Why is General Electric so supportive of the Obama administration? Well they didn’t pay taxes in 2009. GE which includes NBC had an affective tax rate of 5.5% in 2008 and 2007 15% while the Corporate rate is supposed to be 35%. How did they get away with free loading on America’s dime? The have a great ability to lose money or buy companies that offset gains. Does anyone wonder why MSNBC is so complimentary of the President?
Here is what ABC had to say:
How did this happen? It’s complicated. GE’s tax return is the largest the IRS deals with each year–some 24,000 pages if printed out. Its annual report filed with the Securities and Exchange Commission weighs in at more than 700 pages.
Inside you’ll find that GE in effect consists of two divisions: General Electric Capital and everything else. The everything else–maker of engines, power plants, TV shows and the like–would have paid a 22% tax rate if it was a standalone company.
It’s GE Capital that keeps the overall tax bill so low. Over the last two years, GE Capital has displayed an uncanny ability to lose lots of money in the U.S. (posting a $6.5 billion loss in 2009), and make lots of money overseas (a $4.3 billion gain). Not only do the U.S. losses balance out the overseas gains, but GE can defer taxes on that overseas income indefinitely. The timing of big deductions for depreciation in GE Capital’s equipment leasing business also provides a tax benefit, as will loan losses left over from the credit crunch.
But it’s the tax benefit of overseas operations that is the biggest reason why multinationals end up with lower tax rates than the rest of us. It only makes sense that multinationals “put costs in high-tax countries and profits in low-tax countries,” says Scott Hodge, president of the Tax Foundation. Those low-tax countries are almost anywhere but the U.S. “When you add in state taxes, the U.S. has the highest tax burden among industrialized countries,” says Hodge. In contrast, China’s rate is just 25%; Ireland’s is 12.5%.