GE Doesn’t Pay Taxes — Taxpayers Pay GE

In 1983 NY hotel-chain-owning billionaire Leona Helmsley said, “We don’t pay taxes. Only the little people pay taxes…” As our country migrates from democracy to plutocracy, this more and more appears to be official policy. Again and again we see tax cuts for the wealthy few, tax breaks and subsidies for the big corporations that operate as fronts for those wealthy few, and budget cuts for the things We, the People (government) do to empower and protect each other. Just a few weeks ago we watched as an extension of the Bush tax cuts and a huge cut in the estate tax rate was pushed through. Now we watch as the discussion turns to cuts in Social Security and the rest of the so-called “safety net.”

Another indicator of plutocracy (government of, by and for the wealthy) is impunity for those at the top. Leona Helmsley actually went to jail for tax evasion. Even as recently as the early-90s Savings and Loan Crisis our government investigated, prosecuted and jailed more than a thousand bad actors for fraud and other crimes. This time, well, … not so much. Well … actually not at all. Times have changed. Don’t look back. Deal with it. Suck it up. Let’s all get on the same team and keep this ball moving forward down the field at the end of the day. Whatever. Hey, look over there!

Today’s Plutocracy Indicator

From the NY Times, G.E.’s Strategies Let It Avoid Taxes Altogether

The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States.

Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.

So not only did GE, the highly-profitable recipient of federal contracts and bailout money, not pay taxes, we paid them $3.2 billion!

Revolving Door Writes The Loopholes

How does GE accomplish this? By taking advantage of the “revolving door” where people move back-and-forth from government agencies to the corporations those agencies are supposed to oversee. From the NY Times story,

Its extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore. G.E.’s giant tax department, led by a bow-tied former Treasury official named John Samuels, is often referred to as the world’s best tax law firm. Indeed, the company’s slogan “Imagination at Work” fits this department well. The team includes former officials not just from the Treasury, but also from the I.R.S. and virtually all the tax-writing committees in Congress.

While Congressional staffers they write the loopholes into the laws. Then they go to their reward at corporate headquarters for very high pay. Then they go work in the agencies to make sure the rulings go their way. They then go collect again. It is a lucrative game. They’re the winners — they call themselves “producers.” We’re the losers — they call us … “losers.”

Who Really Benefits?

The use of the general term “corporations” to describe the beneficiaries of these policies is really a smokescreen that masks the fact that really a very few people are benefiting. Yesterday’s post, Lobbyists Admit Corporate Tax “Holiday” Didn’t Work, But Demand It Again, pointed out that it is a very few actual people that we are really talking about here,

Corporate wealth is really just personal wealth, held at arms length from the person to mask what is going on. The wealthiest 1% own 50.9% of all stocks, bonds, and mutual fund assets. The wealthiest 10 percent own more than 90 percent. The bulk of us own less than 1 percent. When you hear about “corporate” holdings, think about this chart from the Working Group on Extreme Inequality:

At The Expense Of The Rest Of Us

These benefits accrue to the wealthy few at the expense of the rest of us. What many people don’t understand is that it is also at the expense of other companies. Our infrastructure and public structures – roads, education, courts, customers – are the soil in which good companies can grow. When tax dodgers are able to avoid contributing to our communities and country, the overall environment for the rest of our businesses deteriorates and our worldwide competitiveness declines. We see it all around us every day.

Ungrateful Bastards

For all the benefits huge multinational companies like GE get from We, the People — subsidies, contracts, bailouts, tax breaks and customers, they aren’t very rateful and certainly are not about to give anything back. Barry Ritholtz at The Big Picture writes,

Yet another reason why you don’t bailout companies whose inability to manage risk allowed themselves to become destroyed: They not only do not deserve to continue with the same management/shareholders/creditors who all created the insolvency in the first place, but they are ungrateful bastards as well.

Even Reagan

Even tax-cutter Ronald Reagan balked when he learned that GE (for which he had been spokesman) didn’t pay its taxes. From the NY Times story,

In the mid-1980s, President Ronald Reagan overhauled the tax system after learning that G.E. — a company for which he had once worked as a commercial pitchman — was among dozens of corporations that had used accounting gamesmanship to avoid paying any taxes.

“I didn’t realize things had gotten that far out of line,” Mr. Reagan told the Treasury secretary, Donald T. Regan, according to Mr. Regan’s 1988 memoir. The president supported a change that closed loopholes and required G.E. to pay a far higher effective rate, up to 32.5 percent.

Isaiah Poole, in Rewriting Eric Cantor’s Cant On Jobs,

“So let’s stop the demagoguery about overtaxed corporations and have a dialogue instead about a tax code that taxes all people fairly. A tax system in which a billionaire like Warren Buffett pays taxes at a lower rate than his secretary is not fair, and an unfair tax code, one that’s riddled with loopholes, perverse incentives and ways to game the system, keeps us limping and unproductive.”

Terrance Heath has been writing a series on The Truth About Tax & Spend Conservatism,

… the truth about “Tax & Spend Conservatism” is that it isn’t about raising or cutting taxes, but about whose taxes are raised and whose taxes are cut. It’s about, as Robert Borsage put it, who gets hit with the tab for the great recession.


Public Campaign fact sheet titled, GE’s Corporate Tax Dodging that begins,

General Electric spent $235.2 million in political money since 2000–paid no federal income taxes in 2008, 2009, and 2010.

and points out:

G.E. cut American jobs and exported them overseas.

The New York Times reports “[since] 2002, the company has eliminated a fifth of its work force in the United States while increasing overseas employment.”

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am also a Fellow with CAF.

7 thoughts on “GE Doesn’t Pay Taxes — Taxpayers Pay GE

  1. Union 76 a CA corporation
    pays No CA taxes
    where can i find a progressive, liberal site or group
    I see nothing on raising taxes on the wealthy class, corporations
    wheres info
    on bankers paying county recording fees and fines
    billions of dollars stolen there and jailing them
    where the progressives on repealing CA tax cut for corps
    from 2009
    where idea oil tax in CA?
    all I see is Browns right wing
    taxes on the working class
    sales tax,car tax
    and union busting attack on public workers
    If tax corporations and Oil extraction tax was on ballot it would pass
    browns tax on working people will not pass
    is there a CA group that advocates
    we won’t pay for the rich’s depression?
    and bail out

  2. This will probably shock you but I generally agree with you on GE. My feelings on corporate taxes are basically we either simplify them so much that corporations cannot use loopholes to avoid taxes or we just get rid of them all together. The problem we have now is that “connected” corporations like GE get preferential treatment whereas your small subchapter S corporations get nailed. Ironically, it is the small corporations that actually generate jobs. By eliminating all corporate taxes then we, at least, put the small corporation on the same basis as the big boys.
    GE is particularly obnoxious since they are so well connected (e.g. they own MSNBC – what you thought Keith Obermann was on the air for his ratings?). Furthermore, they have aggressively outsourced. Ironically, this has not even made business sense. GE stock holders have gotten slaughtered over the last few years and GE’s profitability has been dismal. So, the argument that these preferential tax brakes make business sense isn’t even valid.

  3. David,
    Yes, the point is that we hear about being “pro-business” and “anti-business” but that Chamber of Commerce stuff really means their businesses, a few select, connected multinationals.
    But these “pro-business” policies they advocate work against OTHER businesses, the struggling small business trying to compete against these giants, the solar manufacturers trying to compete against China, the startup trying to get a foothold, etc.
    And the multinationals don’t need a good, competitive infrastructure and educated worker base here, so they don’t want to pay taxes to support that here. They just move to wherever people are paying taxes to provide that, and then move on to the next place.

  4. Of course, you do realize that corporations really don’t pay taxes? They just pass them on to the consumer. They are, afterall, the cost of doing business. I remember once an executive from Chevron talking about some proposed tax increase on oil in california shrug his shoulders and say, “doesn’t really matter, we’ll just raise the price of gas a nickel to pay for it.”

  5. Actually corporations CAN’T pass taxes to customers. Here is why.
    A well-run business is already charging what they should charge for their product or service. If they have room to raise prices they should already have done so. But of course doing so this will cause them to lose sales to competitors.
    Taxes are on profits, and profits are calculated at the end of a tax year by adding up all the revenue and subtracting all the costs. When a product or service is sold the company doesn’t really know yet how much profit, if any, it will have at the end of the year, so it doesn’t know what the tax will be, so how can it adjust prices? But if a company was able to just raise prices based on anticipation of profits, then the result would be that profits would be higher because of the higher price charged, which means taxes would be even higher, so the company should have raised prices even more, but that means the profit would be even higher, so they have to go back and charge more, but then … I think you are starting to see how silly this idea of raising prices to cover taxes can get.
    About those competitors – if one company is doing well and therefore making a profit, and another company is not doing so well, and therefore not making as much profit, and the first company raises prices to cover the taxes on the profit, then the second company has a price advantage so the first company loses sales and isn’t going to have a profit after all so they really should put the prices back down, but then the other company’s price advantage goes away and they are making a profit again so they should raise prices but … Hey, this just gets silly, too!

  6. But, if you pass a tax across the board, like the oil tax. it hits all competitors as a cost and they all pass it on. trust me, that is the way it is.

  7. GE doesn’t pay taxes here because they shift there burdens to nations that don’t over tax. Lower the corporate tax from 35% which is ridiculous, to 15% and watch the FLOOD of tax revenue flow in.

Comments are closed.