According to Forbes.com, I should be angry that General Electric pays less taxes than I do:
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%.
Actually I am less than pleased with GE, but that’s because they possess hefty military contracts that allow our brave freedom fighters to slaughter poor brown people overseas, or whoever else refuses to submit to the empire. They are, in Lew Rockwell’s words, true merchants of death, one of the worst examples of corporatism in the American economy.
So although GE isn’t the best example, I favor it or any other company hiding as much of its earnings as possible from the Federal revenue agents. That is money that can be used to reinvest in the business, explore new markets, or just to ride out the recession. In other words, to create wealth and jobs, something Obama can never claim to do (at least, not truthfully). And as any business would rationally decide to do, GE has moved enormous amounts of capital offshore and invested in operations in countries with lower corporate tax rates than in the U. S. Since it can defer taxes on overseas income, it creates a perpetual tax shelter. Of course the Obama administration doesn’t like that:
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.”
Yes, it’s terrible that individuals don’t get similar tax breaks. It’s terrible that we pay taxes at all, particularly since a large chunk of them ends up in GE’s pocket by way of the Pentagon. But levying more taxes on companies will not magically generate more tax revenue, nor will individuals pay less. Companies will simply pass the higher taxes onto consumers, or lower wages for workers, thus furthering economic decline. When will politicians learn even the basics of economics?
Different than I expected from the title. Excellent post.