Friday, March 25, 2011

A Major WTF Moment

I knew corporations dodged taxes, but, like Ronald Reagan, “I didn’t realize things had gotten that far out of line.”   According to a NYT article,
General Electric, the nation’s largest corporation, had a very good year in 2010.
The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States.
Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.
The reason is pretty simple; "The company spent $4.1 million on outside lobbyists last year, including four boutique firms that specialize in tax policy." [page 4 of article]

Tax cuts are supposed to produce jobs.  Since GE is able able to "write its own tax rate,"  one would assume that the company had produced thousands, if not millions of jobs.  That assumption would be wrong:  "Since 2002, the company has eliminated a fifth of its work force in the United States while increasing overseas employment. In that time, G.E.’s accumulated offshore profits have risen to $92 billion from $15 billion." [page 4 of article]

I often tell my students to put facts in context and not to assume that readers will draw the same conclusions that they do.  In this case, I'm not sure there's much context.  Earning $14.2 billion and getting a tax refund of $3.1 billion is an insult to everyone who files and pays on income of $20,000 or $50,000 or even $500,000.  It also shows the flaws of South Dakota's efforts to gain jobs by bribing businesses; clearly, businesses know how to manage bribes far better than government.

No comments: