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Thread: GE: 7,000 tax returns, $0 U.S. tax bill

  1. #11
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    Re: GE: 7,000 tax returns, $0 U.S. tax bill

    Quote Originally Posted by Harry Guerrilla View Post
    You're 100% right.

    If you're an American citizen working and living in a foreign country you are required to file your taxes on your earnings in that foreign country.
    You are allowed to deduct your foreign taxes but you still have to pay your American taxes.
    They have no income to deduct their foreign taxes from! That's why it's deferred.
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    Re: GE: 7,000 tax returns, $0 U.S. tax bill

    Quote Originally Posted by Kelzie View Post
    They have no income to deduct their foreign taxes from! That's why it's deferred.
    They earned a profit in a foreign country, something that an individual would be taxed on.
    Gross profit - losses = net profit - foreign taxes = total net profit for tax purposes.

    They could do it just like the rest of us would have to if we lived and worked in another country.
    I was discovering that life just simply isn't fair and bask in the unsung glory of knowing that each obstacle overcome along the way only adds to the satisfaction in the end. Nothing great, after all, was ever accomplished by anyone sulking in his or her misery.
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    Re: GE: 7,000 tax returns, $0 U.S. tax bill

    Quote Originally Posted by Orion View Post
    Congratulations, GE has been exposed for using one of the many loopholes which exist in the system to get tax credit. If you're smart enough to find them, pretty much anyone can reduce what they owe by quite a bit.
    Yes, its called off-shoring: off-shore the jobs and off-shore the revenues.

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    Re: GE: 7,000 tax returns, $0 U.S. tax bill

    Quote Originally Posted by Harry Guerrilla View Post
    They earned a profit in a foreign country, something that an individual would be taxed on.
    Gross profit - losses = net profit - foreign taxes = total net profit for tax purposes.

    They could do it just like the rest of us would have to if we lived and worked in another country.
    Companies get to deduct their losses. They always have. GE isn't exactly playing tricks here. They have to pay eventually, that's what the "deferred" part means.
    be humble for you are made of earth; be noble for you are made of stars

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    Re: GE: 7,000 tax returns, $0 U.S. tax bill

    Quote Originally Posted by jamesrage View Post
    I have mixed feelings on this. Yes everyone should pay their fair share. But at the same time you could put a 50% tax on businesses and they would pass those costs onto the consumer just like when they buy materials,equipment, pay for employees and other things used to make a product. This is why I laugh my ass off when die hard anti-smokers think big tobacco companies suffered, especially many of those tobacco companies own food companies the die hard anti-smoking people buy food products from. Why would companies not pass taxes onto the consumer?

    GE: 7,000 tax returns, $0 U.S. tax bill - Apr. 16, 2010

    NEW YORK (CNNMoney.com) -- General Electric filed more than 7,000 income tax returns in hundreds of global jurisdictions last year, but when push came to shove, the company owed the U.S. government a whopping bill of $0.

    How'd it pull off that trick? By losing lots of money.

    GE had plenty of earnings last year -- just not in the United States. For tax purposes, the company's U.S. operations lost $408 million, while its international businesses netted a $10.8 billion profit.

    That left GE (GE, Fortune 500) with no U.S. profit left for Uncle Sam to tax. Corporations typically face a 35% federal income tax on their earnings. Thanks to its deductions and adjustments, GE reported an actual U.S. federal income tax rate of negative 10.5%. It got to add a "tax benefit" of $1.1 billion back into its reported earnings.

    "This is the first time in at least decades that GE has reported negative U.S. pretax income and it reflects the worst economy since the Great Depression," Anne Eisele, GE's director of financial communications, said via e-mail.

    But what about the $10.8 billion profit overseas? GE is "indefinitely" deferring income tax payments on those profits, Eisele said.

    Which is why all companies that are outsourcing labor like this need to be taxed 65% of all monies earned outside the country. They can then reduce this tax bill to 5% by returning those assets to the United States (thereby creating jobs for Americans).

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    Re: GE: 7,000 tax returns, $0 U.S. tax bill

    Quote Originally Posted by Harry Guerrilla View Post
    You're 100% right.

    If you're an American citizen working and living in a foreign country you are required to file your taxes on your earnings in that foreign country.
    You are allowed to deduct your foreign taxes but you still have to pay your American taxes.
    And if you have zero American sourced income, your foreign tax credit is 100% and you pay nothing, just like GE.
    "If your opponent is of choleric temperament, seek to irritate him." - Sun Tzu

  7. #17
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    Re: GE: 7,000 tax returns, $0 U.S. tax bill

    Quote Originally Posted by Kelzie View Post
    Companies get to deduct their losses. They always have. GE isn't exactly playing tricks here. They have to pay eventually, that's what the "deferred" part means.
    Speaking of which, what Congress should do is drop the tax rate on repatriated income to like 10% for a year and have all of it go towards debt reduction. There are hundreds of billions (if not a trillions) dollars of income that is sitting outside of the US deferred. Big firms like IBM often will take out unsecured loans with a wink and a smile about what is the real collateral. Allowing firms to repatriate foreign income at a super low rate could put a rather large dent in our debt.
    "If your opponent is of choleric temperament, seek to irritate him." - Sun Tzu

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    Re: GE: 7,000 tax returns, $0 U.S. tax bill

    Quote Originally Posted by obvious Child View Post
    And if you have zero American sourced income, your foreign tax credit is 100% and you pay nothing, just like GE.
    I've been lead to believe that you pay taxes on your income no matter where it is earned.
    Meaning that even after you deduct for foreign taxes you must still pay American taxes on any income earned outside the U.S.

    We're are supposedly the only country that does this.
    I was discovering that life just simply isn't fair and bask in the unsung glory of knowing that each obstacle overcome along the way only adds to the satisfaction in the end. Nothing great, after all, was ever accomplished by anyone sulking in his or her misery.
    —Adam Shepard

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    Re: GE: 7,000 tax returns, $0 U.S. tax bill

    Quote Originally Posted by Deuce View Post
    Individuals don't have anywhere near the opportunity to do this.
    Well, not legally. Ask the fine folks at KPMG and they'll fix up something that will do the same thing. Just don't get caught.
    "If your opponent is of choleric temperament, seek to irritate him." - Sun Tzu

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    Re: GE: 7,000 tax returns, $0 U.S. tax bill

    Quote Originally Posted by Harry Guerrilla View Post
    I've been lead to believe that if you pay taxes on your income no matter where it is earned.
    This is correct.

    Meaning that even after you deduct for foreign taxes you must still pay American taxes on any income earned outside the U.S.
    Sort of.

    The foreign tax credit is a percent of how much foreign sourced income you have.

    For instance, say you have $100 in tax liability and paid $35 in foreign tax on that income. The US would tax you $28. To determine your foreign tax credit, you figure out how much of your income is US vs Foreign sourced. In this case, as 100% of your income is foreign sourced, you get 100% of the foreign taxes paid as a credit, thereby eliminating your entire US liability (not refundable though), thus you pay nothing. Now, however, if 50% of that income was US sourced, you'd only get 50% of your tax credit, and thereby pay $10.5 in US taxes. It really depends on how much of your income is sourced to the US vs foreign.
    "If your opponent is of choleric temperament, seek to irritate him." - Sun Tzu

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