GE evades federal taxes, reaps $3.2 bill in deductions

Posted on March 31, 2011

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The following is an article I wrote for my school paper.

In the American economy, businesses pay 35 percent of their incomes in federal taxes, the highest rate in the world. The purpose of this is to give back to the government and people who helped to generate their wealth. But last year, American company, General Electric, paid zero dollars in U.S. federal taxes.

Last year alone, GE made over $14.2 billion dollars in worldwide profits, but was not required to pay any United States taxes. Large companies, like GE, have learned that they can avoid paying taxes by declaring their headquarters to be in another country.

What makes this interesting is that GE filed for U.S. federal tax returns and received $3.2 billion in deductions, despite not paying any federal taxes.

Corporations have been saying that they are not creating jobs in America because of such a high federal tax rate as 35 percent. In the past nine years, GE has cut a fifth of their United States jobs and increased overseas employment, consistent with this claim.

President Obama spoke on how these conniving actions will be dealt with in a press conference on May 4, 2009.

“We will stop letting American companies that create jobs overseas take deductions on their expenses when they do not pay any American taxes on their profits,” he said.

Then, on January 21 of this year, President Obama enthusiastically appointed GE’s CEO, Jeffrey Immelt, as chairman of a new jobs panel he is assembling.

“…I think GE has something to teach businesses all across America,” President Obama said after announcing Immelt as the chair to his new jobs panel.

Obama has said that a main goal of his administration is to “kick the economy into overdrive.” He has spoken about the need to increase innovation and production, and to drastically increase exports to countries around the world like China and India.

“That’s where the customers are. It’s that simple,” he said.

GE is not the only master of evasion, and this is certainly not a new phenomenon. It is estimated that around two thirds of U.S. companies paid no income taxes in a study done in 2005.

Even after all of this, outsourcing and federal tax evasion by companies has never been legitimately considered as a possible cause of the current economic slump. It has been overall ignored by most government officials up until now.


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Posted in: Economy, Labor, News