FOLLOW THE MONEY
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| ARTIFICIAL STOCK MARKET Britannica image |
Excerpts, editing, re-reporting, comment by Carolyn Bennett
The GE EXAMPLE
David Cay Johnston is author of Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense and Stick You With The Bill and … The Covert Campaign to Rig Our Tax System to Benefit the Super Rich—and Cheat Everybody Else. He is a journalist who specializes in economics and tax issues and writes a column for Reuters. In an August 23 column, months after President Barack Obama, laughably, had tapped defense giant General Electric’s CEO millionaire to head a U.S. jobs creation campaign, Johnston suggested that Washington politicians’ mantra that high corporate tax rates were driving U.S. companies to invest offshore was no more than talking-points hooey.
“GE’s disclosures show that over the last decade the company paid much lower tax rates in [the United States] than it paid offshore — just the opposite of the Washington political mantra.…
From 2001 through 2010, GE’s total American corporate tax burden averaged 9.4 percent of its profits in American corporate income taxes compared to its 17.9 percent foreign tax rate.…
“Offshore, GE reported a positive tax rate every year, always in double digits.… In 2010 … General Electric’s offshore tax rate was 22.9 percent, a higher rate than in 2001 and the second highest rate since 2001.…”
In 2001, this company’s worldwide accounting for taxes — which blends American, offshore, and state burdens — was 28.3 percent of global profits, Johnston writes; and “every year since then it has been below 20 percent.” The rate was negative in 2009; and in 2008 and 2010, it was “in single digits … thanks to negative tax rates in the United States for those three years.…
The numbers show the same basic trend line: despite higher taxes offshore and much lower domestic taxes, GE keeps taking more profits offshore. That cuts against the simplistic theme of the growing bipartisan consensus in Washington that corporate tax rates must come down.
“These facts all raise the question of whether our elected leaders in both parties will stop memorizing talking points and get down to studying data points so we get reality-based tax policy. That means paying attention to nuance, including those business tax credits GE relies on so heavily, as well as posted tax rates.”
President Obama early this year appointed General Electric’s board chair and chief executive officer Jeffrey Robert Immelt to chair the [U.S.] Council on Jobs and Competitiveness. In the Forbes profile of this jobs czar are these notes and rankings.
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13th on the World’s Most Powerful People in 2009 • 145th on the Forbes Executive Pay in 2011 • 237th on the Forbes Executive Pay in 2010 General Electric — 2nd on the Forbes Global 2000 in 2010 • 113th on the Forbes Executive Pay in 2009 •
Salary $3,300,000.00
Bonus $4,000,000.00
Restricted stock awards $0.00
All other compensation $389,809.00
Option awards $ $7,400,000.00
Non-equity incentive plan compensation $0.00
Change in pension value and nonqualified deferred compensation earnings $6,338,956.00
Total Compensation $21,428,765.00
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WHAT’S MISSING HERE?
Running for office, dialing for dollars, listening to lobbyists, paying back
No time for governance, let alone good governance
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| Center for Responsive Politics image |
Johnston continues in that August 23 Reuters column. “All these numbers show the same basic trend line — despite higher taxes offshore and much lower domestic taxes, General Electric keeps taking more profits offshore.”
This reality, he says, “cuts against the simplistic theme of the growing bipartisan consensus in Washington that corporate tax rates must come down.”
This reality, he says, “cuts against the simplistic theme of the growing bipartisan consensus in Washington that corporate tax rates must come down.”
The facts raise the question as to “whether our elected leaders in both parties will stop memorizing talking points and get to studying data points so we get reality-based tax policy.
“This means paying attention to nuance — including those business tax credits GE relies on so heavily, as well as posted tax rates.” However, “Congress may be blind to such facts,” Johnston concludes, “because of the money GE spends to influence Washington.
“Last year GE spent $39.3 million lobbying Congress, roughly $73,000 for every senator and representative — four times what it spent back when GE’s American tax rates and its share of profits taken in America were both much higher.”
“Last year GE spent $39.3 million lobbying Congress, roughly $73,000 for every senator and representative — four times what it spent back when GE’s American tax rates and its share of profits taken in America were both much higher.”
Sources and notes
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| Defense procurement news dot com |
While General Electric’s consumer products are most visible to the general public, these products account for a minority of the company’s annual sales: a substantial portion of GE’s sales are to the U.S. Department of Defense.
GE’s business groups in the early 21st century were in the areas of commercial finance; consumer finance; infrastructure (including diesel locomotives, jet engines, water treatment systems, and energy delivery systems such as power grids); consumer and industrial technologies (including appliances and lighting products); health care (including diagnostic and imaging products); and media and entertainment through NBC Universal.
In 2009 came the announcement that GE had agreed to sell a majority stake in NBC Universal to Comcast.
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| WALL ST., AMEX lower point of map Britannica image |
A major U.S. corporation headquartered in Fairfield, Connecticut, General Electric Co. is one of the world’s largest and most diversified corporations. Its products include electrical and electronic equipment, aircraft engines, and financial services. [Britannica note]
American Stock Exchange (AMEX)
AMEX is a major U.S. stock exchange that also handles trades in options, exchange-traded funds (ETFs), corporate bonds, and other investment vehicles.
American Stock Exchange (AMEX) — the second largest floor-based exchange in the United States; a key marketplace for trading in options, exchange-traded funds (ETFs), and closed-end funds; in 2008 acquired by NYSE Euronext, the parent company of the New York Stock Exchange.
The Amex was part of the National Association of Securities Dealers (NASD) from 1998 to 2004, when ownership of the Amex returned to private hands.
Unlike many other exchanges around the world, it did not relinquish floor trading in favor of computer trading, and, at the beginning of the 21st century, the Amex was the second largest floor-based exchange in the United States. The exchange was a key marketplace for trading in options, exchange-traded funds (ETFs), and closed-end funds. In 2008, the Amex agreed to be actquired by NYSE Euronext, the parent company of the New York Stock Exchange. Britannica note
“America is GE’s tax haven” (David Cay Johnston column, editing by Howard Goller Reuters), August 23, 2011, () (david.cay.johnston@thomsonreuters.com), http://www.reuters.com/article/2011/08/23/column-dcjohnston-ge-idUSN1E77L1GU20110823
David Cay Johnston
Syracuse University College of Law and Whitman School of Management Distinguished Visiting Lecturer teaching tax, property and regulatory law of the ancient world, David Cay Johnston is an investigative journalist, author, specialist in economics and tax issues, and columnist for Reuters.
Johnston is author of Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense and Stick You With The Bill (about hidden subsidies, rigged markets, and corporate socialism); and Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich—and Cheat Everybody Else. He writes and produces video commentaries on worldwide issues of tax, accounting, economics, public finance and business.
Johnston appeared September 3, 2011 in a “Behind the News” interview with Doug Henwood: Archived “September 3, 2011, David Cay Johnston on how corps and the mega rich get away with paying almost no taxes,” http://lbo-news.com/
http://people.forbes.com/profile/jeffrey-r-immelt/36126
“Obama consults with GE, AMEX execs on job creation” (Associated Press— VINEYARD HAVEN, Mass). August.24, 2011, http://www.forbes.com/feeds/ap/2011/08/24/general-financial-administration-us-obama-jobs_8640156.html
Jeffrey Robert Immelt is the chair of the board and chief executive officer of the U.S.-based conglomerate General Electric. He was selected by GE’s Board of Directors in 2000 to replace Jack Welch following his retirement. Previously, Immelt had headed up GE’s Medical Systems division (now known as GE Healthcare) as its President and CEO. http://en.wikipedia.org/wiki/Jeffrey_R._Immelt
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Bennett's books available in New York State independent bookstores: Lift Bridge Bookshop: www.liftbridgebooks.com [Brockport, NY]; Sundance Books: http://www.sundancebooks.com/main.html [Geneseo, NY]; The Book Den, Ltd.: BookDenLtd@frontiernet.net [Danville, NY]; Talking Leaves Books-Elmwood: talking.leaves.elmwood@gmail.com [Buffalo, NY]; Book House of Stuyvesant Plaza: http://www.bhny.com/ [Albany, NY]; Mood Makers Books: www.moodmakersbooks.com [City of Rochester, NY]; Dog Ears Bookstore and Literary Arts Center: www.enlightenthedog.org/ [Buffalo, NY]; Burlingham Books – ‘Your Local Chapter’: http://burlinghambooks.com/ [Perry, NY 14530]; The Bookworm: http://www.eabookworm.com/ [East Aurora, NY]; LONGS’ Cards and Books: http://longscardsandbooks.com/ [Penn Yan, NY] • Articles also at World Pulse: Global Issues through the eyes of Women: http://www.worldpulse.com/ http://www.worldpulse.com/pulsewire
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