Friday, March 25, 2011

G.E.’s Strategies Let It Avoid Taxes Altogether -

American corporations may not make autos anymore, build ships, produce steel, they may not make many products for sale anymore at all.  But one thing American corporations have become extraordinarily skilled at and have created wonderful professional opportunities for former bureaucrats working in the IRS, is how to legally avoid paying taxes! 

Imagine what might happen if the United States government stopped giving so many incentives to corporations on avoiding taxes, with our high tax rates, and, instead, gave corporations incentives to produce wonderful products and services? 

The fact is, it is more profitable for American corporations to avoid paying US taxes than it is for them to act like the private business entities that they truly are. 

This is Crony Capitalism at work.  It has nothing at all to do with real free enterprise, with genuine capitalism, where business is only rewarded by producing superior goods and services, where taxes are extremely low or non-existent, and the entire focus of the corporation's energies, of all the highly intelligent and trained people that work for corporations, must be concentrated, not on protecting itself from the government, but by making money providing people with what they want.

Its extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore. 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.

While General Electric is one of the most skilled at reducing its tax burden, many other companies have become better at this as well. Although the top corporate tax rate in the United States is 35 percent, one of the highest in the world, companies have been increasingly using a maze of shelters, tax credits and subsidies to pay far less.