22 Nov 2011

57,000 Pages of Proof That the US Tax Code Needs Reform

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GE CEO Jeff Immelt

From Alex Tabarrok:

The NYTimes reported earlier this year that through an extraordinary use of tax breaks and clever accounting:

[General Electric] 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.

The Times highlighted the skill of GE’s dream team:

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.

More recently from The Weekly Standard we find what kind of effort it takes to pay no taxes on $14 billion in profits:

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.

(FYI, the length of GE’s tax return has doubled since 2006 when it (first?) filed electronically at an equivalent of 24,000 pages.)

GE’s tax bill illustrates both why our corporate tax rate is too high and too low. The nominal rate is too high which encourages a real rate which is too low.

Hat tip to Walter Olson.

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2 Feedbacks on "57,000 Pages of Proof That the US Tax Code Needs Reform"

SDD

Yet, the anger is directed at GE. Why? The tax law was constructed BY CONGRESS PRECISELY so that companies like GE would be able to reduce their tax burden. Populists are directing their anger at the wrong target.



t. shaw

Better for GE to have the money than the gangster regime.

Cretinous reporters and clueless college profs with agendas getting it all wrong.

In order for GE to benefit, it either paid taxes or it will have taxes due in future. It is either a tax refund or a future tax benefit. It is complex, but it is not rocket science.



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