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

I've always wondered how people could argue out of one side of their mouth that the price of an item is set by supply and demand, and then turn around and say out the other side of their mouth that you can't tax businesses because they just pass the cost onto the consumer? Isn't that a contradiction? Either supply and demand sets the price, or the company sets the price where he wants. If he can pass along the cost of taxes, can't he just as well pass along executive bonuses, or country club memberships? Why stop with taxes? Anything but a pay raise for their workers that make the product. The way I see it, rich men write tax laws, therefore tax laws favor the rich.
 
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Kelzie said:
You're a CPA right? I'm hoping to take the test in October.

Hopefully then I'll be able to spout business taxation law like you! :mrgreen:
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Not quite. I need the time. I passed the exam though. That test sucks. Royally. Makes things like the SAT look like child's play.

I just really wanted to get FAR out of the way. I really, really did not want to be there when the IFRS FAR version comes around. I understand IFRS to a fairly decent level, but that test I suspect is going to blind side people left and right.
 
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Taylor said:
Which is probably why so much of their business is overseas to begin with.
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Not really. Corporations generally don't pay income tax. Well, technically they pay it, but they are really just passing the costs on to consumers. Therefore, the consumer (and intermediaries) is paying an additional 35% sales tax.

Businesses offshore because of labor and environmental reasons. Taxes is not really the issue.
 
obvious Child said:
Not quite. I need the time. I passed the exam though. That test sucks. Royally. Makes things like the SAT look like child's play.

I just really wanted to get FAR out of the way. I really, really did not want to be there when the IFRS FAR version comes around. I understand IFRS to a fairly decent level, but that test I suspect is going to blind side people left and right.
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What is this "FAR?" I haven't heard of it.

I enjoyed the SAT. Not as much as I enjoyed the GMAT, but I like testing. I have this ego problem...:mrgreen:
 
Kelzie said:
I enjoyed the SAT. Not as much as I enjoyed the GMAT, but I like testing. I have this ego problem...:mrgreen:
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Oh GAWD you are weird. You must be a SPACE ALIEN!!!:mrgreen:
 
Kelzie said:
I don't see anything wrong with it. They didn't make any money here to tax.
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Then what are they doing in business here in the US? HOW are they remaining in business? WHY are they remaining in business in the US?

When you figure out their scheme you'll be able to answer those questions.

The General Accounting Office report, commissioned by Senators Carl Levin (D-MI) and Byron Dorgan (D-ND) and released April 5, gave a clue to how. It's called "transfer pricing," or improperly shifting income to lower-tax countries.

Firms set up offshore "subsidiaries" which, on their books, perform functions that let them cut onshore taxes. They may sell their own "logo" to the subsidiary and then pay a high price to "rent" it back, deducting "rent" as expense. They may move money to the subsidiary and "borrow" it back, deducting interest payments. If several of their subsidiaries are involved in a deal, the firms may grossly inflate profits assigned to those in offshore tax havens, which levy no or minimal taxes on "profits" claimed there.

The U.S. firm may "trade" with an offshore "shell" it owns -- a phony company set up in a tax haven -- pretending it's buying goods or services at a high price or selling its product low, to create deductions. Because the tax haven keeps owners' names secret, the IRS won't know the company is "trading" with itself.
Corporate Tax Evasion via Offshore Subsidiaries
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Taylor said:
Which is probably why so much of their business is overseas to begin with.
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Actually, it's only small businesses that pay that rate. Once your corp. produces enough profit to hire the big time lawyers and accountants, THEN they get to reduce their tax bill.
 
NoJingoLingo said:
Then what are they doing in business here in the US? HOW are they remaining in business? WHY are they remaining in business in the US?

When you figure out their scheme you'll be able to answer those questions.
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Not sure if you've been following the news, but GE's fallen on some hard times. It happens to corporations, just like people. They can still remain in business though.
 
jacksbrat said:
I've always wondered how people could argue out of one side of their mouth that the price of an item is set by supply and demand, and then turn around and say out the other side of their mouth that you can't tax businesses because they just pass the cost onto the consumer? Isn't that a contradiction? Either supply and demand sets the price, or the company sets the price where he wants. If he can pass along the cost of taxes, can't he just as well pass along executive bonuses, or country club memberships? Why stop with taxes? Anything but a pay raise for their workers that make the product. The way I see it, rich men write tax laws, therefore tax laws favor the rich.
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You're 100% right. :thumbs:

The other thing that I find interesting is that the people who take the corporations side are generally the same people who run their yap about patriotism. Yet they don't seem to find it very unpatriotic when corps. avoid paying their taxes and moving jobs offshore. Both of which damage our country in lost wages and taxes.
 
Kelzie said:
Not sure if you've been following the news, but GE's fallen on some hard times. It happens to corporations, just like people. They can still remain in business though.
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It's not, falling on hard times that's doing it for them.
GE, Exxon Paid No Taxes in '09

It’s GE Capital that keeps the overall tax bill so low. Over the last two years, GE Capital has displayed an uncanny ability to lose lots of money in the U.S. (posting a $6.5 billion loss in 2009), and make lots of money overseas (a $4.3 billion gain). Not only do the U.S. losses balance out the overseas gains, but GE can defer taxes on that overseas income indefinitely. The timing of big deductions for depreciation in GE Capital’s equipment leasing business also provides a tax benefit, as will loan losses left over from the credit crunch.
http://politisite.com/2010/04/12/general-electric-paid-no-taxes-in-2009/
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Kelzie said:
Yeah...pretty sure times were hard in 2009 too. Tell me, did they make a profit in the US in say, 2002?
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I don't know, did they? Post their profitability for 2002 and what their tax bill was. :waiting:
 
Kelzie said:
What is this "FAR?" I haven't heard of it.
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There's audit, regulation, financial accounting and reporting and BEC. Financial Accounting and Reporting is short named as FAR. IMO, FAR was the worst section of the exam.

I enjoyed the SAT. Not as much as I enjoyed the GMAT, but I like testing. I have this ego problem...:mrgreen:
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SAT is more of a potential exam, where the CPA is almost entirely knowledge.
 
NoJingoLingo said:
Then what are they doing in business here in the US? HOW are they remaining in business? WHY are they remaining in business in the US?

When you figure out their scheme you'll be able to answer those questions.
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Eh, It's nowhere as bad was it was. Exxon used to have this scheme where it would extract the oil overseas, sell it to a Cayman subsidiary for ridiculous prices, take the tax there (which is low) and then have the subsidiary sell it to its refiners in the US at high cost. Refining had barely any profits on it while extraction I think hit triple digits. They cracked down on that a while back.
 
obvious Child said:
Eh, It's nowhere as bad was it was. Exxon used to have this scheme where it would extract the oil overseas, sell it to a Cayman subsidiary for ridiculous prices, take the tax there (which is low) and then have the subsidiary sell it to its refiners in the US at high cost. Refining had barely any profits on it while extraction I think hit triple digits. They cracked down on that a while back.
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How many stories of corporate abuse will it take to out-sell the corporatists mantra about rich people pissing down wealth to the rest of us. I just heard it again this morning on Washington Journal. They had 2 people talking about how great a VAT tax would be which naturally ran into corporate tax rate and the rate on the top 10% rich class. As you'd expect, even when they acknowledge a caller who brings up the effective rate theses large corps pay, they still manage to tell us that it's the wealthy who create jobs and we shouldn't tax them too much because they'll stop investing in the economy and we'll have slower growth and high unemployment. It's ****ing insane.
 
Kelzie said:
I don't see anything wrong with it. They didn't make any money here to tax.
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I don't make any income in the US to tax either? Why, then, if I exceed a certain income on my overseas employment and investments do I have to report and pay US taxes?
 
obvious Child said:
And if you have zero American sourced income, your foreign tax credit is 100% and you pay nothing, just like GE.
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That is not how it works for individuals. I can deduct my tax payments (including sales tax, though that is a pain to document) and then deduct that from my gross income.
 
ludahai said:
I don't make any income in the US to tax either? Why, then, if I exceed a certain income on my overseas employment and investments do I have to report and pay US taxes?
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They will too. It's deferred.
 
ludahai said:
I don't make any income in the US to tax either? Why, then, if I exceed a certain income on my overseas employment and investments do I have to report and pay US taxes?
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Because YOU'RE getting screwed.

Should you not desire that the law be changed to stop screwing you rather than wish the law was changed so others could share your misery?

Money earned outside of the US should not be taxed by the US.

Period.

Work to make that happen, not the opposite.

Work to make your government less intrusive, not more.

Less is more.

Less government is more freedom.
 
ludahai said:
That is not how it works for individuals. I can deduct my tax payments (including sales tax, though that is a pain to document) and then deduct that from my gross income.
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Come again? If your percent of foreign income is high enough and that equivalent percent of the tax credit is larger then your US liability, you owe nothing to Uncle Sam. So, if you had 100% foreign sourced with foreign taxes greater then US tax liability, your Foreign Tax Credit wipes out your US liability.

Well, there are exceptions. Like if your Firm treated you as working in America the whole time, you're pretty much SOL.

I don't make any income in the US to tax either? Why, then, if I exceed a certain income on my overseas employment and investments do I have to report and pay US taxes?
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Because your foreign tax credit isn't sufficiently large enough to erase your US liability.
 
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obvious Child said:
Come again? If your percent of foreign income is high enough and that equivalent percent of the tax credit is larger then your US liability, you owe nothing to Uncle Sam. So, if you had 100% foreign sourced with foreign taxes greater then US tax liability, your Foreign Tax Credit wipes out your US liability.
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But as I live in a low-tax country, my local tax NEVER exceeds what would theoretically be my US tax liability. However, I have enough deductions to render that point moot at this time.
 
Scarecrow Akhbar said:
Because YOU'RE getting screwed.

Should you not desire that the law be changed to stop screwing you rather than wish the law was changed so others could share your misery?

Money earned outside of the US should not be taxed by the US.

Period.
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It should if they have an American subsidiary, or close the import loopholes that allow them to sell to American markets by selling it to themselves to avoid taxes.

Work to make your government less intrusive, not more.

Less is more.

Less government is more freedom.
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Not in business. Business needs LESS freedom and more government regulation because less government in business means more ****ing of the planet and it's inhabitants. PERIOD.
 
ludahai said:
But as I live in a low-tax country, my local tax NEVER exceeds what would theoretically be my US tax liability. However, I have enough deductions to render that point moot at this time.
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Ah, well, that's a secondary problem. However, that's how many people get away with no taxes via foreign tax credit.
 
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