If I hadn’t just read it, I’d never believe it. G.E.—you remember, the company Ronald Reagan used to shill for; the company that built many of the nuclear reactors now under suspicion; the company whose CEO, Jeffrey Immelt, was recently appointed by President Obama to be his liaison to the business community, as well as to head up the President’s “Committee on Jobs and Competitiveness” (slated to discuss corporate tax policy, the Pres. says, so as to LOWER the corporate tax rate)—last year “reported worldwide profits of $14.2 billion,” $5.1 billion of which came from its U.S. operations. And its American tax bill? ZERO. No tax paid. “In fact, G.E. claimed a tax benefit of $3.2 billion,” writes David Kocieniewski in the 3/25/11 New York Times.
How can this be? you might ask. The government is crying about its indebtedness. Republicans and even Democrats are calling for austerity—i.e. cutting spending, i.e. cutting the benefits to the neediest members of our society, with plans to cut even more. And one of the richest corporations in America is paying NO TAX? Could it be that America doesn’t have a spending problem, that it has an INCOME problem because the richest individuals and corporations are paying less and less each year??? Do you think? Listen to what Kocieniewski writes, after recounting how G.E. spends a fortune in lobbying ($200 million over the last decade), and on a G.E. tax department headed by former IRS employees and lawyers numbering no less than 975 individuals! who do nothing but work on how to take advantage of tax breaks so that G.E. pays NO taxes:
Such strategies, as well as changes in tax laws that encouraged some businesses and professionals to file as individuals, have pushed down the corporate share of the nation’s tax receipts — from 30 percent of all federal revenue in the mid-1950s to 6.6 percent in 2009.
Did you get that? Corporations—the alleged lifeblood of our economy, the ones who were just given permission, as PERSONS, to contribute unlimited amounts to political campaigns—not long ago paid nearly a third of the U.S. tax burden, but now pay less than a tenth and may soon pay less than a twentieth.
Ah but, they keep saying, we need to be competitive. What’s good for us is good for America and American workers. Oh really? Here’s the truth:
Since 2003, the company has eliminated a fifth of its work force in the United States, while increasing overseas employment. In that time, G.E.’s accumulated offshore profits have risen to $92 billion from $15 billion.
And what does earning all that money overseas do for G.E.? Well several things. This is because the other big change in G.E.’s business has been a shift from producing goods (like lightbulbs and all the “good things G.E. brings to life”) to providing financing for its products. “GE Capital” is the name of this finance division and more than half of G.E.’s profit recently has come from financing. Then the company managed to muscle changes in the tax laws that allow multinationals “to avoid taxes on some kinds of banking and insurance income.” This is known as “active financing.” It means that “if G.E. financed the sale of a jet engine or generator in Ireland, for example, the company would no longer have to pay American tax on the interest income as long as the profits remained offshore.” G.E. has been diligent in doing this, that is, booking a huge percentage of its profits in low-tax countries like Ireland and Singapore and keeping them there, a practice that, according to one tax economist, has “allowed G.E. to bring its U.S. effective tax rate to rock-bottom levels.” In the past year, in fact, to ZERO. No, less than zero, because it got a benefit of $3.2 billion!
So, in effect, G.E. has said to the United States and its people: “fuck you.” It manufactures more and more of its goods abroad, thus destroying American jobs, makes and keeps its profits abroad, and then gets tax benefits for all this that are applied to the little tax obligation (from goods still manufactured in the U.S.) it hasn’t found a loophole to worm its way out of. G.E. explains this by saying it has an obligation to its shareholders to “legally minimize its costs.” Some would call it more like “corporate welfare” (I would call it corporate thievery.) And what I’m wondering is, How is it that Americans who can barely buy food are pilloried as “welfare queens,” and made to work for their benefits, while these big time welfare queens get lionized, deferred to in every way, and even appointed to the President’s inner circle of advisers?
It’s called corruption, folks, and because of it the United States is looking more and more like one of those banana republics we used to laugh at in the old days, but no more. And if there’s a question left, it can only be: how long can such wanton pillaging of a nation go on? The answer is simple: as long as we the people let it.