Tuesday, March 29, 2011
As tax time approaches, consider America's largest corporation, General Electric. It had an extremely profitable year–yet owes not a penny in taxes. This is in the midst of national cutbacks in education, health care and social programs–and calls by Republican governors like Wisconsin's Scott Walker for "privileged" nurses, teachers and snowplow drivers to sacrifice. Seems there's a certain inequity here:
[General Electric] 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.
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. ...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.
...critics say the use of so many shelters amounts to corporate welfare, allowing G.E. not just to avoid taxes on profitable overseas lending but also to amass tax credits and write-offs that can be used to reduce taxes on billions of dollars of profit from domestic manufacturing. They say that the assertive tax avoidance of multinationals like G.E. not only shortchanges the Treasury, but also harms the economy by discouraging investment and hiring in the United States.
“In a rational system, a corporation’s tax department would be there to make sure a company complied with the law,” said Len Burman, a former Treasury official who now is a scholar at the nonpartisan Tax Policy Center. “But in our system, there are corporations that view their tax departments as a profit center, and the effects on public policy can be negative.”
Despite paying no taxes, guess what G.E. is asking its unionized workers to do? Surprise, surprise. Make wage and benefit concessions:
This year, 14 unions representing more than 15,000 workers will negotiate a new master contract with General Electric. Among the major concessions GE has signaled that it will ask of union workers is the elimination of a defined contribution benefit pension for new employees, a move the company has already implemented for its non-union salaried employees. Likewise, GE is signaling to the union that it will ask for the elimination of current health insurance plans in favor of lower quality health saving accounts, a move the company has already implemented for non-union salaried employees as well.
In addition, General Electric may ask some workers for a wage freeze.