Friday, March 25, 2011

GE: Tax Avoidance or Tax Evasion?

The hugely troubled GE recovered from ashes after its incursions in financial activities in recent years. Or did it?

The company reported worldwide profits of $14.2B. This sounds awesome, for a company that was nearly bankrupt. However, GE paid 0 taxes. It actually claimed a tax benefit of $3.2B according to the NYT.

"... low taxes are nothing new for G.E. The company has been cutting the percentage of its American profits paid to the Internal Revenue Service for years, resulting in a far lower rate than at most multinational companies.

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".

It would seem just unbelievable up until a few years ago but it's is just one more in a number of recent aberrations.

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