As I recently noted, Business Insider turned a profit of $2,000 last year. We also ended the year with a few million of cash in the bank.
As a result, we had to pay the state and city of New York about $13,000 of taxes.
(This was a “capital tax” if you can believe it. I thought only places like France had “capital taxes.” We had to pay a “capital tax” because it was the larger of three “alternative” taxation schemes we got socked with. One was based on our profit, one was based on my salary, and one was based on the capital we had in the bank.)
In any event…
It turns out that the $13,000 of taxes we paid last year was more than the amount GE paid.
Yes, that GE. The one with a $600 billion of enterprise value. The one with 287,000 employees. The one that generated $150 billion of revenue and $12 billion of profit last year.
GE, it turns out, according to the New York Times, paid no taxes last year. (UPDATE: The NYT and GE have since clarified that this refers to no US federal income taxes, and GE is disputing even that assertion).
Photo: Wikimedia Commons
Well, because GE has a “tax department” the size of a big law firm that has become a major profit centre for the company.GE’s tax department figures out how to exploit loopholes and benefits and lobbying and so forth to make sure the company doesn’t pay a penny more in taxes than it absolutely has to. And last year, apparently, GE’s tax department figured out how to make sure the company paid no taxes at all.
(Mostly by gerrymandering the company’s books in such a way that all “profits” are made overseas, even though they obviously aren’t).
Now, we have no problem with GE employing folks to make sure it doesn’t pay a penny more in taxes than it absolutely has to. We also have no problem with GE exploiting whatever loopholes and rules those folks can find to save its shareholders money. (GE isn’t an American taxpayer charity. It shouldn’t be expected to just donate taxes to the American government out of the goodness of its heart.)
But we do need to express some frustration about two things:
First, the inability of poor little companies like ours to afford huge “tax departments” that can figure out how to make sure we pay no taxes like GE.
Second, the patheticness of laws that allow global multi-national corporations like GE to make $12 billion in profits–including from vast US operations–and not pay a penny in US taxes. These laws seriously hurt the competitiveness of companies that don’t happen to be global multi-nationals with huge tax departments (like us, for example). They also deprive our Treasury of revenue it desperately needs to close an absolutely humongous budget deficit.
So who are we pissed off at when we pay the tax bill on our puny $2,000 of profit and ~$3 million of capital and read articles about how GE pays no taxes?
Screw you, fellas. Hope you enjoy your schmoozy dinner with GE’s lobbyists tonight.
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