GE: 7,000 tax returns, $0 U.S. tax bill

Annalyn Censky,

NEW YORK (CNNMoney.com) — General Electric filed more than 7,000 income tax returns in hundreds of global jurisdictions last year, but when push came to shove, the company owed the U.S. government a whopping bill of $0.

How’d it pull off that trick? By losing lots of money.

GE had plenty of earnings last year — just not in the United States. For tax purposes, the company’s U.S. operations lost $408 million, while its international businesses netted a $10.8 billion profit.

That left GE (GE, Fortune 500) with no U.S. profit left for Uncle Sam to tax. Corporations typically face a 35% federal income tax on their earnings. Thanks to its deductions and adjustments, GE reported an actual U.S. federal income tax rate of negative 10.5%. It got to add a “tax benefit” of $1.1 billion back into its reported earnings.

“This is the first time in at least decades that GE has reported negative U.S. pretax income and it reflects the worst economy since the Great Depression,” Anne Eisele, GE’s director of financial communications, said via e-mail.

But what about the $10.8 billion profit overseas? GE is “indefinitely” deferring income tax payments on those profits, Eisele said.

It may seem like accounting magic, but it’s completely legit.

GE isn’t the only “Top 5” company on this year’s Fortune 500 list that owed no income taxes. Bank of America (BAC, Fortune 500), which suffered major losses in 2009, included a tax benefit of $1.9 billion in its annual profit.

“That’s one way of escaping taxes,” said Scott Hodge, president of the Tax Foundation. “Companies get to deduct their losses, so if there’s no earnings, then they pay no income tax.”

But GE isn’t exactly escaping all tax-related pain: The company paid almost $23 billion in taxes to governments around the world from 2000 to 2009, Eisele said.

Plus, paying the accountants to crank out 7,000 tax returns can’t be cheap.

And then there’s all the lawyers needed to defend those returns. GE filed tax paperwork in more than 250 jurisdictions around the world last year. “We are under examination or engaged in tax litigation in many of these jurisdictions,” the company dryly notes in its annual report.

GE may not owe the IRS, but it still has to file — and its filings are epic.

In 2006, as the IRS ramped up its corporate e-filing program, the tax agency actually issued a celebratory press release when it processed GE’s tax return. On paper, the return — the nation’s largest — would have totaled a massive 24,000 pages. But instead, the IRS was able to upload the 237 MB document in under an hour.

Reading it, though, is apparently taking a bit longer. The IRS is currently auditing GE’s tax returns for 2003-2007. 

Read the original article on Money.CNN

Obama and the Left:Not as Planned

Jennifer Rubin

Obama and the Left more generally expected the financial meltdown of 2008 and the resulting recession to undermine the public’s faith in the private sector. As they pushed the Great Depression narrative, they strived to make way for a new, New Deal, in which the public would be willing to accept (in what had heretofore been private-sector decision-making) a far greater degree of government intervention than had been attempted in decades. Government would be entrusted to seize car companies, regulate executive compensation, and direct lending practices. But the “cure” for what supposedly ailed the American economy would not be limited to economic matters or to financial regulation. Obama spoke of a “new foundation,” meaning that government would also seek to expand its reach into health care, as well as to regulate all industries’ carbon emissions.  A larger government, higher taxes, and a shrunken realm of private decision making would ensue.

But the public remained stubbornly resistant to government power grabs. The increase in spending and massive accumulation of debt spooked them. The obvious inability of the government to “create or save” jobs and its scatterbrained rush to pass health-care reform (thus  taking over a sixth of the economy) did not endear to the public the prospect of a bigger, more powerful government. After less than a full year of Democratic control, the public’s faith in big government is on the decline.

It is not only Tea Party protestors and town-hall attendees who have recoiled against the overreach of the Obama agenda. It is the mass of ordinarily nonpartisan independents who have looked upon the corrupt Cash for Cloture deals and the government spend-a-thon with unease. They may not be enamored of big business, but neither are they excited by the prospect of big government, let alone a big government in league with big insurance companies.

Then along comes the Christmas Day bombing plot. The Obama team stumbles about like hapless bureaucrats. First denial that anything much was wrong and then the acknowledgment that yes, they had failed to do their jobs. The “solution” is a flurry of reports and reviews. And we expect to see a series of bureaucratic shuffling, some personnel departures, and some “reforms” that don’t amount to much at all other than vows to do what we thought the government was supposed to be doing since 9/11. Meanwhile, the public sees that the only real line of defense comes from private citizens. Their government is, in its most fundamental task, not to be trusted.

Obama’s new New Deal initiatives have not worked out as planned. Only a fraction of that ambitious agenda has been enacted. The public, including nonpartisan independents, has been jarred by the ambition of Obama’s designs. Large majorities are concerned about the prospect of tax hikes, a massive deficit, and an overactive government. Moreover, there is a growing sense, made worse by the bungling of the Christmas Day bombing, that rather than improve governance, the Obama administration has made things worse.

It is ironic in the extreme that Obama has been unable to dazzle the public with his effectiveness and, more generally, to impress Americans with the ability of the government to reorder society and improve their lives. It was, of course, the Democrats’ critique of the Bush administration’s competence – its handling of Katrina, the hapless Alberto Gonzales Justice Department, the Walter Reed scandal, the failure of financial oversight, and the mishandling of the pre-surge Iraq war – that formed the basis of their winning campaign rhetoric in 2006 and 2008. The Left assured us that sloth or distain for governance were at the root of the Bush administration’s failures but that its own candidates, graduated from the finest schools and enthusiastic proponents of government, would spare Americans from incompetence and corruption and would, moreover, rescue us from the excesses of the private sector. Washington was the place where “good ideas went to die,” Obama told us in the campaign. Puffed up with their own credentials and convinced that they were smarter than all who came before them, the members of Obama’s team assured us that this administration would be different. We were to get a cabinet of “geniuses.” Diplomacy was to be “smarter,” science would rule the day, and ideology was out. But alas it was not to be. The basic tasks of government — vetting, not scaring the populace (with a low Air Force One flyover), and rendering a timely decision on war strategy — seemed at times utterly beyond them.

It was perhaps unfortunate that Obama himself showed so little interest in the details of major domestic legislation. It became evident that, really, any health-care bill would do, so long as Obama got his signing ceremony. So we are on the verge of pasing a bill indefensible on the merits and which the public detests. And if Congress wanted to pass a junk-filled stimulus bill, that was alright with Obama as well. Now the public rightly regards it as a failure, a clumsily constructed waste of their tax dollars. We learned that the smart set really didn’t care about getting exquisitely crafted legislation passed; they simply wanted to demonstrate their own political muscle.

But the heart of the problem was not in a lack of competence or attention to detail but in arrogance – the hubris of believing that government bureaucracies could micromanage complex decisions and order the lives of hundreds of millions of Americans without severe adverse consequences. Never do Obama and his minions seem to recognize that centralizing and regulating millions and millions of intricate interactions is fraught with peril. They never do acknowledge that the track record of government in duplicating and supplanting free markets and individual decision-making is a poor one indeed. They certainly don’t seem to grasp the notion that expanding government and adding trillions to expenditures would merely multiply the opportunities for fraud, corruption, and waste.

So in the end the Obama team has not succeeded in persuading Americans that government should do more, spend more, and be trusted more. For decades, conservatives have made principled arguments as to the dangers of avaricious government, but experience is often the best teacher. After a year of governance by the Obama administration, the public has not learned to love big government but instead has relearned that it is wise to be wary of a growing and intrusive federal government. Had the Obama team been more competent and less ambitious, they might have, by small and irreversible steps, made the case for their ambitious agenda and inured the public to the steady expansion of the public sector. That didn’t happen, however, and the result is a new resurgence of anti-government populism and a fair amount of anger. Americans are reaching the conclusion that even when it comes to the most essential function of government, protecting them from foreign enemies, they are being ill-served. Perhaps if government did less, it would attend with greater focus to its most essential tasks.

The Bush administration never recovered the public’s confidence after Katrina. Americans had seen enough and thereafter tuned out. We will see if the Obama team can avoid that fate after its first year. It might help their cause if they tried to do less, focused more on the business of governing, and spent less time and effort attacking political enemies and recycling shopworn campaign rhetoric. They won’t likely again enjoy the level of goodwill and support that greeted them in the initial days of the administration, but they can perhaps recover a measure of the public’s respect by sober, modest, and competent governance.

Read the original article on Commentary Magazine

Tumultuous Obama

by  Jed Babbin 

Has there ever been a president who had to govern in more difficult times?

Even Franklin Roosevelt had years to deal with the Great Depression before World War 2 came upon him. 

Are we asking too much of Barack Obama? No, because so much of the confusion and commotion that surrounds him of his own making. 

Our young president has always been a man in a hurry. His rhetoric is of urgency, emulating Churchill’s red “action this day” labels attached to the most urgent memos to subordinates.  But Churchill didn’t attach the red label to every memo.  Obama does. 

For him to define a problem as a crisis and demand that congressional action be taken now, and not delayed a year, a month or a day, is a commonplace.  But when the action is taken and subsequently fails, the president ignores the failure and moves along to demand action on another “crisis.” 

Since his inauguration – just shy of ten months ago — President Obama has stampeded Congress into a $1.2 trillion “economic stimulus” package that has caused unemployment to rocket to a 26-year high, a $3.6 trillion federal budget that will carry the federal deficit to a dangerous level of our Gross Domestic Product and taken over two of the three major car makers, losing tens of billions in “loans” to GM and Chrysler. (The only major American carmaker not owned by the government, Ford, reporting a positively bountiful profit last week.)

Obama spent the last three months on his signature issue, the nationalization of healthcare (one-sixth of our economy) despite the fact that a majority of Americans oppose it.  And he and the House Democratic leadership have spent the last weeks twisting arms to produce that Saturday night razor-thin approval (220-215 votes) of the Pelosicare bill with the “public option” – the government-run insurance provider – included.

The day after the House vote President Obama was asked if he was confident that the Senate would also pass his healthcare proposals.  Never given to understatement, he said, “I’m absolutely confident that they will. I’m equally convinced that on the day that we gather here at the White House and I sign comprehensive health insurance reform legislation into law that they’ll be able to join their House colleagues and say that this was their finest moment in public service. The moment we delivered change we promised to the American people.”

And while he has pursued this artificial crisis, he ignores a real one.  Gen. Stanley McChrystal’s “3 am phone call” to the president remains on hold.  McChrystal’s August 30 report says that if we don’t reform our strategy to the counterinsurgency he recommends and adequately resource it – i.e., send at least 40,000 more troops to accomplish it – we may, within a year of his report, be unable to defeat the Taliban.  It’s nearly ninety days since that report was submitted, and the president has yet to decide.  Many meetings are held, and nothing comes out of them.

There is a constant commotion and agitation of Americans by the president, a continuous uproar over the subject of the day, combined with a confusion of voices from the media, the public, and the White House team.  According to the dictionary, this is tumult. Our president is tumultuary: characterized by commotion, impetuosity and, importantly, in disregard of the Constitution.

We are used to tumultuous Hollywood starlets such as Megan Fox, tumultuous foreign leaders such as Hugo Chavez and Dominique de Villepin, the former French foreign minister who famously refused in 2003 to say which side he wanted to win in Iraq.  But American presidents are supposed to be calm custodians of the public weal.  Not so Mr. Obama.

The president wants to close the terrorist detention facility at Guantanamo Bay, Cuba, allow gays to serve openly in the military, and renew the political war over amnesty for illegal immigrants.  His administration and his party – represented by Attorney General Eric Holder and House Speaker Nancy Pelosi — are still at war with the CIA.  All of these “crises” are artificial, cut out of whole cloth to advance a political agenda.  The president could end them as easily as he and his team created them.

While the president’s time is taken up with manufactured crises, real crises go unattended.  The president is leaving for Asia this week, reportedly to convince China and other Asian nations that he isn’t distracted by other crises, such as Afghanistan and the economy.  He could cancel the trip to deal with them, but he will not. The trip speaks for itself, unless the president wants to drop in on Gen. McChrystal on a detour to the trip home.

Or he could stay home to deal with the economy.  But that would require a reassessment of his failures to date.

Obama’s team proclaims the current “jobless recovery” – an economic oxymoron – is proof that his leadership has brought us out of the Bush-induced economic slump.  Before he was even inaugurated, his economic team proclaimed (on January 9) that by November Obama’s stimulus plan would hold unemployment to about 7.7%, and that it would be a full percentage point higher without the plan. 

But unemployment is now at 10.2% — 50% higher than Team Obama promised — and still climbing.  The chaotic economics of the Obama White House – and this includes the costly House-passed healthcare bill – has kept the economy unstable. Businesses can’t determine the cost of any hiring or investment when the government is constantly fiddling with the basic elements of cost.  So they don’t hire, and don’t invest.

The president, who seems to make a speech every day, seeks omnipresence. In the immediate aftermath of the mass murder at Fort Hood last Thursday, the president – his breathless press team explained – was in the White House Situation Room coordinating the response.  The president cannot be blamed for the tragedy, but neither can he be credited for doing anything about it.

President Obama wants to make big decisions that change America and, unfortunately, he is well along in his plan to do just that.  But what he either doesn’t understand, or of which he is willfully ignorant, is that neither American voters nor the world shares his priorities. 

Americans expect their leaders to solve problems and they set their own priorities by what affects them most immediately.  To the overwhelming majority of Americans – including among them the unemployed and the businesses who could hire them if government economic policy every stabilized – the economy is still Job One for the president.  The longer it remains unstable, the longer the “jobless recovery” will continue.

Afghanistan, Iran and North Korea won’t wait. They are real crises that the president apparently believes are above his pay grade.  They will, soon, be beyond America’s ability to solve.

See the Original Article on HumanEvents

The Brainy Bunch- Thomas Sowell

Many people, including some conservatives, have been very impressed with how brainy the president and his advisers are. But that is not quite as reassuring as it might seem.

It was, after all, Franklin D. Roosevelt’s brilliant “brains trust” advisers whose policies are now increasingly recognized as having prolonged the Great Depression of the 1930s, while claiming credit for ending it. The Great Depression ended only when the Second World War put an end to many New Deal policies.

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