GE and 14 other tax dodging companies

It's been a week since we all learned about General Electric's innovation in the corporate tax realm.

The company's vice president for communications and public affairs, Gary Sheffer, responded to the New York Times' story breaking the GE's tax saving situation via a letter in today's newspaper:

"It was significant losses at GE Capital in the financial crisis, not 'tax avoidance' strategies, that reduced General Electric's 2010 overall tax rate below historic levels.

Without these financial crisis losses at GE Capital, G.E.'s tax rate would have been near the average of other multinational corporations. Our tax rate will return to more normal levels this year as GE Capital recovers from the financial crisis. In short, when you lose money, you don't pay taxes, and that's what happened at GE Capital.

The Times points out that G.E.'s job numbers in the United States are down over the past decade, but does not provide the context: G.E.’s employment in the United States has increased in this period, apart from the sale of businesses. Those jobs weren't eliminated; they moved to other companies."

While the GE tax situation has highlighted the corporate tax reform debate, the company is not alone in finding ways to reduce, or eliminate, tax liabilities.

The Daily Beast has put together a gallery of 15 major corporate tax dodgers. The website focused on the largest American companies, as well as ones it says are "are notorious in accounting circles for consistency in doing whatever they can to minimize their U.S. tax liability."

They are, alphabetically: Altria (formerly Philip Morris), Boeing, Devon Energy, General Electric, Goodrich, Google, Hartford, Hewlett-Packard, IBM, Microsoft, Morgan Stanley, News Corp, Oracle, Pfizer and Time Warner.

Again, no one is accusing these companies of tax illegalities. Their tax experts are simply taking full advantage of the Internal Revenue Code.

The firms utilized not only popular foreign tax havens, but also implemented strategies over the years that involved transfer pricing, depreciation, earnings repatriation and, more recently, Troubled Asset Relief Program (TARP) funds.

I liken the corporate tax game to another global sport, auto racing. Each major motorsports series has a set of rules, but there are many gray areas in the guidelines. The teams that figure out how to best exploit those fuzzy parameters are usually the ones that end up in victory lane.

And when it comes to taxes, the tax crew chiefs who know the tax code and where it can be pushed are the ones who lead their corporate teams to the tax winners' podium.

Related posts:

• Corporate taxes: time to cut the tax rate
  or to make sure companies pay at all?
• Debt panel suggests major tax changes
• Deficit commission tax overhaul, take 2
• Up next for Obama: Tax system overhaul
• OMG! AIG ... WTF?!?
• Sing along to the TARP song

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Comments

[Derrick owens]

ms. Bell, i just wanted to give you two thumbs way up for your article in best driver's jobs Magazine. I'm not a tractor trailer driver but i work at a truck stop and read the piece one night. I just want you to know that you hit the nail dead on the head. I watch EVERY Race from start to finish. It's becoming very monotonus. It should not be called NASCAR Because there is nothing "stock" about them anymore. The execs need to take a look at the races and then they may feel the same way as we dedicated fans do. Thanks again for your commentary. Much appreciated and nice to know there is someone out there taking notice as well. Thanks again. -die hard NASCAR Fan from S.C.

[Hunter]

Wow. That list is a who's who of corporate America. Seems to be systemic.

The root of the problem boils down to campaign finance, & political donation reform. Congress needs to operate without influence to manage the country equitably.