The Tax-free Corporation

Here’s a news item you aren’t likely to see in “Boomergeddon:” U.S. industrial behemoth General Electric paid no taxes in 2010. That’s right: zippo, nada, nichevo.

How can it be? As the Boomergeddons and Baconauts complain, we’re heading towards financial meltdown in terms of deficits and debt. Their culprits are entitlement programs, the Washington establishment, poor people demanding aid, free-spending middle class types, and (did I mention this yet?), the government, government, government.

But GE? The famed and successful maker of lightbulbs, refrigerators, diesel locomotives, high tech medical gear and nuclear reactors (of the type used at Fukushima)? Last year, according to the New York Times, GE had worldwide profits of $14.2 billion, with $5.1 billion coming from outside the U.S.

Incredibly, it paid no taxes in the U.S. and, in fact, insisted on a tax benefit of $3.2 billion.

How can that be? The Boomergeddons claim that America’s tax rate of 35 percent is a major impediment to the prosperity of U.S. corporations whose good performance (not to mentioned outsized CEO salaries) trickle down to us lower in the food chain through taxes, jobs, etc.

So how did GE do it? It has a first rate tax department, obviously, including lots of ex-Treasury Department types. It puts ins creativity to work at finding tax breaks, in fact, that’s part of the corporate “mission” statement. One rich seam to mine was GE Capital, with ties to Richmond, which found interesting tax dodges as a lender.

Is this good for the U.S. economy? Ask yourself but the answer should be very simple.

Peter Galuszka

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