General Electric, one of the biggest companies in the world, paid no corporate income taxes last year. Now that’s not to say that they didn’t spend any money on taxes. They spent a lot of money on taxes. For instance, they spent $21.5 million lobbying Congress: you know, to create loopholes in the tax code that they can take advantage of. And then they spent $150 million to pay 950 accountants to take advantage of those loopholes. All that money, and it’s still a bargain. Let me illustrate their big net tax savings.
Assume that they had to pay 35% taxes on the $5.1 billion that they made just in this country. That would have resulted in Federal income taxes of $1.785 billion. $0 is such a better number for GE. GE, they bring good things to life for themselves.
But it’s not just GE. Of the top 100 companies in America, all of which are supposed to pay 35%, they paid an average 6% in corporate income taxes.
And it’s not just companies. Individuals, especially wealthy individuals, used deductions to lower their tax rate in half, sometimes lower.
So all this talk in Washington about raising the tax rate for families making over $250,000 per year means nothing. What you have to do is reform the tax code and get rid of most of the loopholes and deductions.
Actually you could lower the tax rate into the teens for everybody and still balance the budget just with tax reform. But that’s never going to happen because there’s too much money involved. Just ask GE: “We bring good things to life.”
Accountants CPA Hartford, LLC