Going after corporate tax cheats like Bank of America and G.E.

Today was designated a national day of protest by US Uncut – a grassroots organization engaged in direct action against corporate tax cheats. Today’s protests, which took place across 40 states, focused primarily on Bank of America. Here, with more on why Bank of America was chosen as a target, is a clip from The Nation:

…“I’m tired of people calling for shared sacrifice and it’s all coming from the workers and nothing’s coming from the top,” says protester Dave Sonenberg. “I’m sick of companies like Bank of America not paying their taxes.”

Earns Bank of AmericaBank of America hasn’t paid a nickel in federal income taxes for the past two years, and in fact raked in an additional $1 billion in tax “benefits.” The bank is enjoying these profits after accepting $45 billion from taxpayers, which the company then got to count as a deduction when they paid back the money.

Big corporations get to play by a whole different set of rules, says tax expert Bob Willens of New York-based Robert Willens LLC:

“It’s also not unusual for a company to pay no federal taxes, while still paying state and local taxes,” Willens said. “Items that can be deducted for federal purposes aren’t always deductible for state and local returns, he said. State taxes can also be based on the amount of capital deployed in a state, not pre-tax income.”

This is why two-thirds of corporations in America pay no federal income taxes. If they were forced to, we’re told, the whole country would suffer. Jobs would be lost, salaries slashed. Thank heavens we’ve avoided such calamity by allowing corporations to shape legislation in their favor.

In 2010, Bank of America handed out $2.2 million in campaign contributions to congressional representatives and PACs (36 percent went to Democrats, 64 percent to Republicans). By throwing around that much cash, huge companies like BoA have a big say when it comes to crafting legislation that permits them to escape paying taxes, according to US Uncut organizer J.A. Myerson…

As the article mentions, Bank of America isn’t alone either. Several large companies manipulate the system in order to avoid paying federal taxes. The following clip, which is about the sophisticated system employed by General Electric to avoid paying taxes, comes from yesterday’s New York Times.

ge-logoblue-pms7455…The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States.

Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion…

Its extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore. G.E.’s giant tax department, led by a bow-tied former Treasury official named John Samuels, is often referred to as the world’s best tax law firm. Indeed, the company’s slogan “Imagination at Work” fits this department well. The team includes former officials not just from the Treasury, but also from the I.R.S. and virtually all the tax-writing committees in Congress.

While General Electric is one of the most skilled at reducing its tax burden, many other companies have become better at this as well. Although the top corporate tax rate in the United States is 35 percent, one of the highest in the world, companies have been increasingly using a maze of shelters, tax credits and subsidies to pay far less…

And, it’s worth pointing out that this is taking place not only during a period of record corporate profits, but at a time in which our nation is laying off teachers, cutting tuition aid to college students, and slashing budgets for environmental protection. The good news is, people, as evidenced by today’s protests, are beginning to take notice. Now, we just have to wait and see if the movement here really takes hold like it has in Britain, where, it would appear, people are beginning to connect the dots and correctly assign blame.

And, don’t feel bad if you missed today’s protests. There’s something that you can do on Monday morning that’s even more effective. Move your money to a non-profit, community-based credit union.

Update: Here, with more on the G.E. situation, is a note from MM.com reader Glen S.

Since 2001, G.E. has eliminated 34,000 jobs in the U.S., while creating 25,000 jobs overseas. Meanwhile, since the 2008 financial crisis, G.E. has received billions in federal stimulus funds, while paying nearly nothing (and, in some years LESS than nothing) in federal taxes.

The net result? G.E. now finds itself sitting on $79 BILLION in cash — tops worldwide among non-financial publicly-traded companies, or about 62 percent more than the next company, Toyota — and larger than the individual GDPs of 118 of the World’s sovereign nations.

Unfortunately, G.E. is far from an extreme example: In 2010 corporate federal taxes relative to the overall economy reached their lowest level since 1946 — or about 1% of GDP.

Nevertheless, this year U.S. taxpayers (i.e. all of us) will be paying G.E. $3.2 BILLION for the privilege of continuing to do business (and make profits) in the U.S. — an amount roughly equal to TWICE Michigan’s projected budget deficit for the coming year!

Let’s face it: The fiscal “crisis” we are facing is NOT because teachers, firefighters or police officers earn too much. The problem is not that pensions and Social Security are too “generous.” The problem is not because of “greedy” unions, or because there are too many worker-safety, consumer-safety, or environmental regulations tying the hands of business.

The real problem is the insatiable greed, arrogance and lust for power that large corporations and the super-rich have increasingly demonstrated over the past three decades — often facilitated by an unholy alliance of openly sycophantic politicians and, far too often, angry, yet shockingly ill-informed voters.

Meanwhile … lest anybody be too hopeful that any of this might change for the better anytime soon, it is worth noting that President Obama recently chose Jeffrey Immelt — who has chaired G.E. since 2001 — to chair his new “President’s Council on Jobs and Competitiveness.”

‘Nuf said.

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31 Comments

  1. Leroy Washnock
    Posted March 27, 2011 at 5:51 am | Permalink

    Pitchfork? Check.
    Torch? Check.
    When shall we meet?

  2. Stephen
    Posted March 27, 2011 at 8:03 am | Permalink

    Meanwhile, all of our small local companies either pay their taxes of get shut down. The Republicans, for all their talk of wanting a level playing field, don’t really do much to ensure one.

  3. Glen S.
    Posted March 27, 2011 at 8:35 am | Permalink

    Since 2001, G.E. has eliminated 34,000 jobs in the U.S., while creating 25,000 jobs overseas. Meanwhile, since the 2008 financial crisis, G.E. has received billions in federal stimulus funds, while paying nearly nothing (and, in some years LESS than nothing) in federal taxes.

    The net result? G.E. now finds itself sitting on $79 BILLION in cash — tops worldwide among non-financial publicly-traded companies, or about 62 percent more than the next company, Toyota — and larger than the individual GDPs of 118 of the World’s sovereign nations.

    Unfortunately, G.E. is far from an extreme example: In 2010 corporate federal taxes relative to the overall economy reached their lowest level since 1946 — or about 1% of GDP.

    Nevertheless, this year U.S. taxpayers (i.e. all of us) will be paying G.E. $3.2 BILLION for the privilege of continuing to do business (and make profits) in the U.S. — an amount roughly equal to TWICE Michigan’s projected budget deficit for the coming year!

    Let’s face it: The fiscal “crisis” we are facing is NOT because teachers, firefighters or police officers earn too much. The problem is not that pensions and Social Security are too “generous.” The problem is not because of “greedy” unions, or because there are too many worker-safety, consumer-safety, or environmental regulations tying the hands of business.

    The real problem is the insatiable greed, arrogance and lust for power that large corporations and the super-rich have increasingly demonstrated over the past three decades — often facilitated by an unholy alliance of openly sycophantic politicians and, far too often, angry, yet shockingly ill-informed voters.

    Meanwhile … lest anybody be too hopeful that any of this might change for the better anytime soon, it is worth noting that President Obama recently chose Jeffrey Immelt — who has chaired G.E. since 2001 — to chair his new “President’s Council on Jobs and Competitiveness.”

    ‘Nuf said.

  4. Stephen
    Posted March 27, 2011 at 8:54 am | Permalink

    Close to half a million Brits marched yesterday.

    http://www.bbc.co.uk/news/uk-12871357

  5. Glen S.
    Posted March 27, 2011 at 9:23 am | Permalink

    After nearly 18 years as an opinion columnist at the New York Times, Bob Herbert announced last week that he was leaving the Times to write a book, and to “expand (his) efforts on behalf of working people, the poor and others who are struggling in our society.”

    His parting column, “Losing Our Way,” speaks volumes about the current state of our nation — and makes a compelling case that, unless we are prepared to make some truly radical reforms, we are headed into a dark new age.

    It is well worth reading, and considering:

    http://www.nytimes.com/2011/03/26/opinion/26herbert.html

  6. Larry Seven Larry
    Posted March 27, 2011 at 11:22 am | Permalink

    I say pick targets and take them down in sequence, one after the other. Bank of America is a good one to start with. GE can wait. I say we crush BOA.

    Find local locations here, and move your money:

    http://locators.bankofamerica.com/locator/locator/Michigan/branch_and_atm_locations/coverage.html

  7. TaterSalad
    Posted March 27, 2011 at 1:41 pm | Permalink

    Spoiled kids and capitalism:

    http://laiglesforum.com/anarchists-and-frightened-police-face-off-in-london/2272.htm

    Exerpt:

    “While many Americans still believe that the main source of economic benefits is a combination of work, ingenuity and risk taking, along with simple notions of supply and demand (commonly known as free market principles—once believed extinct until live specimens were recently found in China), Europeans have been taught since about the end of WW II that the government is where all money, jobs and benefits come from. Some of them also reportedly believe government is where babies come from and where people go when they die.”

  8. Peter Larson
    Posted March 27, 2011 at 2:19 pm | Permalink

    You are absolutely kidding yourself if you believe thar chinas growth has been without heavy government intervention.

  9. TeacherPatti
    Posted March 27, 2011 at 7:28 pm | Permalink

    I know this is silly of me, but I have to ask why everyone isn’t in a credit union? I’ve had a credit union since I graduated from law school and moved home to MI…it was a no brainer for me. Now we’re members of UMCU (my husband is an alum). What are the advantages of banks, anyway? (Again, this is probably a naive question but bear with me)

  10. Edward
    Posted March 27, 2011 at 8:06 pm | Permalink

    Footage from one of the BoA demonstrations in Pennsylvania.

    http://www.youtube.com/watch?v=irrkk8ZmNrc

  11. Glen S.
    Posted March 27, 2011 at 8:16 pm | Permalink

    @ TeacherPatti

    Until a few years ago, one advantage of banking with a big regional or national for-profit bank was convenient access to their fee-free (to their own customers) ATM networks. Today, however, most credit unions participate in an co-operative arrangement that allows members of credit unions fee-free access to each others’ ATM networks — making membership in a credit union like having access to a network of thousands of ATMs nationwide.

    I have used a local credit union for my primary banking needs for over 20 years, and recently I’ve taken steps to move my mortgage and credit card accounts to local credit unions, too. I really like the idea that my money stays here in the community — benefiting local homeowners and businesses, rather than generating record profits for shareholders of big multi-national banks — and I find that fees are generally lower, interest is generally higher, and customer service is generally better, as well.

    For anyone interested in supporting local business, and local democracy, — moving your financial accounts from one of the big, for-profit “mega” banks to a local, non-profit, and member-owned credit union is one of the easiest, and most satisfying things you can do to (quite literally) put your money where your mouth is when it comes to your values.

  12. Chaely
    Posted March 27, 2011 at 9:34 pm | Permalink

    I think this begs the question, why are we still allowing people to call this a democratic country when we’re clearly not in control of our government at all unless we’re the CEO of some huge corporation?

  13. John Galt
    Posted March 28, 2011 at 7:28 am | Permalink

    The only crime here is that we can’t cut the corporate tax rate to less than zero. If we could just do that, I know it would spur tremendous job creation and growth.

  14. Glen S.
    Posted March 28, 2011 at 8:34 am | Permalink

    @ John Galt

    “The only crime here is that we can’t cut the corporate tax rate to less than zero.”

    Well, since G.E. paid no taxes, yet is getting a $3.2 refund, I think they’ve figured out a way to do exactly that!

    No worries, though … my resume is up to date, and I’m ready and eager to apply one of the thousands of new jobs G.E. surely will be creating.

    Now all I need is a plane ticket to India.

  15. dragon
    Posted March 28, 2011 at 9:03 am | Permalink

    If we eliminated taxes, there wouldn’t be enough room in Washington to hold the extra revenue, and if we went to negative taxation, people would die under the crushing piles of the mushrooming revenues.

  16. Kim
    Posted March 28, 2011 at 10:23 am | Permalink

    Doesn’t GE create a lot of jobs in their Sheinhardt Wig division?

  17. Posted March 28, 2011 at 10:30 am | Permalink

    They are obviously working hard, thus they shouldn’t have to pay taxes. Only the lazy need to pay.

  18. wetdolphinmissile
    Posted March 28, 2011 at 10:46 am | Permalink

    welfare for the wealthy…but watch those entitltements

  19. Eel
    Posted March 28, 2011 at 12:22 pm | Permalink

    As us non-gays would say, “It gets worse.”

    After not paying any taxes and making huge profits, ThinkProgress has learned that General Electric is expected to ask its nearly 15,000 unionized employees in the United States to make major concessions.

    http://thinkprogress.org/2011/03/28/ge-union-workers-cuts/

  20. Ms. Pacman's Lover
    Posted March 28, 2011 at 4:46 pm | Permalink

    I moved my accounts from BoA to Midwest Finacial CU (now DFCU, as of this month) a year or two ago, and couldn’t be happier. Screw big banks. Credit Unions are where it’s at.

  21. Glen S.
    Posted March 29, 2011 at 6:13 am | Permalink

    Interesting to see this editorial in — of all places — the Wall Street Journal’s “Marketwatch,” blog:

    “Tax the Super Rich now or face a revolution”

    http://www.marketwatch.com/story/tax-the-super-rich-now-or-face-a-revolution-2011-03-29?link=home_carousel

  22. Kim
    Posted March 30, 2011 at 12:21 pm | Permalink

    Jon Stewart was brilliant on this subject.

    http://www.thedailyshow.com/watch/mon-march-28-2011/i-give-up—pay-anything—

  23. Glen S.
    Posted March 30, 2011 at 2:41 pm | Permalink

    I attended last night’s special Ypsilanti City Council meeting where elected leaders were put in the unenviable position of having to choose between (sorry, “prioritize”) two Michigan Natural Resources Trust Fund grant applications that could potentially provide seed money to kick-start two extremely worthwhile local projects:

    1.) A bridge under Michigan Ave. that would exemplify regional cooperation by providing a vital link in Washtenaw County’s Border-to-Border trail, or –

    2.) A rebuild/renovation of Rutherford Pool, which provides safe, affordable recreation opportunities to untold numbers of Ypsilanti children and families.

    Unlike in many such debates, it was actually kind of refreshing to see how speakers (neighbors, really, on both sides) were almost unfailingly polite and respectful — each taking great pains to recognize the worthiness of their opponents’ plans and position — while nevertheless making their individual cases for why one project or the other deserved to make the cut.

    Still, I ended up leaving the meeting feeling sad and angry … as if I had just watched friends and neighbors being forced into a bizarre standoff over the mere CHANCE of being awarded a grant (albeit one that amounts to a relatively small amount of money, in the scheme of things) — amid a sense of growing urgency driven by the sense that these kinds of grant opportunities may not be available in the future.

    If (as federal, state, and local budgets continue to shrink) neighbors are increasingly forced to fight over the “scraps” of what’s left — not only for amenities like recreations trails and pools, but core services like police and fire, then make no mistake — it will be because there is a DIRECT CONNECTION between the kinds of abuses described throughout this thread and these threats to our community’s quality of life.

    Q: Why are Ypsilanti neighbors who support a public pool or a recreation trail being pitted against each other — while General Electric, one of the World’s largest and most profitable corporations, enjoys a NEGATIVE 60% tax rate?

    Q: Why is Ypsilanti being forced to consider trimming current and future wages and benefits for hard-working City employees — when not a single person responsible for the Wall Street “collapse” has ever been held accountable, and many of these same people continue to earn obscene salaries and bonuses?

    Q: Why is Ypsilanti facing an accelerating budget disaster and threats of an appointed Emergency Financial Manager with unlimited, unchecked powers — when Michigan Republicans are proposing an unncesary $1.6 billion corporate tax giveaway?

    Q: Why are we being threatened with cuts to education spending that are so drastic that continued existence of free, public education in Ypsilanti (and many other communities) is in doubt — while the U.S. is engaged in not two, but now three unnecessary wars?!

    My point is this: Why is it that America seems to place a higher value on some CEO’s lavish salary and “bonus,” or another unnecessary tax giveaway to the wealthy and corporations, or for that matter — on one more ($1 million) Tomahawk Cruise Missile lobbed into the Libyan desert — than the very real needs of communities like Ypsilanti, and the people who live in them?

    Better yet, why are none (or at least very few) of our so called “leaders,” doing anything about it?

  24. dp in ypsi
    Posted March 30, 2011 at 4:23 pm | Permalink

    I can’t see any of the esteemed MI Congressional delegation lifting a finger anytime soon.

    OpenSecrets.org
    http://www.opensecrets.org/orgs/summary.php?id=D000000125&cycle=2010

    GE 2010 Election Cycle Contributions

    Stabenow, Debbie (DMI) Senate $16,000
    Peters, Gary (DMI) House $9,800
    Levin, Sander (DMI) House $9,000
    Dingell, John D (DMI) House $8,000
    Conyers, John Jr (DMI) House $6,500
    Kilpatrick, Carolyn Cheeks (DMI) House $6,500
    Schauer, Mark (DMI) House $4,000
    Stupak, Bart (DMI) House $2,000

    Camp, Dave (RMI) House $21,500
    Rogers, Mike (RMI) House $4,000
    Ehlers, Vernon J (RMI) House $2,000
    McCotter, Thad (RMI) House $2,000
    Amash, Justin (RMI) House $1,000
    Upton, Fred (RMI) House $1,000

  25. dp in ypsi
    Posted March 30, 2011 at 5:04 pm | Permalink

    Via Glen S: “Better yet, why are none (or at least very few) of our so called “leaders,” doing anything about it?”

    Why should they when their own interests are taken care of just fine? Members of Congress make decent money, have a nice expense account, get a guaranteed pension, a staff to to their bidding, get on tv when/if necessary, eat at fancy restaurants and are generally doted on like royalty. Short a few rare examples, they are completely unaccountable to their “constituents” come re-election, and when pressured too much by any do-gooder interest group, they’ll flaunt that fact in your face.

    We live in a faux-democracy where inertia, money, administrative infrastructure and maintenance of power mean more, and indeed result in more, than do good ideas, hard work and living an honorable life.

  26. TeacherPatti
    Posted March 30, 2011 at 9:34 pm | Permalink

    @GlenS, belated thanks for the awesome response! :)

  27. Glen S.
    Posted March 31, 2011 at 7:00 am | Permalink

    Former U.S. Senator Russ Feingold (D-WI) is leading a new organization called “Progressives United,” which is working with “MoveOn.org” in sponsoring a petition calling for G.E. head Jeffrey Immelt to resign (or be forced to resign) his position of chair of President Obama’s “Council on Jobs and Competitiveness.”

    http://www.progressivesunited.org/action/immelt-must-go

  28. Meta
    Posted March 31, 2011 at 12:58 pm | Permalink

    From Common Dreams:

    It’s tempting to blame government for our middle-income 15-20% tax rates. But the true culprits have documented their own guilt. Comprehensive financial reports called ’10-Ks’ are issued annually to the SEC by U.S. corporations. Amidst tedious pages of income, flow, and outgo, company accountants deftly balance management’s desire to impress stockholders with the need to avoid self-incrimination.

    PayUpNow.org has documented recent corporate tax activity from the 10-Ks. We took non-deferred federal tax payments over the past three years and analyzed the figures to determine which companies and industries consistently meet or avoid their obligations. The entire dataset is available on the PayUpNow.org website.

    The GOOD seems to be in the health care industry, where Humana, Medco, Wellpoint, and United Health all paid taxes at rates close to the 35% corporate maximum over the past three years. Some nation-wide family favorites fared well, too. Home Depot, Walgreens, CVS, Kohl’s, and Best Buy all approached the 35% rate three years running. Good places to shop.

    Companies within specific industries were generally grouped together, as if they didn’t want to fall far from the tree. In the middle of the pack were Costco, Walmart, and Target, all consistently paying in the mid-20% tax rate range. Even more noteworthy was the tech industry, which had several companies paying taxes at annual rates between 15 and 20 percent: Microsoft, Oracle, Dell, Google, Apple, Amazon, Cisco, and Comcast.

    On to the BAD…Kraft Foods and Coca Cola paid less than 10% in taxes over the three-year period. Chevron paid 5%. Hewlett-Packard 3%. IBM 2%. Exxon 2%. Carnival 1%.

    Can’t get much worse, it seems. But it does. It gets UGLY.

    Boeing and DuPont and Dow Chemical and Verizon all made profits three years in a row, but all received net refunds for the three-year period. The ugliest result comes from General Electric, which made pre-tax profits of $44 billion over three years but received almost $5 billion in refunds! So ugly, indeed, that the company buried its tax benefit (refund) strategy in a nondescript passage near the end of its 10-K.

    The big picture:

    The top 100 companies, with $5 trillion in 2010 revenue and $500 billion in pre-tax earnings, paid less than 10% last year in non-deferred federal taxes. If these 100 companies had paid the 35% tax designated by U.S. tax law, an additional $140 billion would have been collected in federal taxes in just one year. This is approximately equal to the total budget deficits for all 50 states.

    Pay Up Now is committed to a focused national effort to refuse the business of the worst corporate tax offenders. We should not have to subsidize them with our own tax money.

    http://www.commondreams.org/view/2011/03/31-6

  29. TaterSalad
    Posted April 1, 2011 at 3:27 pm | Permalink

    We can now give thanks to Democrats Chris Dodd, Bwaney Fwranks and Barack Obama for changing the laws and helping these underpaid exec’s out with a couple of extra bucks!

    http://weaselzippers.us/2011/04/01/outrage-freddie-and-fannie-execs-pocketed-35-million-in-taxpayer-money/

  30. ODB
    Posted April 8, 2011 at 3:19 pm | Permalink

    The conversation has already moved on to other things. GE has nothing to worry about from you people.

  31. Glen S.
    Posted April 13, 2011 at 12:56 pm | Permalink

    Brilliant!

    http://www.bloomberg.com/news/2011-04-13/ge-tax-hoax-responsibility-claimed-by-activist-group-us-uncut.html

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  1. By Sophie’s Choice… Ypsi style on March 30, 2011 at 3:55 pm

    […] it will be because there is a DIRECT CONNECTION between the kinds of abuses described throughout yesterday’s thread and these threats to our community’s quality of […]

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