News that General Electric (GE) earned more than $5 billion from its U.S. operations last year and yet paid absolutely zero in corporate taxes should disturb everyone who is concerned with the federal government’s budget deficit, or even just fairness more generally. Yesterday’s New York Times story entitled “GE’s Strategies Let It Avoid Taxes Altogether” sheds light on yet another way the lack of common sense in Congress is costing us financially. Here is one of the more astonishing facts from the article:
“While the financial crisis led G.E. to post a loss in the United States in 2009, regulatory filings show that in the last five years, G.E. has accumulated $26 billion in American profits, and received a net tax benefit from the I.R.S. of $4.1 billion.”
And yes, many people are complaining that the U.S. corporate tax rate of 35% is too high and must be lowered for us to be more competitive with the rest of the world. And if every firm paid that rate, I would certainly agree, but we need to change the system so that everyone pays their fair share and the number of tax lawyers you can afford to hire does not determine how much income tax your company forks over. If that is accomplished by closing loopholes and simultaneously reducing the corporate tax rate (provided firms actually pay that rate), then we should be all for it. There is absolutely no excuse for one of the country’s largest and most profitable companies to not pay a dime in corporate taxes.