General Electric and the Death of American Outrage
If there was a funeral notice, I missed it. No obituary appeared in any of my daily papers. But make no mistake about it: In the spring of 2011 in the United States of America, our collective sense of moral outrage must now be officially dead.
You want proof? On March 25, The New York Times ran David Kocieniewski's front-page story disclosing that General Electric — which had corporate profits of $14.2 billion last year, including $5.1 billion in this country — did not pay one dime of federal taxes to the U.S. Treasury. That is the same GE the CEO of which, Jeffrey Immelt, was chosen personally by President Obama to head the president's Council on Jobs and Competitiveness.
Where did the outrage go? Every one of us can know for sure that every firefighter, every special education teacher, every hospice nurse we run into, each of them will individually on April 15 pay more in federal taxes than will General Electric. And more as well than ExxonMobil, Citigroup and Bank of America paid Uncle Sam last year.
There was a time, barely a quarter-century ago, when news like that did engage an American president and lead to a rewriting and reform of the nation's loophole-heavy tax law. When then-Treasury Secretary Donald Regan told President Ronald Reagan that 60 American corporations would pay less that year in federal taxes than the president's personal secretary, Kathleen Osbourne, would, Reagan, according to Regan, responded, "I just didn't realize that things had gotten that far out of line."
More importantly, the Gipper, after being re-elected in a landslide, threw his political support squarely behind the tax-reform effort, initiated by Democratic Sen. Bill Bradley, which would eventually triumph in law as the Tax Reform Act of 1986.
Shepherded expertly through Congress by Democratic House Ways and Means Committee Chairman Dan Rostenkowski and Republican Senate Finance Committee Chairman Bob Packwood, the reform law was inspired by the straightforward principles that people of equal incomes should pay equal taxes and that the tax code should elevate simplicity and, as to the degree possible, eliminate complexity.
In the last 25 years, presidents and Congresses have compromised — make that sold out — those principles, and we end up with the current statutory snarl and its corporate welfare, when the corporate share of all U.S. taxes paid has dropped from 30 percent of the total in the mid-1950s to just 6.6 percent in 2009.
While all of this takes place, the newly empowered House Republican majority makes it clear that their new lean, federal budget will include cuts of $1.3 billion from community health centers across that nation, which could mean denying access to medical care for 11 million people. Add to those, cuts to Head Start of $1.1 billion, which would translate into dropping 200,000 children from the proven preschool program.
I forgot to mention that GE, according to the Times piece, also claimed it was owed a tax benefit from the Treasury of $3.2 billion on its 2010 taxes.
All of this brings to mind the sworn testimony in a New York courtroom of Elizabeth Baum. Baum, a housekeeper, quoted her multimillionaire employer, on trial for income-tax evasion, as telling her: "We don't pay taxes. Only the little people pay taxes." After that, Leona Helmsley became an enduring object of public scorn. Of course, that was when outrage was still alive in this land.
To find out more about Mark Shields and read his past columns, visit the Creators Syndicate web page at www.creators.com.
DISTRIBUTED BY CREATORS.COM
COPYRIGHT 2011 MARK SHIELDS
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11 Comments | Post Comment
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Regarding fairness in corporate taxation, if Reagan the conservative, then why not Obama the liberal? Leadership counts. Look at photos of GE's Immelt with President Obama, check the satisfied grin of Immelt, and guess who is in charge. CEO Immelt knows how to lead. In the direction he wants to go. President Obama is pushed by the pressure of prevailing breezes. Obama recently spoke of “[American?] values that we [Americans?] hold so dear”. We might inventory and rank American values and compare notes of our president and ourselves. Where does fairness in taxation rank, if it is on Obama's values list? If corporation don't pay taxes, real people do.
Comment: #1
Posted by: dr
Fri Apr 1, 2011 2:29 AM
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The GE money massacre is outrageous. Does the fault lie with big business or big government? Both, of course, they are feeding off each other with donations in one pocket and favorable bills in the other. Government is corrupt but no one is allowed to talk about downsizing it because there are always 200,000 children who will never succeed without government aid, 11 million people who will die from lack of medical access the government must provide, radio stations that will go extinct if the government doesn't prop them up, on and on and on. Taxpayers have to carry all of this weight plus corporate welfare, plus foreign wars, foreign aid, rising inflation, a government with only $58 billion in cash on hand, most likely spent by the time you finish this sentence. If taxpayers don't carry this burden in silence they are called rascist, greedy, fascist, or worse, teabaggers. No statesmen in sight. No fiscal restraint in sight. Like Lady Madonna, taxpayers have all of these children at their feet. Can't afford the time or money for outrage. Thank you for the article, Mr. Shields, but it didn't make my day. Heading off to HR Block now. In silence.
Comment: #2
Posted by: Tom
Fri Apr 1, 2011 9:08 AM
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We do feel the outrage and over our morning coffee we vent to each other. Look what public outrage accomplished in Wisconsin. We feel that we have no say in what happens in this country - only those with money can have their voices heard. We write to our congressmen and representatives and it accomplishes nothing. We were outraged when Bush invaded Iraq for no good reason; we were outraged when he was re-elected; we have responded to polls. People who have to work for a living cannot take time off work to "demonstrate" at the halls of congress - so what to do? We have to hope that there is someone in congress who will pick up the banner for "the working class", but that is very seldom. Right now we are enraged at the price of gas and the fact that speculators are raising the price of gas and getting rich off the backs of every person in the country who pumps gas into their vehicle! What can we do? We see the gas companies gouging us in our own communities ($3.65 a gallon here; $3.43 a gallon 17 miles down the road) - what can we do? NOTHING!
Comment: #3
Posted by:
Sat Apr 2, 2011 8:21 AM
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We need to be a socialist country. Capitalism has shown itself incapable of reform. The only way for companies like GE to pay taxes is by nationalizing them. I'm not a fan of Lenin, but he was right when he said that the capitalist will hang himself around the neck. Socialismo democratica o muerte!
Comment: #4
Posted by: Xenia Grant
Sat Apr 2, 2011 8:31 PM
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I grew up thinking that my country, first among equals, worked on principles that would give everybody at least a fair chance. The trend since then has been toward multinational corporations, granted all the rights of personhood with no accountability and no morality beyond grabbing money, ruling as a plutocratic artistocracy over a growing permanent underclass. Somehow that bothers me.
Comment: #5
Posted by: Steven Doyle
Sun Apr 3, 2011 7:49 AM
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*chuckles*
Gentlemen, I guess you do not know what a tax write-off means?
In previous 3 or 4 years, GE experienced losses during the recession and after. Under general taxation law, you are allowed to carry forward and set off previous year's losses against the current year's losses. This is not a "loophole", but a very standard way of handling corporate taxes for the past nine decades across the world.
General Electric has less capital than it had half a decade ago, and after recovering a marginal amount of that lost capital, you expect that to be taxed too? The government doesn't want it to be taxed, business doesn't want it, and workers don't want it. This practice helps create greater taxes in the future and greater growth for the business in the future. Their business is on lean times, has lost money, and the moment they get back some money, why should that be taxed? This is money that belongs to workers who have faced paycuts and shareholders who have seen their share prices fall. Let them get back all the money they lost and they'll fork over whatever they extra gains they make to the government.
Mark Shields, a slightly above average intelligence columnist, is an ivory tower Washington DC resident and a newspaper columnist. He does not understand the fundamental technical matters of industry and the private sector (he is not supposed to), but his forced outrage over this petty incident is just his oversimplified third-party view of a matter he is not qualified to understand. Same for the toilet paper we call The New York Times.
Comment: #6
Posted by: Prateek Sanjay
Mon Apr 4, 2011 4:46 AM
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When it comes to government and corporations, I think most of us feel helpless. We don't think we can reform corporations through government. Their voices are so much louder than ours.
However, we might organize a boycott. If there's one thing corporations hear, it's money.
Prateek Sanjay, your way of expressing your opinion will make you few converts. You need to decide: are you trying to put down people you disagree with, or are you trying to convince them? You can't do both.
Comment: #7
Posted by:
Mon Apr 4, 2011 7:45 AM
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Re: Prateek Sanjay - Your post reeks of trickle-down. When GE claimed those losses in previous years, did they eat those losses, or did they lay off thousands of workers to protect their bottom line? Now that they are making back some of that money, are they re-hiring everyone they let go, or are they counting this income as "profit", and is upper-management giving themselves bonuses based on this improved performance?
Guess what, all of America made less money in the past few years. My salary was reduced in 2008 and hasn't gone back up. Did I get to claim a loss and roll that forward? No, I still owed taxes that year, last year, and this year. How about every American that lost their home to foreclosure, lost their job when a big company like GE needed to protect itself, etc... etc...? I've never liked the fact that companies can roll losses forward. I don't like how people can claim gambling or stock market losses (same thing?). If you don't make money, that's unfortunate, but you know what, the government doesn't tax you on money you don't make. When you do start making money, doesn't matter how much you lost in the past, and doesn't matter what you chose to do with that money, you should pay taxes on what you earn today.
This doesn't stifle innovation or productivity like so many free-market purists will tell you. No, if your company doesn't make money, you still don't pay taxes, but if your company does make money, and is successful, you pay your fair share like everyone else. I think GE would rather pay taxes on its $15-billion in profits than not pay taxes because of a $15-billion in loss, but unfortunately for the hard working citizens of this country, that's not even a choice GE has to make.
Comment: #8
Posted by: Nathan H.
Mon Apr 4, 2011 12:37 PM
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Nathan H., I am a student of income tax law, by the way, and you should check another piece of information about general taxation laws across the world.
Gambling and stock market losses can only be set off against gambling and stock market gains. I invite you to check this up.
I am also not a "trickle-down" thinker or an Arthur Laffer style supply sider. I think all that is a bit of nonsense, frankly. A body corporate may be a separate legal entity that holds assets and liabilities of thousands of people under a single title, but ultimately those assets belong to and are used by the managers, employees, and shareholders. All of those people have to pay taxes on the earnings of this body corporate and then pay taxes on whatever they earn personally out of the business concern itself. They have paid their fair share...twice. God forbid they do it only once.
Comment: #9
Posted by: Prateek Sanjay
Mon Apr 4, 2011 6:58 PM
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Mark - Be cautious not to lump Government Electric in with ExxonMobil. ExxonMobil's 2010 Federal tax liabilities were $61 Billion. Even with a majority of our revenues earned overseas, half of every dollar earned went to taxes either domestic or foreign. I am proud to be employed by this company; make no bones about it, we are in the energy business. But you don't see us dodging taxes like GE; we pay them in accordingly.
Comment: #10
Posted by: Charles
Tue Apr 5, 2011 12:22 PM
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TFAR----Time for another revolution!
Comment: #11
Posted by: Ed Cool
Sun Apr 10, 2011 8:48 AM
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