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Unbelieveable. I know I shouldn't be shocked, but it's incredible that a corporation that got bailed out by federal taxpayers can rake in billions of dollars in profits and not pay a penny in federal income taxes...
GM rakes in big profits, avoids U.S. income tax
'General Motors Co., which has earned more than $13 billion since 2009, said Thursday its worldwide tax rate will increase to as much as 13 percent.
But the Detroit automaker, which reported $1 billion in profits for the first three months of the year, has legally avoided paying U.S. federal income taxes since exiting bankruptcy. And GM likely will pay no income taxes for many more years.
A series of Treasury Department rulings since 2008 let GM use $18 billion in losses — from the "old GM" that was left behind in bankruptcy — to offset any profits.
GM spokesman Jim Cain said the automaker pays "significant" state income taxes, but because of its prior losses doesn't incur federal tax liability. "We did not pay federal income tax last year," he said.
GM isn't alone among automakers that have paid little, if any, federal income taxes in recent years.
Ford Motor Co. has paid relatively low worldwide income taxes in recent years after it lost $30 billion between 2006 and 2008. It, too, has been able to use past losses to offset its profits.
But some experts have criticized the U.S. Treasury's decision as part of its $49.5 billion bailout of GM to allow the company to retain the losses of its predecessor General Motors Corp.
Under the 1986 law, a change in control of a company typically limits the use of tax losses by the company. That's to prevent "trafficking in tax losses," where big profitable companies could buy money-losing firms to reduce their tax bills.
The Treasury has allowed many companies that received big government bailouts to retain tax losses estimated to cost the Treasury more than $100 billion in tax revenue. That includes companies like AIG, Citibank and other banks.
Since the government owned 61 percent of GM after it exited bankruptcy, the credits should not have transferred, some say.
"It was basically just ignoring the law," said J. Mark Ramseyer, a Harvard law school professor who wrote a 2011 paper on the Treasury's decision to exempt GM.
GM kept about $45 billion in tax losses and valued them on its books at $18 billion in 2009.
"Had the president tried to give GM $18 billion forthrightly, voters might have complained. By hiding the gift in an obscure tax section, he reduced that electoral scrutiny," Ramseyer and Indiana University business professor Eric Rasmusen wrote.'http://www.detroitnews.com/article/20120504/AUTO0103/205040378/GM-rakes-big-profits-avoids-U-S-income-tax?odyssey=tab|topnews|text|FRONTPAGE
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WixomSpartan said...
Unbelieveable. I know I shouldn't be shocked, but it's incredible that a corporation that got bailed out by federal taxpayers can rake in billions of dollars in profits and not pay a penny in federal income taxes...
GM rakes in big profits, avoids U.S. income tax
'General Motors Co., which has earned more than $13 billion since 2009, said Thursday its worldwide tax rate will increase to as much as 13 percent. But the Detroit automaker, which reported $1 billion in profits for the first three months of the year, has legally avoided paying U.S. federal income taxes since exiting bankruptcy. And GM likely will pay no income taxes for many more years. A series of Treasury Department rulings since 2008 let GM use $18 billion in losses — from the "old GM" that was left behind in bankruptcy — to offset any profits. GM spokesman Jim Cain said the automaker pays "significant" state income taxes, but because of its prior losses doesn't incur federal tax liability. "We did not pay federal income tax last year," he said. GM isn't alone among automakers that have paid little, if any, federal income taxes in recent years. Ford Motor Co. has paid relatively low worldwide income taxes in recent years after it lost $30 billion between 2006 and 2008. It, too, has been able to use past losses to offset its profits. But some experts have criticized the U.S. Treasury's decision as part of its $49.5 billion bailout of GM to allow the company to retain the losses of its predecessor General Motors Corp. Under the 1986 law, a change in control of a company typically limits the use of tax losses by the company. That's to prevent "trafficking in tax losses," where big profitable companies could buy money-losing firms to reduce their tax bills. The Treasury has allowed many companies that received big government bailouts to retain tax losses estimated to cost the Treasury more than $100 billion in tax revenue. That includes companies like AIG, Citibank and other banks. Since the government owned 61 percent of GM after it exited bankruptcy, the credits should not have transferred, some say. "It was basically just ignoring the law," said J. Mark Ramseyer, a Harvard law school professor who wrote a 2011 paper on the Treasury's decision to exempt GM. GM kept about $45 billion in tax losses and valued them on its books at $18 billion in 2009. "Had the president tried to give GM $18 billion forthrightly, voters might have complained. By hiding the gift in an obscure tax section, he reduced that electoral scrutiny," Ramseyer and Indiana University business professor Eric Rasmusen wrote.'
http://www.detroitnews.com/article/20120504/AUTO0103/205040378/GM-rakes-big-profits-avoids-U-S-income-tax?odyssey=tab|topnews|text|FRONTPAGE
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Nitro Biscuits said...
But GM and Billions of profits? Fucking awesome for Michigan and proof positive the Auto Bailout was a great call even though it was unpopular at the time.
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Tree Rat said...
As if Wixom doesn't have an ax to grind.
But glad to make myself just as stupid as him, I'll play along.
I don't give two shits what GM pays in taxes, same for GE, Apple, Exxon, all of them. Only idiots worry about this crap. Now what the workers pay, that's what matters.
Our tax system is a load of crap. Some idiots "think" levying taxes is a way of retribution. Some idiots want to live off the efforts of others. That this subject "matters" to some fools shows how fucked up our political system is.
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GM: billions in profits, zero federal income taxes