General Electric Tax Bill

[atlcomedy]

http://www.nytimes.com/2011/03/25/bu...pagewanted=all

sorry for going all WTF on y'all with the link, but it is a long article

bottomline, article says GE pays no US Corporate Income Tax. I bold Corporate Income because it ignore the billions in other taxes GE pays directly or indirectly.

One fun fact: GE's in-house Tax Dept. (not Finance & Accounting; just Tax function) is 975 employees....

[WTF]

Originally Posted by atlcomedy

http://www.nytimes.com/2011/03/25/bu...pagewanted=all

sorry for going all WTF on y'all with the link, but it is a long article

bottomline, article says GE pays no US Corporate Income Tax. I bold Corporate Income because it ignore the billions in other taxes GE pays directly or indirectly.

....

Damn GE sounds like one of those piss ass folks that don't pay no federal income taxes but pays a shit load of other taxes.

I'm going to have me some fun with this one if any righties chime in!

[I B Hankering]

Originally Posted by atlcomedy

http://www.nytimes.com/2011/03/25/bu...pagewanted=all

sorry for going all WTF on y'all with the link, but it is a long article

bottomline, article says GE pays no US Corporate Income Tax. I bold Corporate Income because it ignore the billions in other taxes GE pays directly or indirectly.

One fun fact: GE's in-house Tax Dept. (not Finance & Accounting; just Tax function) is 975 employees....

Interesting. John Stossel did a piece last night, citing the NYT's article, detailing how much GE receives from the government in tax breaks: but Stossel also points out that it's Congress that writes the laws (and Stossel insinuates about cozy connections - Obama appointed Jeffrey Immelt, CEO of General Electric Corporation, as "Jobs Czar" - what else is new?)

[atlcomedy]

Go right ahead....

I'll start you off. Who do you think owns GE? You, me and millions of others via direct stock ownership or retirement plans, etc. GE has a responsibility to their shareholders (us) to play the game as well as they can.

I am more struck by the macro inefficiency the current system creates. For all their six sigma shit, this is a lot of waste. 975 employees in the tax dept?

[Camille]

Originally Posted by atlcomedy

I am more struck by the macro inefficiency the current system creates. For all their six sigma shit, this is a lot of waste. 975 employees in the tax dept?

Are they just dealing with US taxes...or taxes in other countries too?
If they are dealing with multiples that a friggin shitload of tax law and equations (not to mention various currencies) to deal with. I would think after the millions they were fined for a couple of dodgy accounting methods back in 2008 (?) they would be going through everything with a fine tooth comb these days.

C

[atlcomedy]

Originally Posted by atlcomedy

Go right ahead....

I'll start you off. Who do you think owns GE? You, me and millions of others via direct stock ownership or retirement plans, etc. GE has a responsibility to their shareholders (us) to play the game as well as they can.

I am more struck by the macro inefficiency the current system creates. For all their six sigma shit, this is a lot of waste. 975 employees in the tax dept?

I'm not sure there is an easy fix, though. We all talk about a flat tax or simplification.

Try this analogy out for size. Remember the Saturn Car Company and those dealerships that tried the no haggle/one price pricing model? Most of them closed or changed their pricing model.

As much as we want to embrace this simplicity, at its core we all (taxpayers/car buyers) think we are smarter than the median and can get a better deal than the sticker/flat rate and (politicians/car dealers) when offered some kind of incentive or (reasonable) offer will accept it because at least on a marginal basis it is profitable.

[Texas Contrarian]

Originally Posted by atlcomedy

I am more struck by the macro inefficiency the current system creates. For all their six sigma shit, this is a lot of waste. 975 employees in the tax dept?

And in my opinion, that cuts to the heart of the problem.

Our corporate tax system is every bit as fucked up as our personal income tax system. At the very least, we should simplify the structure, broaden the base, and lower the rate to a level at least as low as the OECD mean.

Jason Furman, who later became one of Obama's economic advisors, covered some of the key points in this 2007 article:

http://www.washingtonpost.com/wp-dyn...102601860.html

But to this date, no one seems to be taking the inititiative to make any progress toward meaningful reform.

Of course, influential Washington lawyers and lobbyists wouldn't have it any other way.

[Mazomaniac]

If I'm not mistaken, GE uses the "Double Irish" trick to hide from the IRS.

It's a complicated structure - too complicated to get into it here - but you can Google it. (In fact, you can Google it because Google uses it to avoid US taxes too.)

Basically, they run sham transactions through two Irish subsidiaries (the Double Irish) and a third company in a tax haven like the Dutch Antilles. By the time all of the paper stops moving around all of the US profits have been buried in the second Irish company which then pays 12.5% to the Irish government rather than 30%+ to the US.

What's "unfair" about it (if you want to use that term) is the parent company uses the resources and advantages of the US but it's Ireland who ends up with the tax revenue for pretty much doing nothing.

Loophole that needs to be closed, IMHO. If nothing else the US should be capturing that 12.5% that the Irish are sucking in without spending any of their resources to get.

Cheers,
Mazo.

[atlcomedy]

Originally Posted by Camille

Are they just dealing with US taxes...or taxes in other countries too?
If they are dealing with multiples that a friggin shitload of tax law and equations (not to mention various currencies) to deal with.

C

I'm not sure if it is US or Global...I assume it is global, but underestimated. That is if it was Global there are a whole heck of a lot of people that may not be classified as in "Tax" but spend their whole day dealing with it (think sales support staff)...Most of the "Tax" jobs aren't the fancy ones with big salaries wining & dining lobbyists/elected officials but clerical trying to comply with local tax laws

[Camille]

Originally Posted by atlcomedy

I'm not sure if it is US or Global...I assume it is global, but underestimated. That is if it was Global there are a whole heck of a lot of people that may not be classified as in "Tax" but spend their whole day dealing with it (think sales support staff)...Most of the "Tax" jobs aren't the fancy ones with big salaries wining & dining lobbyists/elected officials but clerical trying to comply with local tax laws

Yep agreed. If Mazo's post us anything to go by I'm not at all surprised they need all those people to friggin follow it all the way through

[atlcomedy]

Originally Posted by Mazomaniac

If I'm not mistaken, GE uses the "Double Irish" trick to hide from the IRS.

It's a complicated structure - too complicated to get into it here - but you can Google it. (In fact, you can Google it because Google uses it to avoid US taxes too.)

Basically, they run sham transactions through two Irish subsidiaries (the Double Irish) and a third company in a tax haven like the Dutch Antilles. By the time all of the paper stops moving around all of the US profits have been buried in the second Irish company which then pays 12.5% to the Irish government rather than 30%+ to the US.

What's "unfair" about it (if you want to use that term) is the parent company uses the resources and advantages of the US but it's Ireland who ends up with the tax revenue for pretty much doing nothing.

Loophole that needs to be closed, IMHO. If nothing else the US should be capturing that 12.5% that the Irish are sucking in without spending any of their resources to get.

Cheers,
Mazo.

I'd be careful with the word "sham" but it is commonplace for large multinationals.

Procter & Gamble has saved billions "running" most of their EU operations thru Switzerland despite doing very little actual "business" there.

Some small % of a big number is better than a big % of a small number.

[Mazomaniac]

Originally Posted by CaptainMidnight

Our corporate tax system is evry bit as fucked up as our personal income tax system. At the very least, we should simplify the structure, broaden the base, and lower the rate to a level at least as low as the OECD mean.

One of the other problems - and one I deal with constantly as a business owner - is that the tax breaks are upside down.

Everybody talks about how small and medium business drive tax growth, but in the code the gross majority of tax breaks go to large companies. It's actually rare that I can take significant advantage of loophole or credit. You have to be an elephant to jump through the eye of those needles.

I'd love to see a flat rate structure without all of the loopholes the big guys get.

Mazo.

[Mazomaniac]

Originally Posted by atlcomedy

I'd be careful with the word "sham" but it is commonplace for large multinationals.

I actually thought about that after I wrote.

You're right in that they're not "sham" as in fraudulent. I just didn't have a better word.

What I was aiming at is that the transactions are undertaken for no other reason than to avoid the US tax. It's just a bunch of paper that's passed around. Nothing bought or sold. No value added. Not quite a sham perhaps but pretty damn close.

[atlcomedy]

Originally Posted by Mazomaniac

I actually thought about that after I wrote.

You're right in that they're not "sham" as in fraudulent. I just didn't have a better word.

What I was aiming at is that the transactions are undertaken for no other reason than to avoid the US tax. It's just a bunch of paper that's passed around. Nothing bought or sold. No value added. Not quite a sham perhaps but pretty damn close.

You're right. What cracks me up is when you know what's really going on in the reporting periods following a large "accounting change"/sham and you read the actual language in SEC docs.

Those investor relations folks at the GE's of the world are very smart. If you reconcile the numbers "beat earnings by x%" really could read "core business growth off; bailed out by tax department!"

[TexTushHog]

Don't blame GE. Blame the folks who wrote the rules.
We have a saying in the law suit business: "Just tell me the rules ahead of time and I'll play the game." Of course they have a shit load of people in their tax department. I'm sure all corporations do, although I understand GE is particularly aggressive in part because so much of their business is lending money and there are lots of strategies that they can exploit give the nature of that business.

And I think to use the double Irish tax strategy you have to have an off shore entity in a low tax country to receive the payments from on of the Irish subsidiaries. It's commonly used for IP holdings, I am told by some of my IP clients. There is also something that you can do with a Dutch company too, although I don't profess to understand either.