No clearer demonstration of American wrongheadedness can be made: “GE’s Strategies Let It Avoid Taxes Altogether.” That wrongheadedness extends right to the Times editor who approved the title of David Kocieniewski’s report; because of course it is Congressional cooperation that cuts the mammoth corporation’s tax bill.

The assortment of tax breaks G.E. has won in Washington has provided a significant short-term gain for the company’s executives and shareholders. While the financial crisis led G.E. to post a loss in the United States in 2009, regulatory filings show that in the last five years, G.E. has accumulated $26 billion in American profits, and received a net tax benefit from the I.R.S. of $4.1 billion.

But critics say the use of so many shelters amounts to corporate welfare, allowing G.E. not just to avoid taxes on profitable overseas lending but also to amass tax credits and write-offs that can be used to reduce taxes on billions of dollars of profit from domestic manufacturing. They say that the assertive tax avoidance of multinationals like G.E. not only shortchanges the Treasury, but also harms the economy by discouraging investment and hiring in the United States.

“In a rational system, a corporation’s tax department would be there to make sure a company complied with the law,” said Len Burman, a former Treasury official who now is a scholar at the nonpartisan Tax Policy Center. “But in our system, there are corporations that view their tax departments as a profit center, and the effects on public policy can be negative.”

This isn’t just inequitable; it’s bad for business — unless, of course, you’re in the businss of making money.

Drop me a line at rjk@dailyblague.com
This entry was posted on Friday, March 25th, 2011 at 10:30 am.