Protestors at the Cobo Center in Detroit confronted GE’s CEO Jeff Immelt by shouting “pay your fair share.” They should be protesting against the 47 percent of Americans who don’t pay a penny in federal taxes. In addition, they should be asking Immelt why he’s supporting President Obama. We know the answer: GE is involved in corporate welfare. Right now Obama is the guy passing out the subsidies, and Immelt is taking advantage. But that’s a subject for another article.
The story is that General Electric (GE) didn’t pay any taxes in 2010. For 2011, GE paid $2.9 billion globally in income tax. In reality, GE didn’t pay any income tax in 2010 or 2011. If you bought something from GE, then you paid some of GE’s taxes. There is not a single corporation in the United States that pays taxes. Taxes are a cost of doing business that are passed on to consumers who purchase a company’s products or services.
When people want corporations to be taxed at ever higher rates, they are only asking for the government to tax them.
GE’s tax return in 2010 came out to 57,000 pages. This shows how absolutely outrageous our tax code is and why so many are for scrapping the whole thing and going to a flat tax or a consumption tax that goes under the name “The Fair Tax.”
First, a good portion of the profits GE makes go to shareholders who do pay taxes on the profits they receive in terms of capital gains. These profits fuel the retirement programs of millions of investors so that they do not end up becoming dependent on the government. That’s a very good thing.
Second, any profit kept by the company goes to future development costs and serves as a financial cushion in case of an economic downturn. Profits are necessary to stay in business. A company that does not innovate stagnates and eventually dies. Think Kodak.
Third, GE is an international company. The corporate tax rate in the United States is as high as 35 percent. The corporate tax rate in many other countries is less. GE is being smart. America’s high corporate tax rates force companies to operate off shore. If the corporate tax rate were lower in the United States, more companies would decide to stay. Unions don’t help.
Fourth, GE takes advantage of so-called tax loopholes. They’re not loopholes; they’re legal ways to avoid taxes that are written in the enormous tax code. We all take advantage of these legal ways to lessen our nation’s oppressive and complicated tax code. The home mortgage deduction is one example. If we don’t like GE to take advantage of them, then neither should we take advantage of them.
Fifth, every penny kept away from the Federal Government is a good thing. What do we think is better? To let Congress decide how to spend GE’s profits as it funnels them though the bureaucracy giving more power to the government and its high salaried employees or for the stockholders to decide how to spend their dividend money?
Sixth, why should any company have to pay billions of dollars in taxes?
Seventh, GE employs nearly 300,000 people worldwide. What happens to the money GE pays to them? The money they earn goes back into the economy that ends up helping all of us. They buy houses, shop for groceries, purchase cars, clothes, TVs, computers, and so much more. GE stimulates the economy in ways the governments can’t.