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Tax Paradise By Parking Profit Offshore

825 words - 4 pages

Tax Paradise by Parking Profit Offshore

There was a heated debate flowing among the headline of mainstream media about General Electric's 2010’s tax position. It was first published by the Times and pointed out that General Electric, by its aggressive strategy and “innovative” accounting, paid nothing in federal taxes in the year 2010, even it made billions in profit.

Generally speaking, it has become increasingly common for those gigantic multinationals to take advantages of the tax regulations by keeping those “geniuses” in their tax department and, at the meantime, exerting their powerful lobbyist skill. But how is it possible that such a giant American business with a profit of ...view middle of the document...

S. income statement to its overseas income statements and parking its profit in foreign countries, GE has been cutting the percentage of its American profits paid to the Internal Revenue Service for years, resulting in a far lower rate than most of its counterpart.

Beyond these two reasons, its extraordinary “success” is also based on an aggressive strategy that pursues fierce lobbying for tax breaks. It has long been known that GE has the best tax department over the word, which consists of more than 1000 tax exports, including former officials not just from the Treasury, but also from the I.R.S. and virtually all the tax-writing committees in Congress. Over the last decade, G.E. has spent tens of millions of dollars to push for changes in tax law and the most lucrative one allows G.E. to operate a vast leasing and lending business abroad with profits that face little foreign taxes and no American taxes as long as the money remains overseas.

In face of those shocked media and people, GE kept arguing that there is nothing illegal or even unethical about any of its tax strategy since its business truly has such a foreign oriented nature. We do agree that GE expanded abroad since last decade, which allowed it to book portion of its profits in low-tax countries such as Ireland and Singapore. But what we are questing is the...

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