NEWS > BUSINESS > G.E. CRYING FOUL IN THE FACE OF REDUCED TAX PROFITS
G.E. CRYING FOUL IN THE FACE OF REDUCED TAX PROFITS
March 29 2011
Fairfield, CT – No one, absolutely no one, likes paying taxes. Some certainly understand the value of paying taxes and are more than willing to pay their share, but even the most liberal amongst us hasn’t had a moment when they would rather have
had those dollars in their pocket, or been overjoyed at healthy return. For centuries, taxation has been a burden that people have had to bear, and that in turn has become the motivation for more than a few revolutions.
While there is certainly valid concern that many tax dollars are wasted in dangerous, arcane, and even ludicrous exercises the vast majority of dollars are used to support the basics of modern society, things such as governments, schools, hospitals, and roads. Still, a little extra change in one’s pocket is something just about every can use, particularly in these harsh economic times. Like regular people, corporations are also subject to taxes and like people, those companies would like to save a little extra wherever possible. Big companies of course are in a much stronger position to fight for their pocket change and now one, General Electric, has upped the ante in the fight against the IRS after reduced profits from taxes over the last year.
“Tax benefits have been a huge boon to the General Electric over the years and they have been diligent in pushing those profits forward, but in the last year profits have been way down. They didn’t pay anything of course, but the benefits dropped in accordance with revenue and that hurts the bottom line,” said a GE insider. “To put it into perspective, over the last five years the company has made a little over $4 billion from the IRS but this last year grossed only a few hundred million, most of which will be eaten up in costs and put them at about even. That is why they have been pushing for this new legislation, they simply can’t afford to lose that tax revenue.”
GE saw a drop in gross revenue last year to $104.6 billion, much of which is being attributed to tough new tax laws.
“In this environment companies like GE will suffer, there are no two ways about it. It isn’t just in the U.S. either, many other countries have introduced new tax legislation as well and that has reduced overseas profit dramatically. The days of billion dollar years are behind us if something doesn’t change,” continued the insider. “This isn’t just GE of course, there are many other companies which have seen their tax profits drop in the last year and they are all looking for some way to resolve this effectively so that it will benefit everyone involved, both the corporations, their shareholders, and of course the people who work for the company. The reality is that tax revenue is essential to long term health of major companies.”
Other companies with reduced tax revenue include Halliburton, Tome Warner, and British Petroleum.
“This is really a tough situation for these companies. I mean they don’t want to be seen as the bad guys, taking money from the coffers and putting it in their own pockets, but they really, really like money and they need it more than ordinary people. I mean most ordinary people don’t have employees after all,” said Scrape TV Business analyst Ken Green. “GE is just one of many companies that is having these problems but unless we see radical changes to the way the government and the IRS does business I think there are going to be more and more complaints in the near future from many areas of the corporate world.”
Part of the proposed changes would be having the IRS compensate GE for the costs of maintaining an accounting department.
William Ashford, Business Correspondent