GE, Exxon Paid No Taxes in '09 In Section: Politics/Issues » Posted In: Business, Financial Crisis, Bailout Posted By: Kevin Osborne
With the federal income tax deadline looming next week, people can expect Tea Partiers and others to moan and shout about giving some of their money for the common good. If those tax protestors really wanted to make an impact, though, they’d focus on making sure large corporations pay their fair share.
Forbes magazine reported last week that General Electric had $10.3 billion in pre-tax income last year but ended up paying nothing in federal income tax. Instead, it recorded a tax benefit of $1.1 billion.
Meanwhile, ExxonMobil had a record-breaking $45.2 billion in profits last year, but paid no taxes to the federal government. Of the $15 billion it owed in taxes, all of it was legally channeled to corporate tax shelters in nations overseas.
As expected, corporate shills defend the practice. They allege if companies are forced to pay more, they will either pass the cost along to consumers or eliminate some jobs.
No economic system is perfect but the mere discussion of capitalism’s wretched excesses and possibly changing them makes many Americans squeamish, showing just how indoctrinated we are by Big Business.
As part of its “Day of Dialogue” program, the Interfaith Justice and Peace Center (IJPC) will hold a screening of Michael Moore’s latest film, Capitalism: A Love Story, on May 1, followed by an audience discussion. Also, attendees will be able to enjoy a chili dinner and hear news about the local job market from the AFL-CIO, the AMOS Project and the Interfaith Worker Center.
The event, which is free and open to the public, runs from 6-8:30 p.m. It will be held at the Laborer’s International Union Hall, 3457 Montgomery Road, in Evanston.
With rampant unemployment due to the reckless behavior of Wall Street bankers and their lack of proper oversight, the economy is at the forefront of everyone’s minds.
The net result of Ronald Reagan’s unproven theory of “trickle down economics,” combined with George W. Bush’s tax cuts for the wealthy, has led to disastrous results that threaten to shred society’s social contract.
Statistics show that the top 1 percent of U.S. society has more wealth than the bottom 95 percent combined, while the annual incomes of the top 20 percent equal the total of the bottom 80 percent. Any system that promotes such radical and destabilizing inequality needs fixing.
Moore has his weaknesses as a filmmaker – unnecessary bombast and a tendency to inject himself into the subject matter -- but one of his strengths is as a provocateur, someone willing to broach topics that others won’t. His film ends with several interesting quotes interspersed among the closing credits. Here are two that stood out in my mind.
“I sincerely believe that banking institutions are more dangerous than standing armies.” – Thomas Jefferson
“All the property that is necessary to a man, for the conservation of the individual and the propagation of the species, is his natural right, which none can justly deprive him of; but all property superfluous to such purposes is the property of the publick who, by their laws, have created it, and who may therefore by other laws dispose of it, whenever the welfare of the publick shall demand such disposition.” – Benjamin Franklin
If the Founding Fathers were willing to question our economic system, why have we become so afraid to do so?
-------------------- Wise men learn more from fools than fools from the wise. Posts: 3827 | From: beautiful California | Registered: Sep 2008
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Bank Of America Paid Nothing In Federal Income Taxes Last Year And Got Almost $1 Billion From Taxpayers
All around the country, right-wing legislators are asking Main Street Americans to pay for budget deficits resulting mainly from a recession caused by Wall Street by attacking collective bargaining, and cutting necessary services and investments like college tuition aid and health care for the poor.
Yet at the same time, some of the country’s biggest corporations are getting away without being asked to pay anything at all. In 2009, mega corporations like Boeing and General Electric managed to avoid paying a penny in federal taxes — while also netting enormous benefits in tax benefits and subsidies.
Now, with many companies releasing their financial reports for 2010, it appears that Bank of America — the nation’s largest bank — has gone a second year in a row paying absolutely no federal corporate income taxes. In fact, not only did the company use its losses to avoid paying taxes last year, but it actually reported a tax benefit of almost a billion dollars:
After another money-losing year, Bank of America Corp. got the upper hand with Uncle Sam in 2010.
The Charlotte-based bank had no federal income tax expense for a second straight year and actually reported a tax “benefit” of nearly $1 billion. Also, the bank’s billions in accumulated losses could reduce its taxes in future years, a tax expert said.
“Bank of America takes its role as a corporate citizen very seriously, and pays taxes in accordance with all applicable laws and regulations,” bank spokesman Jerry Dubrowski said.
“If you go out and try to make money and you don’t do it, why should the government pay you for your losses?” asked Bob McIntyre of Citizens for Tax Justice when Bank of America used a similar provision in the tax code to dodge taxes in 2009. Additionally, in one state alone, Connecticut, Bank of America’s state income tax tax dodging cost the state a whopping $500 million.
Over the weekend, the UK-inspired movement US Uncut held demonstrations at Bank of America branches all over the country to protest the bank’s egregious tax dodging. In Washington, D.C., US Uncut protests shut down a major Bank of America branch in the Columbia Heights neighborhood. Watch it:
In a press release from last week, Sen. Bernie Sanders (I-VT) laid out ten corporate tax dodgers who aren’t paying their fair share and called for shared sacrifice. “We have a deficit problem. It has to be addressed,” said Sanders in a press release addressing tax fairness. “But it cannot be addressed on the backs of the sick, the elderly, the poor, young people, the most vulnerable in this country. The wealthiest people and the largest corporations in this country have got to contribute. We’ve got to talk about shared sacrifice.”
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Beltway What The Top U.S. Companies Pay In Taxes Christopher Helman, 04.01.10, 3:00 PM ET
HOUSTON - As you work on your taxes this month, here's something to raise your hackles: Some of the world's biggest, most profitable corporations enjoy a far lower tax rate than you do--that is, if they pay taxes at all.
The most egregious example is General Electric. Last year the conglomerate generated $10.3 billion in pretax income, but ended up owing nothing to Uncle Sam. In fact, it recorded a tax benefit of $1.1 billion.
Avoiding taxes is nothing new for General Electric. In 2008 its effective tax rate was 5.3%; in 2007 it was 15%. The marginal U.S. corporate rate is 35%.
In Pictures: What The 25 Top U.S. Companies Pay In Taxes
How did this happen? It's complicated. GE's tax return is the largest the IRS deals with each year--some 24,000 pages if printed out. Its annual report filed with the Securities and Exchange Commission weighs in at more than 700 pages.
Inside you'll find that GE in effect consists of two divisions: General Electric Capital and everything else. The everything else--maker of engines, power plants, TV shows and the like--would have paid a 22% tax rate if it was a standalone company.
It's GE Capital that keeps the overall tax bill so low. Over the last two years, GE Capital has displayed an uncanny ability to lose lots of money in the U.S. (posting a $6.5 billion loss in 2009), and make lots of money overseas (a $4.3 billion gain). Not only do the U.S. losses balance out the overseas gains, but GE can defer taxes on that overseas income indefinitely. The timing of big deductions for depreciation in GE Capital's equipment leasing business also provides a tax benefit, as will loan losses left over from the credit crunch.
But it's the tax benefit of overseas operations that is the biggest reason why multinationals end up with lower tax rates than the rest of us. It only makes sense that multinationals "put costs in high-tax countries and profits in low-tax countries," says Scott Hodge, president of the Tax Foundation. Those low-tax countries are almost anywhere but the U.S. "When you add in state taxes, the U.S. has the highest tax burden among industrialized countries," says Hodge. In contrast, China's rate is just 25%; Ireland's is 12.5%.
Corporations are getting smarter, not just about doing more business in low-tax countries, but in moving their more valuable assets there as well. That means setting up overseas subsidiaries, then transferring to them ownership of long-lived, often intangible but highly profitable assets, like patents and software.
As a result, figures tax economist Martin Sullivan, companies are keeping some $28 billion a year out of the clutches of the U.S. Treasury by engaging in so-called transfer pricing arrangements, where, say, Microsoft's overseas subsidiaries license software to its U.S. parent company in return for handsome royalties (that get taxed at those lower overseas rates).
"Corporations are paying lower amounts of their profits in taxes now than in the past," says Douglas Shackelford, who teaches tax law at the University of North Carolina at Chapel Hill. "Other countries have been lowering their rates, but not the U.S."
Mind you, not all global megacorps enjoy such low tax rates. Try to muster some pity for Big Oil. ExxonMobil in its 2009 annual report to the SEC, recorded a larger income tax expense than any other U.S. company last year, some $17.6 billion, or 47% of pretax earnings. Exxon's peers Chevron and ConocoPhillips likewise recorded similarly high effective tax rates. The oil companies are oddities among the multinationals because many of the oil-rich countries where they do business levy even higher taxes than the U.S.
Exxon tries to limit the tax pain with the help of 20 wholly owned subsidiaries domiciled in the Bahamas, Bermuda and the Cayman Islands that (legally) shelter the cash flow from operations in the likes of Angola, Azerbaijan and Abu Dhabi. Exxon has tens of billions in earnings permanently reinvested overseas. Likewise, GE has $84 billion in overseas income parked indefinitely outside the U.S.
Though Exxon's financial statement's don't show any net income tax liability owed to Uncle Sam, a company spokesman insists that once its final tax bill is figured, Exxon will owe a "substantial 2009 tax liability." How substantial? "That's not something we're required to disclose, nor do we."
Naturally the Obama administration wants to put an end to this. It has proposed doing away with tax deferrals on overseas income. If the plan passes, a U.S. company that pays a 25% tax on profits in China would have to pay an additional 10% income tax to Uncle Sam to bring it up to the 35% corporate rate. "Eliminating deferrals would put U.S. companies on an unlevel playing field," says the Tax Foundation's Hodge, "especially if competing with the likes of Germany, which only taxes companies on domestic operations."
Hewlett-Packard and others among the top 25 state in their annual reports that if Obama's tax measures pass it would mean a certain tax hike, probably amounting to billions of dollars.
Would no more tax holiday for GE really end up helping Mr. and Mrs. Taxpayer? Doubtful. "The average Joe should be in favor of lower corporate taxes," says Hodge, "because ultimately they are paying the corporate income tax. Either as workers, getting lower wages and fewer jobs, or as consumers, paying higher prices, or as retirees, getting lower dividends and earnings on their investments."
In the same vein, JPMorgan Chase Chief Executive Jamie Dimon has spoken out against an Obama proposal to levy a special tax on banks to recoup bailout costs. "Using tax policy to punish people is a bad idea," said Dimon. "All businesses tend to pass costs on to customers."
In
-------------------- Wise men learn more from fools than fools from the wise. Posts: 3827 | From: beautiful California | Registered: Sep 2008
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It's called tax avoidance Ray and I'm quite sure you do the same thing on a personal level. Don't you take every deduction that you legally can to lower your amount owing? Why should a corporation do anything different?
As long as it's not tax evasion, they're doing exactly what a well managed corporation should do. I applaud them.
Posts: 5729 | From: Wisconsin | Registered: Sep 2003
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A company like GE is paid many billions of dollars by the government and unlike, the person who delivers my mail, does not put anything into the pot. Those billions of dollars should be studied to make sure that none of it is used to make a profit out of which GE pays no taxes.
-------------------- Wise men learn more from fools than fools from the wise. Posts: 3827 | From: beautiful California | Registered: Sep 2008
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Isn't it strange?! BOA has tons of lobbyists and tax lawyers, makes a ton of money, pays no taxes, and gets a ton of money from the government. I have no lobbyists nor tax lawyers, earn a tiny fraction of what BOA makes, pay a ton of taxes, and get no money from the government. I'm beginning to think it might pay to invest in lobbyists and tax lawyers. Gee, I wonder if any of them do pro bono
-------------------- Wise men learn more from fools than fools from the wise. Posts: 3827 | From: beautiful California | Registered: Sep 2008
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But it's the tax benefit of overseas operations that is the biggest reason why multinationals end up with lower tax rates than the rest of us. It only makes sense that multinationals "put costs in high-tax countries and profits in low-tax countries," says Scott Hodge, president of the Tax Foundation. Those low-tax countries are almost anywhere but the U.S. "When you add in state taxes, the U.S. has the highest tax burden among industrialized countries," says Hodge. In contrast, China's rate is just 25%; Ireland's is 12.5%.
Corporations are getting smarter, not just about doing more business in low-tax countries, but in moving their more valuable assets there as well. That means setting up overseas subsidiaries, then transferring to them ownership of long-lived, often intangible but highly profitable assets, like patents and software.
I have to go with Upside there, Ray...
Although our individual taxes are infinitesimally smaller, what is the difference between what most americans do to lower their tax burden and what GE is doing?
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I don't care who go with and thats the way you would call it. I like my conservatives to think that corporations are saints. And should be treated to protection and rights without paying the price or there share.
-------------------- Wise men learn more from fools than fools from the wise. Posts: 3827 | From: beautiful California | Registered: Sep 2008
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Has Obama explained any of this mess to the public? I would love to personally ask him how this happens after talking so big about everyone paying their fair share.
From the Czech Republic: "The danger to America is not Barack Obama, but a citizenry capable of entrusting a man like him with the Presidency. It will be far easier to limit and undo the follies of an Obama presidency than to restore the necessary common sense and good judgment to a depraved electorate, willing to have such a man for their president. The problem is much deeper and far more serious than Mr. Obama, who is a mere symptom of what ails America. Blaming the prince of the fools should not blind anyone to the vast confederacy of fools that made him their prince.
Their Republic can survive a Barack Obama, who is, after all, merely a fool. It is less likely to survive a multitude of fools such as those who made him their President."
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Again, I believe you misunderstand what 'conservatives' think, Ray. Speaking for myself, I don't believe that large corporations are 'saints'. What I believe is that corporations are necessary to both our economy AND our way of life here in the U.S. As such, it is absolutely insane to expect them to pay higher taxes here when they can LEGALLY pay less by using international laws. We cannot compete globally with Mom and Pop stores. These mega-corps are the only way to keep what jobs we still have here within our borders. We should be encouraging this...not taxing them out of their profits.
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From the Czech Republic: "The danger to America is not Barack Obama, but a citizenry capable of entrusting a man like him with the Presidency. It will be far easier to limit and undo the follies of an Obama presidency than to restore the necessary common sense and good judgment to a depraved electorate, willing to have such a man for their president. The problem is much deeper and far more serious than Mr. Obama, who is a mere symptom of what ails America. Blaming the prince of the fools should not blind anyone to the vast confederacy of fools that made him their prince.
Their Republic can survive a Barack Obama, who is, after all, merely a fool. It is less likely to survive a multitude of fools such as those who made him their President."
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I don't get why we tax the companies at all.
If we are going to tax the people then when the profits go to the people they pay the taxes shouldn't be both. And if you want to tax the companies don't tax the people.
And taxing government workers and Soc security folks is beyond me as well ... why waste time and money with it. Just don't give as much to begin with.
Posts: 3417 | From: Cleveland, Ohio | Registered: Jan 2000
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quote:Originally posted by glassman: LOL... that fits every president we've had since Eisenhower.
EVERY President? That is very broad.
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As ThinkProgress has been reporting, while Main Street Americans are having their services gutted and public investment is being slashed, some of the country’s most profitable corporations are getting away with paying little to nothing in taxes.
A new report by Public Campaign examines how these major corporations have influenced Congress to craft a tax code that lets them get away with making so much money and paying so little taxes in return. In its report, “The Artful Dodgers,” Public Campaign juxtaposes the limited tax liability of dozen major corporations with the companies’ campaign contributions and lobbying expenditures, which amount to more than a billion dollars over the last decade:
EXXON MOBIL: The oil giant that was the world’s most profitable corporation in 2008 has spent $5.7 million in campaign contributions over the last ten years and $138 million in lobbying expenditures. Its federal corporate income tax liabilities for 2009? Absolutely nothing. Not only did it pay nothing, but it also received a tax rebate the same year of $156 million.
CHEVRON: Chevron spent $4.4 million in campaign contributions and $91 million in lobbying expenditures over the last decade. It received a tax refund of $19 million in 2009 while making $10 billion in profits and $324 million in government contracts in 2008.
CONOCOPHILLIPS: The Texas-based gasoline giant spent $2.5 million in campaign contributions and $63 million in lobbying expenditures over the last decade. It received “$451 million through the oil and gas manufacturing deduction,” a special tax break, between 2007 and 2009, despite $16 billion in profits over the same period of time.
VALERO ENERGY: Valero spent $4.1 million in campaign contributions and $4.8 million in lobbying expenditures from 2001 to 2010. It received a $157 million tax rebate in 2009 despite $68 billion in sales during the same year. It received “$134 million through the oil and gas manufacturing deduction” over the last three years.
BANK OF AMERICA: Bank of America employees contributed $11 million to federal political campaigns from 2001 to 2010 and spent $24 million lobbying over the same period of time. It made $4.4 billion in profits in 2010 while receiving a tax refund of $1.9 billion.
CITIGROUP: Citigroup employees contributed $15 million to federal political campaigns from 2001 to 2010 and spent $62 million lobbying over the same period of time. It made $4 billion in profits in 2010 while paying absolutely nothing in federal corporate income taxes. It also received a $1.9 billion tax refund.
GOLDMAN SACHS: The mega-bank Goldman Sachs, which is often called “Government Sachs” in insider circles because of its clout over Washington, spent $22 million in campaign contributions and $21 million in lobbying over the last decade. It paid an ultra-low tax rate of 1.1 percent in 2008, while also receiving $800 billion in governmentloans to help weather the financial crisis.
BOEING: The aviation and defense contractor giant gave $10 million in contributions and $115 million in lobbying expenditures over the last decade. It paid a grand total of nothing in federal corporate income taxes in 2010 and received a $124 million tax refund.
FEDEX: FedEx spent $8.7 million in campaign contributions and $71 million in lobbying expenditures from 2001 to 2010. It paid a .0005 percent effective tax rate recently, actually spending 42 times as much on lobbying Congress as it did paying taxes. To do this it utilizes 21 tax havens.
CARNIVAL: The cruise line paid $1.7 million in campaign contributions and $1.6 million in lobbying over the past ten years. Despite the relatively low amount of money it spent influencing Washington, it has gotten away with a super-low tax rate. Over the past five years, its federal corporate income tax rate has been an effective 1.1 percent.
VERIZON: Verizon spent $12 million in campaign contributions and $131 million in lobbying expenditures over the past decade. It paid absolutely nothing in federal corporate income taxes over the past two years and $488 million in government contracts in 2008; in 2010, it made $12 billion in profits.
GENERAL ELECTRIC: General Electric spent $13 million in campaign contributions and $205 million in lobbying expenditures over the last decade while netting a tax refund of $4.1 billion over the past five years. It made $26 billion in profits over the same time period.
The amount of money that taxpayers are losing from the tax dodging by these major corporations is enormous. For example, if five of the nation’s biggest banks paid their taxes at the full rate, we could re-hire every single one of the 132,000 teachers laid off during the recession — twice.
Update As a reminder, the median effective income tax rate for family in 2007 was 13.6 percent.
-------------------- Wise men learn more from fools than fools from the wise. Posts: 3827 | From: beautiful California | Registered: Sep 2008
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Big business still getting big breaks under the Obama admin, and he isnt coming out and speaking about it to the public. Why? Start calling ALL of them out for crying out loud.
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actually, the interesting point in all that lobbying money is that the GOP is going after the little guys in the labor unions so they cannot lobby, somehow they seem to think it's wrong for employees to lobby but not for employers to lobby... WTF is that?
IMO? none of 'em should be lobbying. registered voters should be th eonly ones lobbying, and niether unions nor corporations can vote, so why should they be allowed to lobby
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I guess everyone here burned their draft cards.
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It's nice to have all the money in the world isn't it. Then you can pay off whoever you need to pay under the table to not pay anymore money to the taxman. Wow, these corporations get slimier by the second and politions do nothing because they pretty much answer to these guys. Ge and Exxon just keeps smiling all the way to the bank.
-------------------- One risk I enjoy: daytrading stocks Posts: 273 | From: New York City | Registered: Sep 2004
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Undocumented Immigrants Paid $11.2 Billion In Taxes While GE Paid Nothing
Our guest blogger is Mike Elk, a freelance labor journalist and third generation union organizer based in Washington, D.C. You can follow him for more updates on twitter at @MikeElk.
This past month, there was much outrage over the fact that General Electric, despite making $14.2 billion in profits, paid zero U.S. taxes in 2010. General Electric actually received tax credits of $3.2 billion from American taxpayers.
At the same time that General Electric was not paying taxes, many undocumented immigrants, who are typically accused of taking advantage of the system while not contributing to it by many on the right, paid $11.2 billion in taxes. A new study by the Institute for Taxation and Economic Policy shows that undocumented immigrants paid $8.4 billion in sales taxes, $1.6 billion in property taxes, and $1.2 billion in personal income taxes last year. The study also estimates that nearly half of all undocumented immigrants pay income taxes.
ITEP bases its figures of what immigrants pay taxes based on the following factors:
•Sales tax is automatic, so it is assumed that unauthorized residents would pay sales tax at similar rates to U.S. citizens and legal immigrants with similar income levels. •Similar to sales tax, property taxes are hard to avoid, and unauthorized immigrants are assumed to pay the same property taxes as others with the same income level. ITEP assumes that most unauthorized immigrants are renters, and only calculates the taxes paid by renters. •Income tax contributions by the unauthorized population are less comparable to other populations because many unauthorized immigrants work “off the books” and income taxes are not automatically withheld from their paychecks. ITEP conservatively estimates that 50 percent of unauthorized immigrants are paying income taxes.
While it’s impossible to estimate exactly how much in taxes undocumented immigrants paid, it is clear that undocumented immigrants are paying more taxes than General Electric, which paid absolutely nothing. This raises the question of who really is leaching off the American system: undocumented immigrants who pay their taxes and are typically too afraid of being deported to receive public assistance or corporations that pay nothing while receiving billions in credits.
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