In yesterday’s news was an interesting item. General Electric (GE) appears to be tax free. Free in that it has cut itself out of the tax system, freeing itself from paying any tax obligations. Because apparently, it has none.
The Weekly Standard
General Electric, one of the largest corporations in America, filed a whopping 57,000-page federal tax return earlier this year but didn’t pay taxes on $14 billion in profits. The return, which was filed electronically, would have been 19 feet high if printed out and stacked.
The fact that GE paid no taxes in 2010 was widely reported earlier this year, but the size of its tax return first came to light when House budget committee chairman Paul Ryan (R, Wisc.) made the case for corporate tax reform at a recent town hall meeting. GE was able to utilize all of these various loopholes, all of these various deductions legal, Ryan said. Nine billion dollars of GE’s profits came overseas, outside the jurisdiction of U.S. tax law. GE wasn’t taxed on $5 billion in U.S. profits because it utilized numerous deductions and tax credits, including tax breaks for investments in low-income housing, green energy, research and development, as well as depreciation of property.
I asked the GE tax officer, How long was your tax form? Ryan said. He said, “Well, we file electronically, we don’t measure in pages”. Ryan asked for an estimate, which came back at a stunning 57,000 pages. When Ryan relayed the story at the town hall meeting in Janesville, there were audible gasps from the crowd.
Ken Kies, a tax lawyer who represents GE, confirmed to THE WEEKLY STANDARD the tax return would have been 57,000 pages had it been filed on paper. The size of GE’s tax return has more than doubled in the last five years.
The economy insiders get tax cuts; the economy gets zombified. GE pays an army of lawyers and tax accountants to dig into the tax system. It strikes gold. The economy gets shafted. GE pays no taxes. The lawyers and accountants presumably smart gals and guys spend their time doing zombie work. Society is poorer. But the zombies get their meat.
Wait a minute, Elizabeth protested. The accountants and lawyers aren’t zombies. They’re doing real work, protecting GE…which is wealth creation – producing business from taxes.
Yes…they’re honest, decent workers, we replied. Like many government employees. And millions of other people. They’re good people doing bad work. They may be doing it well. They may be diligent and hardworking. But they have been zombified.
for The Daily Reckoning Australia