Ge Accountant Case
Essay Preview: Ge Accountant Case
Report this essay
In the midst of our nations current serious budget deficit, corporate taxation has been getting more heated scrutiny than ever especially after GE did not have any tax liability in 2011 despite reporting a profit of approximately five billion dollars. Even though corporate tax rate in the United States is one of the highest in the world, 35%, however, few U.S companies have been paying at this rate, not to mention, they have been paying at much lower rates through a variety of tax shelters and tax credits enabled by our tax loopholes. They avoid paying their fair share of tax by adopting aggressive tax strategies that mixes fierce lobbying for tax breaks and innovative accounting that allows them to keep their profits offshore. Besides GE, other notable examples can be Apple and hundreds of other tech companies whose tax liabilities for their 2011 billions of profits were calculated at a much lower than a tax rate of a household making less than $42,500 a year. The almost to zero tax liability have helped GE and other companies increase their bottom-line profits and continue paying dividends to shareholders, bumping up their stock price during the economic downturn. However, evidence has suggested that companies do not use such revenue for their corporate citizenship; instead, they have been laying off thousands of American employees while increasing oversea employment.
Twenty five years ago, President Ronald Reagan even had to admit to his Treasury secretary that he “did not realize things had gotten far out of line”. Despite the introduction of Tax Reform Act of 1986, multiple new loopholes have arisen through business backed lobbying campaigns and employment of former government officials. For example, corporations have been joined each other in the lobby company for the repeat of 2004 repatriation tax holiday which allowed companies to bring profits from overseas subsidiaries back to US at a sharply discounted tax rate. Moreover, our current tax loopholes also allow these giant corporations to pioneer and adopt numerous aggressive tax avoidance strategies with the help of their skilled tax departments flooded with former officials from IRS, Treasury and even tax writing committees in Congress. The 1986 Act has lost its effectiveness and the fact that these companies can set their own tax rate has shown how much our tax code needs to be reformed.