Wednesday, July 13, 2011
General Electric Co. paid essentially no tax in 2010. A 35% tax on GE’s economic income would have been $6.8 billion, or $4.7 billion with inflation adjustments. Generally accepted accounting principles and tax accounting allow too much expensing of investments, and ignore predictable future income, the use of tax havens, and accelerated depreciation.
The government can most easily and fairly collect the requisite tax from GE by imposing a tax on the fair market value of its capital. The government can charge GE $6 billion to $7 billion a year for access to public markets and GE and every corporation would be willing to pay that much to give its shareholders access to ready liquidity.
All Tax Analysts content is available through the LexisNexis® services.