GE and We: A Tale of Income Tax

By most accounts I paid more federal income tax than GE for 2010.  Personally, I paid more in regular federal income tax than I did for my brand new car.   When you factor in social security tax, medicare tax, state tax, and property tax that is an additional $16,700 or so.  I probably paid about another $4200 in sales tax, gas tax, liquor tax, fees, tariffs,  assessments, regional assessments, urban renewal, licensing, and other government fees.  I’d bet I paid more (federal income) tax than GE, and I’d bet almost everyone reading this blog did too, but I’m even more sure that GE paid it’s accountants more than I did.  I wonder how many millions GE spent on accounting, preparing, and filling its 2010 return?

I don’t blame GE for taking advantage of the system… minimizing tax is one of the key responsibilities to its shareholders.  But I am troubled by the corporate tax system.  Why should GE pay 0.0% and IBM pay 24.8%?  Shouldn’t large U.S. corporations play by the same rules?  Shouldn’t the rules be more even across companies?  Who wrote these crazy rules?  Well, that last question is rhetorical, obviously!

I think a 35% base corporate income tax rate is way too high, but 0% (for GE) is way too low.  My opinion is that a 15-25% corporate tax is much more internationally competitive.  But even at 15%, GE’s 14.2 Billion USD profit should be taxed at a little bit more my than my way-way-way less than a million, barely-6-figure, USD income.