This excellent New York Times article about General Electric's tax-dodging acrobatics is one of the best arguments for eliminating corporate taxes that I've ever read (unintended, I'm sure). The article describes one contortion after another by G.E., its lobbyists, and its bought politicians to shield the company from paying any taxes whatsoever.
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.
Hm, could there be any corruption and insider-dealing going on?
President Obama has said he is considering an overhaul of the corporate tax system, with an eye to lowering the top rate, ending some tax subsidies and loopholes and generating the same amount of revenue. He has designated G.E.’s chief executive, Jeffrey R. Immelt, as his liaison to the business community and as the chairman of the President’s Council on Jobs and Competitiveness, and it is expected to discuss corporate taxes.
“He understands what it takes for America to compete in the global economy,” Mr. Obama said of Mr. Immelt, on his appointment in January, after touring a G.E. factory in upstate New York that makes turbines and generators for sale around the world.
So Immelt is BFF with President Obama. Ok.
The head of its tax team, Mr. Samuels, met with Representative Charles B. Rangel, then chairman of the Ways and Means Committee, which would decide the fate of the tax break. As he sat with the committee’s staff members outside Mr. Rangel’s office, Mr. Samuels dropped to his knee and pretended to beg for the provision to be extended — a flourish made in jest, he said through a spokeswoman.
That day, Mr. Rangel reversed his opposition to the tax break, according to other Democrats on the committee.
The following month, Mr. Rangel and Mr. Immelt stood together at St. Nicholas Park in Harlem as G.E. announced that its foundation had awarded $30 million to New York City schools, including $11 million to benefit various schools in Mr. Rangel’s district. Joel I. Klein, then the schools chancellor, and Mayor Michael R. Bloomberg, who presided, said it was the largest gift ever to the city’s schools.
G.E. officials say the donation was granted solely on the merit of the project. “The foundation goes to great lengths to ensure grant decisions are not influenced by company government relations or lobbying priorities,” Ms. Eisele said.
Mr. Rangel, who was censured by Congress last year for soliciting donations from corporations and executives with business before his committee, said this month that the donation was unrelated to his official actions.
How dumb do they think we are?
I'm sure G.E. isn't the only huge corporation that legally avoids paying any taxes. The harder we squeeze them, the more they
bribe lobby our crooked politicians for exemptions. Since we're not collecting any money anyway, why not just eliminate corporate taxes entirely? G.E. would still pay zero, but:
- G.E. wouldn't need to keep all their profits outside the U.S.
- G.E. wouldn't have an incentive to buy politicians.
- Individual shareholders would still pay taxes on G.E.'s profits when they sell stock or the company issues dividends.
- Smaller companies who can't afford a zillion tax attorneys and lobbyists could compete with G.E. on a more level playing field.
Of course to G.E. and our politicians the rampant corruption isn't a bug, it's a feature. Eliminating corporate taxes would be one of the simplest ways to reduce political corruption generally and the influence of major corporations more specifically.