Taxing US Businesses

May/14/2011 9:17AM
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It’s not possible to tell what any US corporation pays in US income taxes. They are not required to publish their tax returns and the government can’t release them without permission. You can’t really determine the US income tax from published data. It’s too complex. The GE tax return for 2007 was reportedly 24,000 pages. How’s that for government productivity? Hundreds of man hours to put the return together and hundreds more for the IRS to review the data. Was it worth it for the taxpayer?

Supposedly, in 2007, the GE effective US income tax rate was 15%, for 2008, it was 5.3% and for 2009, it was zero. Why doesn’t Obama turn his guns on GE? How can a corporation have $10.3 billion in pre-tax income and pay no taxes? Not even pay none, but have a $1.1 billion tax benefit.

Well, first of all, it’s not an oil company. It’s Obama’s favorite US corporation. Jeffery Immelt sits on Obama’s economic advisory board and he’s on the board of the NY Federal Reserve. Since GE shareholders want to fire him for his performance since replacing Jack Welch, it makes perfect sense that he should advise Obama. First, screw up GE, then help screw up the US.

Here’s one of the ideas Durbin is putting forth for taxing US global corporations. He wants to tax them on profits made in other countries. This is like the estate tax the democrats love so much. In your lifetime, you pay taxes on income and dividends and interest all adding up to your net assets. When you die, the democrats want to tax your estate again on those assets. Same with the Durbin plan. Pay income tax to Ireland on income made there, then pay Durbin again for that income.

So, you are a CEO of a global corporation. You make 18% of your pre-tax profit in the US and the rest in other parts of the world. You pay taxes in those other countries and now the US wants to add a tax to the 82% where you already paid taxes elsewhere. What would you do? Move, that’s what. Just move the corporate headquarters to the country where you can get the best talent and pay the lowest taxes on the total income.

Who is a corporation like that? Try Exxon/Mobile. In 2009 they paid global taxes of $78.6 billion. The paid US income taxes(estimated) of $7.7 billion. The effective tax rate for all taxes paid was 47%. This includes sales, excise, state, and country income tax. It is estimated that 18%, and dropping, of Exxon/Mobile’s income comes from the US.

Since the US has spent 30 years attacking Exxon/Mobil, what does the company owe the US. They are selling off US assets, getting out of retail marketing, and setting everything up to make a potential move.

When that happens where will the idiots like Dick Durbin be? Retired on your tax dollars. Sleeping like a baby even though hundreds of US Exxon/Mobile employees will get the axe.

This is really a common sense issue. But, since we all get our answers from the media and have stopped using our own common sense years ago, just don’t give it any thought.

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