides you, so the only relevant question about that is whether you paid taxes on it. It's not like someone else had that same exact money as profit, too. Unless of course you believe the fraud the kleptocratic left puts out.
 
  • #44
Al68 said:
Because they, unlike most private companies, are one of government's "favorites".

As a side note, corporate income taxes are more complicated than just a simple assumption that profits (dividends) are subject to the tax. I'm not an expert, but it's more like a complicated sales tax that varies depending on political factors.

As far as the dividends, no one actually made that profit besides you, so the only relevant question about that is whether you paid taxes on it. It's not like someone else had that same exact money as profit, too. Unless of course you believe the fraud the kleptocratic left puts out.

If the left is kleptocratic, why does the right have all the money? Active fraud, vs. verbal fraud maybe?
 
  • #45
Having money does not in any way imply one is a thief. That's propaganda designed by the left to convince people it is alright to steal.
 
  • #46
OmCheeto said:
If the left is kleptocratic, why does the right have all the money? Active fraud, vs. verbal fraud maybe?

The Right has all of the money (?) - link please?
 
  • #47
OmCheeto said:
If the left is kleptocratic, why does the right have all the money? Active fraud, vs. verbal fraud maybe?
All of what money? What are you talking about? What fraud? Your question not only contains a false premise, it makes no sense.

And the word kleptocratic doesn't mean "having money" anyway, so what on Earth are you talking about?
 
  • #48
russ_watters said:
Having money does not in any way imply one is a thief. That's propaganda designed by the left to convince people it is alright to steal.
Why is it that the left appears incapable of seeing the obvious connection between that and the fact that Americans now have to keep their houses and cars locked up with security systems? And in many places, can't even walk down the street?
 
  • #49
russ_watters said:
Having money does not in any way imply one is a thief.
But being left leaning does? Maybe I'm right wing then.
That's propaganda designed by the left to convince people it is alright to steal.
hmmm... The only stealing I've done lately was making a 60% profit on the sale of my GE stock, and having only had to pay 15% taxes. vs. some schmuck who actually has to work for his money who has to pay 35%. Damn. I think I'm starting to like this right wing stuff.

WhoWee said:
The Right has all of the money (?) - link please?

Can't I just say "Koch brothers"? Seems to be the left wing thing to do lately. Oh wait, I'm right wing now. Never mind. The right is as poor as everyone else.

Al68 said:
All of what money?
Ummm... That $13.7 trillion sitting in the Caymens. The $4.5 billion that nice young lady from Texas inherited last year.
What are you talking about? What fraud? Your question not only contains a false premise, it makes no sense.
I was only repeating what you said, as I recall.
Al68 said:
Unless of course you believe the fraud the kleptocratic left puts out.

And the word kleptocratic doesn't mean "having money" anyway, so what on Earth are you talking about?

I know that. It means stealing. But I'm right wing now. So I know that no one with money came by it by anything but by their hard labor. Like George Soros. How hard he must have worked to make a $1,000,000,000.00 in one day. Wait a minute. Isn't he left wing now? I'm getting confused again.

Al68 said:
Why is it that the left appears incapable of seeing the obvious connection between that and the fact that Americans now have to keep their houses and cars locked up with security systems? And in many places, can't even walk down the street?

Yah!
 
  • #50
OmCheeto said:
Ummm... That $13.7 trillion sitting in the Caymens. The $4.5 billion that nice young lady from Texas inherited last year.
Which is why your question makes no sense. Why would you use an obvious example of honestly obtained money, like that lady's inheritance, as an example of someone being kleptocratic? Or the right? Doubly nonsensical.
I was only repeating what you said, as I recall.
I think it's against forum rules to purposely misrepresent the words of another forum member. I never suggested that inheriting money or having money was kleptocratic, because that's not what it means.
I know that. It means stealing. But I'm right wing now. So I know that no one with money came by it by anything but by their hard labor. Like George Soros. How hard he must have worked to make a $1,000,000,000.00 in one day. Wait a minute. Isn't he left wing now? I'm getting confused again.
You are definitely confused. How hard someone works is irrelevant in this context. Money obtained by voluntary transactions is not theft regardless of whether it was for "hard labor" or not. Voluntary equals not theft.

I have no idea if Soros obtained any of that that billion dollars by theft, but how hard he worked is irrelevant. And everything I've said in this post is so obvious, at least to an adult, that I must assume your "confusion" is feigned as part of some weird game you're playing.
 
  • #51
Al68 said:
Which is why your question makes no sense. Why would you use an obvious example of honestly obtained money, like that lady's inheritance, as an example of someone being kleptocratic? Or the right? Doubly nonsensical.
My question? I asked three questions. Which one are you referring to? Or are you referring to a previous post?

Honestly obtained money? Her father built a company from nothing. I would say that was honestly obtained money. The right wing has now declared that taxing inheritance is a "death tax". Which it is of course. He couldn't take it with him, so we tax the dead. Are they going to complain? Easy pickings! But last year, due to a glitch in the matrix, this young lady was allowed to not only inherit 9 billion dollars, but not pay a dime in taxes. Hmmm...
What was the number they were whining about two days ago? 30 billion vs 60 billion dollars? To keep the government from shutting down? Yet this single individual gets to keep everything. Just because the right wing has deluded a whole bunch of teabaggers into believing that taxes on the super-rich are the equivalent to them being taxed.

One individual gets to keep her extra 4.5 billion dollars, while 300,000,000 people are fighting over what amount's to what? $30 billion/100 million taxpayers = $300 each.

What a pathetic comment on the state of our nation, when billionaire kleptocrats can herd the populace into this field of absurdity.

I think it's against forum rules to purposely misrepresent the words of another forum member. I never suggested that inheriting money or having money was kleptocratic, because that's not what it means.
I don't recall misrepresenting your words. As I recall, I only paraphrased you. In my reflective, passive aggressive, "I know you are, but what am I"?, kind of way.

You are definitely confused. How hard someone works is irrelevant in this context. Money obtained by voluntary transactions is not theft regardless of whether it was for "hard labor" or not. Voluntary equals not theft.

I have no idea if Soros obtained any of that that billion dollars by theft, but how hard he worked is irrelevant. And everything I've said in this post is so obvious, at least to an adult, that I must assume your "confusion" is feigned as part of some weird game you're playing.

I know exactly how Soros made his billion dollars in one day. And you are correct, it was not theft. Theft is against the law. The laws are made by those guys in Washington. The laws in Washington were what made it possible for Soros to do what he did. They also allowed GE, like the young lady from Texas, to make a boat load of money and not pay any taxes. And that's what this thread is about.
 
  • #52
OmCheeto said:
My question? I asked three questions. Which one are you referring to? Or are you referring to a previous post?

Honestly obtained money? Her father built a company from nothing. I would say that was honestly obtained money. The right wing has now declared that taxing inheritance is a "death tax". Which it is of course. He couldn't take it with him, so we tax the dead. Are they going to complain? Easy pickings! But last year, due to a glitch in the matrix, this young lady was allowed to not only inherit 9 billion dollars, but not pay a dime in taxes. Hmmm...
What was the number they were whining about two days ago? 30 billion vs 60 billion dollars? To keep the government from shutting down? Yet this single individual gets to keep everything. Just because the right wing has deluded a whole bunch of teabaggers into believing that taxes on the super-rich are the equivalent to them being taxed.

One individual gets to keep her extra 4.5 billion dollars, while 300,000,000 people are fighting over what amount's to what? $30 billion/100 million taxpayers = $300 each.

What a pathetic comment on the state of our nation, when billionaire kleptocrats can herd the populace into this field of absurdity.
Still making no sense. Who's the billionaire kleptocrat? You just said the money was honestly obtained.

Your posts are becoming more, not less, incomprehensible and illogical. What on Earth are you talking about?
I don't recall misrepresenting your words. As I recall, I only paraphrased you.
Your paraphrase was fraudulent.
I know exactly how Soros made his billion dollars in one day. And you are correct, it was not theft.
How disappointing. I had assumed that since you brought him up in this context, you had evidence of something "kleptocratic" about him. It would have amused me greatly.

You still haven't explained in any logical way what in the world you're talking about. You can't simultaneously refer to someone as "kleptocratic" and refer to their money as honestly obtained. Again, you simply cannot be this confused.
The laws in Washington were what made it possible for Soros to do what he did.
What are you referring to? What specifically did Soros do that he could not have done in the absence of the "laws in Washington" and what laws specifically are you referring to?

Your vague and unsupported assertions, and the complete lack of any connection with this thread, and generally illogical statements are just needlessly derailing this thread. Why?
 
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  • #53
Al68 said:
Still making no sense. Who's the billionaire kleptocrat? You just said the money was honestly obtained.

Your posts are becoming more, not less, incomprehensible and illogical. What on Earth are you talking about?Your paraphrase was fraudulent.How disappointing. I had assumed that since you brought him up in this context, you had evidence of something "kleptocratic" about him. It would have amused me greatly.

You still haven't explained in any logical way what in the world you're talking about. You can't simultaneously refer to someone as "kleptocratic" and refer to their money as honestly obtained. Again, you simply cannot be this confused.What are you referring to? What specifically did Soros do that he could not have done in the absence of the "laws in Washington" and what laws specifically are you referring to?

Your vague and unsupported assertions, and the complete lack of any connection with this thread, and generally illogical statements are just needlessly derailing this thread. Why?

Derailing this thread? This thread is about making billions of dollars in profit and not paying taxes. That's what my last post was about. And where is the substance in your post? I see only a confused stream of incoherent insults.
 
  • #54
OmCheeto said:
Derailing this thread? This thread is about making billions of dollars in profit and not paying taxes. That's what my last post was about.
I was referring to your use of the word "kleptocracy" to refer to honestly obtained money.
And where is the substance in your post? I see only a confused stream of incoherent insults.
LOL.
 
  • #55
Al68 said:
I was referring to your use of the word "kleptocracy" to refer to honestly obtained money.LOL.
Funny the way quotes parse sometimes.

Proton Soup said:
what is fair is that business pay taxes to support the services they receive from their hosts. this includes things such as roads, police protection, access to the courts, education of the labor force, military protection, etc. it really doesn't matter where they exist on paper. or at least it shouldn't. the fact is, they like setting up shop in the US because they like the quality of those services. so as far as I'm concerned, the only thing that matters is how to assess the fee. if that's some kind of value-added tax instead of income, then so be it. and if they want to try and commit fraud on that, then we can just show them the value of the executive and judicial branches.

but whatever we do, we can't allow what is going on to continue, because it will destroy us.

bolding mine.

Just because it is/was legal for the super rich to pay zero to negative taxes, doesn't mean it has to stay that way.
 
  • #56
OmCheeto said:
Just because it is/was legal for the super rich to pay zero to negative taxes, doesn't mean it has to stay that way.
Are you honestly going to pretend that you think that has anything to do with anything I said? Nice dodge. I think we're done here.
 
  • #57
OmCheeto said:
But being left leaning does? Maybe I'm right wing then.hmmm... The only stealing I've done lately was making a 60% profit on the sale of my GE stock, and having only had to pay 15% taxes. vs. some schmuck who actually has to work for his money who has to pay 35%. Damn. I think I'm starting to like this right wing stuff.
It was your suggestion that the right has the money because they steal it and your suggestion that it needed to be combated by taking the money back. If the premise is flawed, then your conclusion and course of action is flawed too.
I'm getting confused again.
I can't help you with that. You seem to recognize the illogical and contradictory aspects of your beliefs, yet you don't want to let go of them. I wish you luck trying to deal with the doublethink, though!

...though I will say:
Just because it is/was legal for the super rich to pay zero to negative taxes, doesn't mean it has to stay that way.
Stopping believing in/stating factually wrong things will be a big help toward alleviating the confusion! You do know that the bottom 47% of the population pays no or negative federal income taxes and the top 25% pay 85% of taxes and the top 1% pays 37% of federal income taxes, right? http://www.american.com/archive/2007/november-december-magazine-contents/guess-who-really-pays-the-taxes

I can't imagine what would make you think the super rich pay zero or negative taxes!
 
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  • #58
OmCheeto said:
I know exactly how Soros made his billion dollars in one day. And you are correct, it was not theft. Theft is against the law. The laws are made by those guys in Washington. The laws in Washington were what made it possible for Soros to do what he did. They also allowed GE, like the young lady from Texas, to make a boat load of money and not pay any taxes. And that's what this thread is about.

A trip down memory lane. (my bold)

http://www.nytimes.com/2006/06/14/business/worldbusiness/14iht-soros.1974397.html

"Soros has often drawn criticism for speculating heavily on the collapse of fragile currencies. In 2004 he also angered many conservatives in the United States by pumping millions of dollars into election campaigns to try to unseat President George W. Bush."
 
  • #60
Does anyone think President Obama will be critical of GE (or GM) for not paying taxes in his address to the nation today (4/13/11)?