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.

  • #91
Amp1 said:
No, actually the assets are the corps. The BOD or upper level management can decide if it should be disbursed or reinvested back. The ones investors like disburse.

I'm not sure what your point is - the shareholders own the corporation that owns the assets. The board is accountable to the shareholders and the executive management is accountable to the board.
 
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  • #92
The def. I gave says a corp is a person to the law. Notwithstanding ownership by stakeholders, a corp doesn't have to give them yield on revenue.(am i wrong?)
 
  • #93
Amp1 said:
The def. I gave says a corp is a person to the law. Notwithstanding ownership by stakeholders, a corp doesn't have to give them yield on revenue.(am i wrong?)

Sometimes reinvestment or debt reduction might serve the corporation better than a dividend disbursement. Given that a corporation is an on-going entity - it's ability to survive should be a priority. The same could be said of a government - in order to survive it must control it's expenses and debt.:smile:
 
  • #94
Amp1 said:
No, actually the assets are the corps. The BOD or upper level management can decide if it should be disbursed or reinvested back. The ones investors like disburse.
Either way, the corp, and its assets are owned by the stockholders. The only difference is whether the value is reflected in a higher stock price or in dividends.
Amp1 said:
The def. I gave says a corp is a person to the law. Notwithstanding ownership by stakeholders, a corp doesn't have to give them yield on revenue.(am i wrong?)
A corporation doesn't have to "give" stockholders anything: they already have it. If a corporation re-invests all revenue instead of issuing dividends, it makes the stock of the corporation more valuable, since stock is ownership of the corporation as a whole, not just a claim on dividends.
 
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