You Pay More Tax Than General Electric

Rules about deductions and the location of income add up to make a bizarre tax picture for some companies--how can you get that kind of treatment?


Chances are you've probably written your tax check by now, or you've been writing it throughout the year, but maybe you're wondering what your bosses are paying?

If you're General Electric, for example, you haven't paid taxes since 2008.

I caught this little nugget today, and what seems to be driving it is some phenomenal corporate skullduggery that most of us probably wish we could do with our own tax records--GE's got this subsidiary, GE Capital, which is a financial services outfit. And GE Capital has been losing just phenomenal amounts of money. While GE itself has made massive piles of money--just over ten billion in 2009--GE Capital lost six and a half billion that same year.

Since business losses are deductible, along with many other common operational expenses--and moreover, GE had a lot of profitable operations in other countries that they don't need to pay United States taxes on right away--this allowed GE's total tax obligation to be NEGATIVE one billion dollars.

And this, of course, means that they're not forking over nickel one to Johnny Fed.

Of course, most of us in turn are saying, hey, I'm barely getting by on MY pittance of an annual salary--why should GE be allowed to pull all these stunts and pay nothing? Sadly, this is counterintuitive; if GE handed over more money in taxes, they in turn would charge us more for their products and services. So maybe we'd get a cut in taxes because the feds would get more cash elsewhere--and even that is a dodgy prospect--but we'd just pay it to GE instead when we bought, say, a washer.

So what does this mean for me and my savings, you're probably wondering. Well, what this means is that you may want to consider starting up your own small home business, especially something that ties into a hobby you already have. If GE can take huge quantities of business losses off their taxes, well, why not you? Consult your tax preparer for full details, naturally, but it may put a little extra juice in your flagging savings.

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Comments

  • Anne from GE

    April 06, 2010

    Anne from GE: It is incorrect and misleading to suggest GE has not paid tax since 2008.


    --GE's 2009 U.S. tax expense reflects the fact that we had losses in our financial services business in 2009, which resulted in tax benefits. Because we file a consolidated tax return, we could use these tax benefits to offset income earned by our U.S. industrial businesses.
    --Like many other financial institutions, GE Capital incurred a pre-tax loss in 2009 during the worst economic crisis since the Great Depression. In contrast to the 2009 results, GE’s cumulative U.S. current tax provision from 2000-2009 totaled almost $7.4 billion. GE paid almost $23 billion of taxes to governments around the world from 2000-2009, making it one of the highest payers of corporate income taxes.

    --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

    --In contrast to the 2009 results, GE’s cumulative U.S. current tax provision from 2000-2009 totaled almost $7.4 billion. GE paid almost $23 billion of taxes to governments around the world from 2000-2009, making it one of the highest payers of corporate income taxes.

  • Donald

    April 06, 2010

    @Anne from GE

    I don't think he's blasting GE for not paying taxes since 2008 (which you didn't exactly refute). It's more about how we can all can get in that game. After all, what's good for the goose is good for the gander. I don't see why anyone or any company should pay taxes.

  • Ed

    April 06, 2010

    I think Steve Anderson is the one up to skullduggery.

    I have no dog in the fight, but it is certainly self-serving for him to insinuate that GE has used "deception or trickery" (as skullduggery is defined in Wikipedia). The tax laws are what they are and probably not written by GE, but I'm sure I'm right in saying that Steve Anderson probably takes advantage of all the tax laws when he does his taxes.

    What say Steve, is this article simply a cheap commercial for your business at GE's expense?

  • SteveAnderson

    April 06, 2010

    First, I'll admit to one error--I didn't give you the link back to the chunk of news I caught this in. I'll fix that immediately--and once you guys have the same bit of news I had when I wrote this, we'll all be able to have a good discussion. Who knows? I might even be wrong!

    http://finance.yahoo.com/taxes/article/109244/what-the-top-us-companies-pay-in-taxes

  • Herman Kline

    April 06, 2010

    What is up with posting with aliases like "Anne from GE"? For goodness sakes, if you work for the company and are going to put yourself out there, please add some credibility to your posts by identifying yourself. Signed, "Herman who used to work for Jack Welch's evil empire where he spent his his life dealing with Six Sigma."

  • Anne Eisele from GE

    April 06, 2010

    Herman, "Anne from GE" is not an alias. It's the company-approved identification for posting responses to blogs. It means I am officially a spokesperson for the company. For the record, my name is Anne Eisele and I am director of Financial Communications at GE Corporate in Fairfield, CT. Should the writer of this blog care to fact-check items with GE prior to posting, I can be reached via our public affairs website.

  • SteveAnderson

    April 06, 2010

    Ms. Eisele--please note that a link has been posted to my source material.

  • Jeffrey

    April 07, 2010

    GE, with the help of GE Capital, has become a master at financial chicanery. In the late 1990's, GE Capital became the engine of growth of GE, and it was all accounting gimmicks / fraud (eg., selling aircraft engines built be GE and leased out to an offshore vehicle with 4 tranches of debt and Key Bank to pay $1 for the equity, just to get the engines off of GE's books). Then, when it all blew up in 2008, GE turned around and we have this wonderful business here and why is everyone so focused on GE Capital. Now, they want us to focus on GE Capital again as they avoid their taxes. The author's advice is plain wrong because if you set up your own business and try to engage in this kind of fraud, you are going to go to jail.

  • SteveAnderson

    April 07, 2010

    Excuse me? Jeffrey, come on. My advice was to consider converting a hobby into a small business to take advantage of favorable tax deductions under the guidance of a CPA. I can't even begin to imagine where you got "commit fraud" out of THAT.

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