Tag: Taxes

Confidential to The New York Times: GE’s 2010 Tax Return Isn’t Finished Yet

Remember that New York Times story that put the universe on notice that General Electric made truckloads of money and ended up with a $3.2 billion “tax benefit”? It also mentioned that their tax department is known as the “best tax law firm” and is staffed with a small army of former Treasury whiz-kids and turbo-tax nerds to legally minimize the company’s tax obligation. The story got all sorts of people worked up from Jon Stewart to Henry Blodget and it whipped up a small amount of hysteria amongst the masses who had the courage to read an esoteric tax article that went on for more than one page.

Today a new report from ProPublica (a rebuttal of sorts, since they got scooped by the Times) is “Setting The Record Straight on GE’s Taxes“:

Did GE get a $3.2 billion tax refund? No.

Did GE pay U.S. income taxes in 2010? Yes, it paid estimated taxes for 2010, and also made payments for previous years. Think of it as your having paid withholding taxes on your salary in 2010, and sending the IRS a check on April 15, 2010, covering your balance owed for 2009.

Will GE ultimately pay U.S. income taxes for 2010? After much to-ing and fro-ing — the company says it hasn’t completed its 2010 tax return — GE now says that it will pay tax.

Also, part of the ProPublica report clarifies that the whole “financial reporting vs. tax reporting” thing:

GE’s 2010 financial statements reported a $3.25 billion U.S. “current tax benefit,” which is where the Times, which declined comment, got its $3.2 billion “tax benefit” number. But a company’s “current tax” number has nothing to do with what it actually pays in taxes for a given year. “Current tax benefit” and “current tax expense” are so-called financial reporting numbers, used to calculate the profits a company reports to shareholders.

In other words, the Times left out the tricky stuff or maybe just didn’t a bang-up job explaining the tricky stuff. But framing the shrewd tax planning and lobbyists working for a giant corporation is far more provocative than book-tax differences and defining deferred tax assets. Relevancy be damned!

Setting The Record Straight on GE’s Taxes [ProPublica]
Also see: GE and the power of iterative journalism [Felix Salmon/Reuters]

How Do You Like VAT?

[A]s globalization increases demand for a more competitive tax system, the United States must consider shifting from a system that primarily relies on income taxation to one that relies primarily on consumption taxation. Most other major economies around the world depend more heavily on consumption taxation than does the United States. And all indications are reliance on consumption taxes is increasing. [Martin Sullivan]

Omaha Mayor Proposes Crappy Idea to Fund Sewer Improvements

Omaha Mayor Jim Suttle was at the U.S. Conference of Mayors this week to brainstorm solutions to various problems with his fellow hizzoners. Omaha, for one, needs to make improvements to its sewer system to the tune of $1.7 billion. So it makes perfect sense for Suttle to suggest a simple way to get to the source of this problem:

Among the items on his brainstorming list: a proposal for a 10-cent federal tax on every roll of toilet paper you buy. Based on the four-pack price for Charmin double rolls Tuesday at a midtown Hy-Vee, such a tax would add more than 10 percent to the per-roll price, pushing it over a buck.

But just because Scuttle is throwing this out there doesn’t mean he’s on board with it; he’s just come up with solutions:

The idea came from a failed 2009 House measure by an Oregon congressman to help cities and the environment. “I heard about it and said, ‘Well, this is simple. Let’s put it on the table,’” said Suttle. “It doesn’t mean I endorse it.

Suttle unrolls toilet paper tax [OWH via TaxProf]

Rich People in the U.S. Seem to Be Pulling Their Tax Weight Relative to Other Industrialized Countries

The United States relied more on tax revenue from wealthy individuals and families than other industrialized countries during the middle of the last decade, the Tax Foundation said Monday. Citing data released in 2008 from the Organization for Economic Cooperation and Development, the nonpartisan group said that the ratio of what higher-income households paid in taxes compared to their share of market income was bigger here than in certain other countries. The richest 10 percent of American households paid a 45 percent share of the nation’s taxes in the mid-2000s, the OECD found, while having a 33.5 percent share of market income. That 1.35 ratio was higher than countries including Australia (1.29), Canada (1.22), France (1.1) and Poland (0.84). [The Hill]

Pipedream Legislation Would Tax Billionaires at 49%

Congresswoman Jan Schakowsky (D-IL) has introduced the cleverly-named “Fairness in Taxation Act” that would tax millionaires and billionaires at rates that will cause John Boehner to hack up both his lungs.

Despite the futility of the FiTA, these are some tax rates that Tom Bloch can get behind!

The bill would create the following new tax brackets for millionaires and billionaires:

• $1-10 million: 45%
• $10-20 million: 46%
• $20-100 million: 47%
• $100 million to $1 billion: 48%
• $1 billion and over: 49%

And Schakowsky obviously has a thing for the Steve Cohens and John Paulsons of the world:

The current top tax bracket begins at $373,000 in income and fails to distinguish between the “well off” and billionaires, such as the top 20 hedge fund managers whose average income last year was over $1 billion, Schakowsky pointed out.

Congresswoman Introduces Bill to Tax Millionaires and Billionaires [AT]

Memo to Congress: Cutting Funding for NPR Should Be NBD

The NPR funding debate is a litmus test of how serious Congress in general and Republicans in particular are about spending cuts. If Congress can’t even cut NPR it is a sign that deficits are here to stay and . . .dare I say it . . .tax hikes will be necessary. Or perhaps you don’t care that your children will be paying big chunks of their diminished incomes to the Chinese. [Martin Sullivan/Tax.com]

Heir to H&R Block Fortune Is Ready to Pay Higher Taxes

Tom Bloch is so ready in fact that he wants his to go up first.

“Congress will have no choice, in my opinion, but to raise taxes sooner rather than later.

“I also believe that the rich are significantly under-taxed compared to the middle class. That’s why I suggest that raising taxes on the very wealthiest taxpayers must be the first step toward restoring equity in our income tax system and ensuring the financial security of our children’s future.”

US taxes are too low, should be raised: H&R Block heir [PhillyDeals]

IRS Eases Up on the Tax Liens for the Little People; Celebrities Not So Lucky

Commissioner Doug Shulman said in a statement today that the agency would make it easier for taxpayers to seek withdrawal of liens when they pay a tax debt or make arrangements to pay in installments for debts of less than $25,000. The agency also raised the dollar thresholds before liens are typically filed. “We are making fundamental changes to our lien system and other collection tools that will help taxpayers and give them a fresh start,” Shulman said in the statement. “These steps are good for people facing tough times, and they reflect a responsible approach for the tax system.” [Bloomberg]

Be Prepared for a New Flood of GOP ‘IRS Agents Will Be Invading Your Homes’ Rhetoric

President Barack Obama proposed increasing the budget for the Internal Revenue Service by 9.4 percent to hire more than 5,000 new employees, most of whom would pursue tax cheats. The president’s fiscal 2012 budget released today sets funding for the tax-collection agency at $13.3 billion, an increase of $1.1 billion from 2010, the last time a full appropriation was made for the IRS. Almost half of the increase, or $460 million, would support the agency’s tax-enforcement programs. Under the plan, the IRS would focus on fighting tax evasion through the use of offshore accounts and cheating by corporate and high-wealth taxpayers. It also would seek out fraudulent tax preparers. [Bloomberg]

It’s Being Suggested That Higher Taxes on Alcohol Will Reduce Crime

It’s ironic that I read this this blog post today (rather than on Friday) since A) approximately a third of the country is in a some stage of a hangover B) I’m listening to “Rehab” by Amy Winehouse as I write this and C) there was a murder at a fraternity in Youngstown, Ohio over the weekend (I realize it’s a stretch to assume that anyone would have been drinking at a frat party) but this is pie-in-the-sky postulating that just begs to be mocked.


Janet Novack’s post at Forbes discusses a recent article written by two professors who are crime fighters in the economic persuasion:

Would raising the tax on beer reduce the number of young folks who get caught up in crime and the high budget and social costs of locking up so many people?

In a provocative article, The Economist’s Guide To Crime Busting, in the new issue of The Wilson Quarterly, Duke University’s Philip J. Cook and the University of Chicago’s Jens Ludwig suggest that it would. (The article is here, but isn’t free.) The profs argue that crime policy (from an economist’s point of view) should focus “both on making criminal opportunities less tempting and the law-abiding life more rewarding” and offer three strategies which they say have been shown to do just that: raising the mandatory age through which kids must attend school; creating business improvement districts with private security guards (a tactic Los Angeles has used with great success); and yes, raising taxes on alcohol.

Our favorite passage being the “making criminal opportunities less tempting and the law-abiding life more rewarding” because this what someone walking into the liquor store is thinking, “Jeepers, the cost of binge drinking on the weekend has gone up significantly and no longer fits my monthly budget. I guess I’ll stay sober and won’t break the law today.”

It continues:

The average state excise tax on beer, they note, is now only about 10 cents per 12 ounce bottle. Raising it to 55 cents they write, would persuade some teenagers “not to pick up that second six-pack on Thursday night” and would produce such extra benefits such as “fewer auto accidents and more money for state treasuries.” Data from Cook’s 2007 book, Paying The Tab, suggests a 55 cent per bottle levy would reduce beer consumption perhaps 10% and crime maybe 6%, they note.

Never mind how the neo-con scamps over at American for Tax Reform would react; this assumes that the demand for alcohol is elastic. You could easily argue that most people with the necessary means will pick their potent potable of choice regardless of price and even if they did decided to tighten the booze budget, they’d just go for a cheaper alternative, they wouldn’t actually buy or drink less.

I’m no economist but this kind of reasoning simply defies logic. People will drink regardless of the cost and they will continue to act like idiots and commit crimes when doing so. If you want to discuss that from a tax/fiscal policy standpoint raising taxes on booze (or taxing other sins) is a good idea then a discussion can be had. But let’s not get all crazy and start claiming that our country will become a bunch of law-abiding teetotalers the second a sixer of suds goes up $6.

Super Bowl Question:Would Higher Beer Tax Reduce Crime? [Forbes]

Can We Get a Show of Hands From People Who Plan to Declare Their Super Bowl Gambling Winnings?

You may have heard about or even watched a sporting event known as the Super Bowl that was played last night. This particular mother of all bowls saw the Green Bay Packers defeat the Pittsburgh Steelers 31-25, paying a tidy sum for anyone that picked them last spring. Which brings me to my next point: while the Super Bowl is a grand occasion that involves athletes at the top of their game, expensive ads and shitty, over-hyped halftime shows, it’s also means an epic amount of wagering. Everything from the coin flip to last year’s odds on Reggies Bush’s total yardage versus Kim Kardashian’s measurements are popular ways to earn yourself some free money (or, if you’re on the losing side, a broken tibia).


And believe it or not, most gamblers appear to be a honest lot with over $27 billion declared gambling winnings in 2008 (the most recent data available). However, because avoiding taxes is as American as, well, the Super Bowl you can bet that a lot of the winnings don’t ever see a 1040. The exact amount of unreported winnings is, like that the secret ingredient in that dip you were inhaling last night, a mystery. Kay Bell reports:

As for how many taxpayers didn’t completely ‘fess up on 2008 returns about their gambling income, the IRS won’t even venture a guess. Or as an IRS spokesman once told me, “We can’t tell you what we don’t know.”

But guesstimating that a whole heck of a lot of gambling income never gets taxed is a very safe bet.

But don’t worry if you missed some sweet, tax-free action on last night’s game. March Madness isn’t far off.

By the Numbers: $27.197 billion [DWMT]