Ge Capitals

Guiding Questions for:

November 6, 2013

G.E.’s Strategies Let It Avoid Taxes Altogether

By DAVID KOCIENIEWSKI

1. What were company profits in 2010? Of this amount, what comes from its operations in the US

- GE reports profits of $14.2 billion, with $5.1 billion coming from U.S. operations.

2. Is this an MNC? Is GE a conglomerate? What does this mean?

- MNC stands for “Multinational Corporation and G.E. is a conglomerate who has many different industries. They are manufacturers of consumer appliances and medical equipment but are now profiting from their lending businesses overseas.

3. What is GE’s strategy regarding taxes? What do the lobbyists and tax lawyers for GE do?

- G.E.’s strategies for taxes are to expand abroad in countries where income taxes are lower. They also have assembled a team of lobbying and accounting professionals that devote their efforts to granting themselves tax shelters and using creative accounting to raise their bottom line. They cut back their domestic profits to keep their overall tax payments low.

4. What is the corporate tax rate in US? How do companies avoid paying the full amount?

- The corporate tax rate in the US is 35% but firms have avoided paying the total amount through tax credits, shelters, and subsidies.

5. What percentage is corporate tax return as a part of federal revenues, collected from taxes? What was it in the 1950’s?

- In the 1950’s corporate taxes accounted for 30% of all federal revenue. In 2009 it accounted for 6.6%.

6. Describe GE’s tax department? Where do we see the revolving door in action? What is the job of the accountants in this department?

- GE’s tax department is made up of former high-ranking officials from the treasury, congress, IRS, prominent tax lawyers, government committees, and accountants. Their structure their work by devoting half the jobs to compliance and the other half to...