But nobody pays that
David Kocieniewski
The New York Times
3/24/2011
A PRESIDENT'S BUSINESS LIAISON In January, President Obama named Jeffrey R. Immelt, General Electric's chief executive, to head the President's Council on Jobs and Competitiveness. "He understands what it takes for America to compete in the global economy," Mr. Obama said. Drew Angerer/The New York Times
General Electric, the nation’s largest corporation, had a very good year in 2010.
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.
That may be hard to fathom for the millions of American business owners and households now preparing their own returns, but low taxes are nothing new for G.E. The company has been cutting the percentage of its American profits paid to the Internal Revenue Service for years, resulting in a far lower rate than at most multinational companies.
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…
…In a regulatory filing just a week before the Japanese disaster put a spotlight on the company’s nuclear reactor business, G.E. reported that its tax burden was 7.4 percent of its American profits, about a third of the average reported by other American multinationals. Even those figures are overstated, because they include taxes that will be paid only if the company brings its overseas profits back to the United States. With those profits still offshore, G.E. is effectively getting money back…
…Martin A. Sullivan, a tax economist for the trade publication Tax Analysts, said that booking such a large percentage of its profits in low-tax countries has “allowed G.E. to bring its U.S. effective tax rate to rock-bottom levels.”…
Read the complete article at The New York Times.
Read also from March 2009, Is GE Next in Line for Government Bailout?
…GE could be overestimating the value of some of it real estate portfolio, said BernsteinResearch’s Winoker. Winoker calculates that the company’s real estate equity is worth about $20 billion, rather than the $32.7 billion GE estimated at the end of 2008. If that were true, that would represent an overestimate of more than 60%.
GE Capital has vast real estate holdings in the United States and around the globe, making it an important cog in GE’s operating results. Overall, GE Capital accounted for about 47%, or $8.6 billion, of GE’s total profits of $18.1 billion last year. The company projects the unit will earn $5 billion this year.
GE has stakes in 8,000 properties in 2,600 cities worldwide, including office buildings, warehouses and apartments. About 71% of those properties are located outside the United States.
In Europe, GE has $22 billion worth of real estate assets. About one-third of that was real estate debt and non-performing loans at the end of the second quarter of last year, according to its Web site.
“They spent a huge amount of money in real estate,” James S. Corl, who oversees distressed real estate investments at Siguler Guff & Co., told Bloomberg. “They paid a full price for what ends up being a lot of mediocre real estate.”…
And on 29 June Yid with Lid wrote, General Electric Major Recipient of TARP Loans
Update: Related from Moonbattery, The World’s Most Unfair Tax System
Which country has the most progressive — i.e., parasitical, socialistic, and grotesquely unfair — tax system in the industrialized world? None other than the erstwhile Land of Liberty…
Instapundit wonders, Jeffrey Immelt: Looter, or Producer?
