In a Remarkable Show of Bi Partisanship... GE Pays No Tax on 14 Billion Profit.

[Timkin]

Okay Jmac...you said they pay income tax.. that is on their employees?   But what about profits? If we as taxpayers are taxed because our savings make money.. why should the same not hold true for corporations? I am simply trying to understand

[Timkin]

you just answered my question, Stephen. thanks

[JMac]

Jmac.  You don't understand the basic structure.

Subchapter s corporations do not pay any taxes on profit.  All profit passes through and counts as income for the owners of the corporation.

C Corporations are taxed on profits after all tax deductible expenses have been tallied up.

For example, if a shareholder of a C Corp is also an employee of the C Corp, then his salary is simply paid out as income to him/her.  The C Corp is not taxed on this salary as a profit, since it is tax deductible for the C Corp.

However, if the C Corp pays dividends (Which are paid out after all legitimate taxes have been paid out), then the dividend payments are taxable income to the shareholder.

Surely you are not suggesting that every single corporate shareholder is taxed equally to all other shareholders.

You just illustrated my point.  Profits for your S Corp in the first example are taxed once.  Profits in the C Corp example are taxed twice.  The Corporation pays income tax on profits after expenses, then they pay out dividends with what is left, and the owners of the company, shareholders, pay taxes again.  Capital gains are usually based on retained profits, so the same concept applies.

[finehoe]

The Corporation pays income tax on profits after expenses

This is only in theory.  Some 60% of corporations pay no taxes.  As several posts above have illustrated, billions in corporate profits aren't taxed at all.

[Timkin]

How do they get away with that, Finehoe?

[finehoe]

How do they get away with that, Finehoe?

"He who pays the piper calls the tune."

[Timkin]

How do they get away with that, Finehoe?

"He who pays the piper calls the tune."

which means ......... 

[JeffreyS]

Our government's view is that a corporation is a separate legal entity that benefits from it's presence and actions in the country and should be taxed. The individual draws income in the form of dividends based on profits not the actual profits.  Many governments do view this as double taxation.

[BridgeTroll]

How do they get away with that, Finehoe?

"He who pays the piper calls the tune."

I think your "blame" is misplaced.  Over the past decades your representatives in congress made the rules with which the corporations now play.

[BridgeTroll]

http://chicagobreakingbusiness.com/2011/03/immelt-backs-tax-free-ge-calls-for-reform.html

Immelt backs tax-free GE, calls for reform

The chief of General Electric on Thursday defended the conglomerate’s zero tax rate in 2010 and called for reform of the U.S. tax code.

In his first public speaking engagement since a barrage of criticism about not having to pay taxes in 2010, GE Chief Executive Jeff Immelt told the Economic Club in Washington that his company did nothing wrong.
“At GE, we do like to keep our tax rate low, but we do it in a compliant way, and there are no exceptions,” Immelt said. “Our tax rate will be much higher in 2011 as GE Capital recovers.”

But Immelt added that he, along with many other corporate leaders, wants the federal government to reform the U.S. tax code, which he called “old, complex and uncompetitive.”

The company is particularly in the spotlight because Immelt is the chief of President Barack Obama’s innovation and jobs council.

Immelt added later that he understands why his company is taking heat in the media.

“I don’t fault this type of reporting,” Immelt said. “It is what it is. You can’t do any job like this unless you have a thick skin.”

FYI... Jeffrey Immelt is head of GE and of President Barack Obama's business innovation task force.

[BridgeTroll]

Here ya go Timkin...

http://abcnews.go.com/Business/companies-ge-lower-taxes/story?id=13258952

Big Corporate Profits, Small Tax Bill
How GE, Boeing and Others Make Billions But Pay Relatively Little or No Tax: It's All Legal

24 comments By ALAN FARNHAM
March 31, 2011


"Immelt Must Go! Sign the Petition."

So goes the rallying cry of former Sen. Russ Feingold, whose group, Progressives United, backed by MoveOn.org, is demanding that General Electric Co. head Jeffrey Immelt step down as chairman of President Obama's Council on Jobs and Competitiveness.....

[finehoe]

I think your "blame" is misplaced.  Over the past decades your representatives in congress made the rules with which the corporations now play.

And you think they did this with no prodding from said corporations?

[BridgeTroll]

I think your "blame" is misplaced.  Over the past decades your representatives in congress made the rules with which the corporations now play.

And you think they did this with no prodding from said corporations?

"Prodding" happens all through life finehoe.  From the child sneaking into the cookie jar all the way through adulthood.  It is understood that individuals might cave to temptation... but this has happened to the entire institution of congress.  These are laws passed by majorities of those bodies.  They should not be enticed by "prods".

[BridgeTroll]

  I have no idea what you are talking about... Please explain your blood of jesus obsession.

[finehoe]

These are laws passed by majorities of those bodies.  They should not be enticed by "prods".

This is misleading.  Yes the laws themselves are passed by the majority, but these loopholes are more often than not one-line entries in otherwise large bills that frequently have nothing to do with the main thrust of the bill.  I seriously doubt if you did a search of all the legislation from the last fifty years or so that you would find any bills entitled "The General Electric Will Pay No Corporate Tax Act" or what have you.  These things are slipped into bills at the last minute exactly because the sponsors know they would never pass on their own.