[quote=KSMountain][quote=flu] …just like I have an issue with General Electric paying to income taxes. Minute distinction.[/quote]
I think the “GE pays no taxes” meme is over done and overly simplistic.
GE was founded in 1892. You think they’ve never paid taxes all that time? Don’t you think the amount they pay varies year by year?
Their 2012 net income according to Wiki will be about $14 billion on revenue of $147 billion. You think they aren’t paying all sorts of taxes of various kinds on that, in many different countries?
As we all know, if your business has a losing year, you will pay less taxes that year. Maybe no income taxes if in aggregate your expenses exceed your income. Of course if you do that year after year you won’t be in business for long.
Here’s a quote, admittedly from a company spokesman:
GE paid an effective global tax rate of 7 percent in 2010, counting money paid “to the IRS and foreign counterparts” in other nations. That rate was particularly low, Williams said, because the company lost $32 billion in its financial business during the global financial crisis.
According to the company release, GE’s effective tax rate jumped to 29 percent in 2011. The company paid $2.9 billion in worldwide corporate income tax in 2011, and another $1 billion in other U.S. taxes that year, the release states.[/quote]
I didn’t mean literally paid no taxes. I was being facetious.
Before anyone suggests that upper middle class w2 slave “rich” should pay more taxes….Read this article, and tell me why the hell are we taxing individual more again, and not addressing these fundamental issues? All yes, that’s right because regardless of which political party politicians are in, it would be political suicide to really try to fix the the real problem…So let’s just gloss over it by taxing the upper middle class more…
So…If you’re really not going to fix the real problem with a real solution don’t raise taxes for anyone. Then when we can’t afford to pay our bills, deal with it then, when the government really will need to make some tough choices and really take cutting spending more seriously…
For the lazy (inclusive),
BTW: in 2004…repatriation tax was 5.25%…Imagine that…Or better yet, let’s keep the profits overseas and borrow money domestically so that we get a lower tax treatment in the U.S. while in countries we operate (like China), we already enjoy very low corporate taxes..
Gee, if you thought it was nice to be a rich individual, it must be really nice to be a corporate conglomerate…
Cash Hoard Grows By $187 Billion In Untaxed Overseas Profits
U.S. companies led by General Electric Co. (GE) and Pfizer Inc. (PFE) stockpiled an additional $187 billion in untaxed overseas profits over the past year, boosting their offshore holdings by 18.4 percent, according to data compiled by Bloomberg.
The 70 U.S.-based companies studied hold $1.2 trillion in profits around the world. GE and Pfizer have built up the most money outside the U.S., with $102 billion and $63 billion respectively, according to securities filings. Apple Inc. (AAPL), Google Inc. (GOOG) and Microsoft Corp. (MSFT) were among the companies that increased their accumulated overseas profits by more than 40 percent in 2011.
s U.S.-based companies expand globally, they keep profits overseas, legally out of the reach of the Internal Revenue Service. Lawmakers from both political parties point to the stockpiling as a symptom of a failed corporate tax system, even while they remain deadlocked over whether the U.S. should impose higher or lower taxes on its companies’ global profits.
“You’re seeing more and more business go on overseas, because that’s where an increasing amount of the global purchasing power is,” said Matt Miller, director of public policy at the Business Roundtable, a Washington-based association of chief executives at large companies that backs lower taxes on overseas profits. “We need to get a competitive tax system that is not antiquated and has all the complexities we have today.”
Worldwide Profit Tax
Under the U.S. tax code, the top corporate rate is 35 percent on worldwide profits. Companies receive credits for payments to other governments, and they can defer taxation while the money accumulates. When companies bring their profits home, they pay U.S. taxes after subtracting the foreign tax credits.
Democrats, including President Barack Obama, maintain that the system encourages companies to move jobs and profits overseas. He has proposed a global minimum tax on foreign profits.
Republicans, including Dave Camp of Michigan, the top tax- writer in the House of Representatives, make the opposite argument. They say the residual tax that U.S. corporations face makes them less competitive in global markets and discourages companies from reinvesting their profits at home.
Andrew Williams, a spokesman for Fairfield, Connecticut- based GE, said the company’s operations around the world support U.S. facilities that produce goods for export.
Broader Tax Base
“We believe fundamental tax reform would increase domestic investment, create high-quality jobs and encourage U.S. multinationals to reinvest more overseas earnings in the U.S.,” he said in an e-mailed statement. “We support a broader tax base, lower statutory corporate tax rate and adoption of a territorial tax system even if it means higher taxes for companies like GE.”
Bloomberg analyzed the public filings of 70 U.S.-based companies that had reported at least $4 billion in untaxed overseas profits as of this time last year. The data include information from the two most recent annual reports — covering the years ending Dec. 31, 2011, and Dec. 31, 2010, for most companies.
A May 2011 study by JPMorgan Chase & Co. found that U.S. companies had $1.375 trillion in undistributed foreign earnings. Last year’s total of $1 trillion held overseas by the 70 companies in the data compiled by Bloomberg made up about three- quarters of the total amount cited by JPMorgan.
Low-Tax Countries
As a result, the latest data suggest that, in all, U.S. companies have more than $1.6 trillion outside the country. The total includes cash and investments in assets such as factories and active businesses.
Companies typically bring home money earned in high-tax jurisdictions that can be offset with foreign tax credits and keep profits earned in low-tax countries outside the U.S., said Edward Kleinbard, former chief of staff of the congressional Joint Committee on Taxation.
“The companies continue to reap the harvest of their years of aggressive tax planning to locate as much of their profits as possible in low-tax foreign jurisdictions,” he said.
Representatives of several of the companies, including Pfizer and Citigroup Inc. (C), said they keep money outside the U.S. to support their international businesses.
‘Matter of Course’
“Citi maintains a presence in more than 100 countries and some of its earnings are retained outside of the U.S. to provide the necessary capital to fund its international operations,” said Jon Diat, a spokesman for Citigroup, which increased its accumulated overseas profits to $35.9 billion from $32.1 billion.
Joan Campion, a Pfizer spokeswoman, said the company repatriates profits “as a matter of course.” That strategy gives Pfizer a higher effective tax rate than its competitors, its chief financial officer, Frank D’Amelio, told investors on a conference call Jan. 31.
Some tax policy analysts, including law professor Thomas Brennan of Northwestern University in Chicago, say companies are holding money outside the U.S. in part because they are waiting for Congress to repeat a 2004 tax holiday law that set a maximum tax rate for repatriation of 5.25 percent.
“Why not do it?” he said. “It’s pure upside. In the worst-case scenario, you’re going to be taxed as you would have been in any event.”
Issuing Debt
Many large companies can meet their cash needs by issuing debt in the U.S. without tapping their offshore holdings, Brennan said.
A coalition of U.S.-based companies, including Google, Cisco Systems Inc. (CSCO), Qualcomm Inc. (QCOM) and Oracle Corp. (ORCL), has been lobbying for the past year for a repatriation holiday.
“Google’s practices are very similar to those at countless other global companies operating across a wide range of industries, such as technology, pharmaceuticals and retail,” Google said in an e-mailed statement.
The temporary repatriation proposal hasn’t advanced in Congress. Obama opposes a one-time tax holiday, arguing that it would be a giveaway to big corporations.
Doug Thornell, an adviser to the pro-repatriation coalition, called the inaction a “missed opportunity” for Congress.
“The money keeps piling up while Washington fiddles,” he said in a statement.
Permanent Change
Other companies, including International Business Machines Corp., have emphasized a permanent change and not a one-time holiday.
Camp has said he prefers to address repatriation as part of a tax-code overhaul. His draft proposal would shift the U.S. to a territorial tax system that exempts 95 percent of foreign profits. That would resemble the systems of other major economies, such as the U.K., Japan and Germany.
All four Republican presidential candidates have endorsed a territorial tax system. In an essay in the Boston Herald yesterday, Mitt Romney wrote that companies will continue to park profits outside the U.S.
“With our high rates and our punitive incentives, we are shooting ourselves in the foot with a machine gun,” he wrote. “This has to end and I will end it.”
Under the Obama or the Camp approach, the accumulated offshore profits must be addressed, said Kleinbard, now a law professor at the University of Southern California in Los Angeles.
Camp Proposal
“It would be extraordinarily and unnecessarily complicated to imagine a world in which old earnings were taxed one way and new earnings taxed a different way,” he said.
Camp has proposed a 5.25 percent tax on the accumulated offshore profits to finance a transition to a territorial system. In his proposal, that one-time revenue would help offset the cost of the territorial system.
Representative Kevin Brady, a Texas Republican, has sponsored a bill for a repatriation tax holiday. He said the punitive nature of the U.S. tax code is illustrated by the growth in offshore holdings.
“It’s both a cry for immediate repatriation and an assurance for fundamental tax reform that there will still be stranded profits,” Brady said in an interview. “The pot will still be large and I think it will continue to grow exponentially.”
