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My understanding was that nobody, individuals or corporations, escapes the Alternative Minimum Tax because whoever writes their taxable income down to zero, whether it's Mr & Mrs Smith with 100k or GE with 15 billion, automatically triggers the AMT from which they cannot escape, the AMT is that iron-clad. But apparently it isn't, at least for the wealthiest corporations among us, as GE wrote off every penny of that 15 billion and even got a 4 billion credit from the IRS. How does that happen?
As I understand it, GE paid a staff of nearly 1,000 accountants to file a 27,000 page tax return. It would cost the government more to read it and audit it, than they would take in as revenue if GE had to pay tax. The government is obliged to accept the figures filed, unless it performs an audit and proves that they are inaccurate.
GE could have filled in the whole thing with numbers from random number generating software, and the governent would have no way to check it. The only number that we can be sure is not random, is the zero on the line that says Total Tax Due, and maybe the $15-billion on the line that says Profits.
Assuming there would have ordinarily been a $5-billiion tax assessment, and they were instead given a $4-billion credit, that's a $9-billion shortfall. Which means the average working taxpayer paid about 150 bucks last year in taxes on behalf of GE. And will pay it again next year, because not a single loophole will be addressed. We can't even boycott GE---how many GE products have you bought in the past 10 years? Nearly all their income comes from sweet contracts with the military/industrial complex and other large corporate clients. There's a bunch of them. Try to boycott Raytheon, or Lockheed Martin, or Cisco. or Electric Boat. They don't pay much tax, either, but since they don't have the balls to pay zero, it doesn't get publicized.
A week or so ago, I posted a reply to another thread, to the effect that virtually all taxes are paid by the bottom feeders, because, everyone passes their tax burden down to consumers, and there is nobody for us to pass it on to. Everybody scoffed.
As I understand it, GE paid a staff of nearly 1,000 accountants to file a 27,000 page tax return. It would cost the government more to read it and audit it, than they would take in as revenue if GE had to pay tax. The government is obliged to accept the figures filed, unless it performs an audit and proves that they are inaccurate.
GE could have filled in the whole thing with numbers from random number generating software, and the governent would have no way to check it. The only number that we can be sure is not random, is the zero on the line that says Total Tax Due, and maybe the $15-billion on the line that says Profits.
Assuming there would have ordinarily been a $5-billiion tax assessment, and they were instead given a $4-billion credit, that's a $9-billion shortfall. Which means the average working taxpayer paid about 150 bucks last year in taxes on behalf of GE. And will pay it again next year, because not a single loophole will be addressed. We can't even boycott GE---how many GE products have you bought in the past 10 years? Nearly all their income comes from sweet contracts with the military/industrial complex and other large corporate clients. There's a bunch of them. Try to boycott Raytheon, or Lockheed Martin, or Cisco. or Electric Boat. They don't pay much tax, either, but since they don't have the balls to pay zero, it doesn't get publicized.
A week or so ago, I posted a reply to another thread, to the effect that virtually all taxes are paid by the bottom feeders, because, everyone passes their tax burden down to consumers, and there is nobody for us to pass it on to. Everybody scoffed.
Well, my mother's experience was that she made a 430k profit on an income property. She had to pay 115k in fed and state capital gain and then, to add insult to injury, an additional 9k AMT on top of it. Yes, we truly are subsidizing megacorp's like GE.
My fiancee is taking tax law as one of her CPA pre-requisite exams. You should see the tax law textbook she had...and yes she said loopholes galore for companies in general.
Well, my mother's experience was that she made a 430k profit on an income property. She had to pay 115k in fed and state capital gain and then, to add insult to injury, an additional 9k AMT on top of it. Yes, we truly are subsidizing megacorp's like GE.
what we are subsidizing is the GOVERNMENT.
while i agree that some corporations are not paying their fair share in comparison to others due to government loopholes and lobbying, who is the real parasite here? who made your mother pay those high taxes?........
Every company as large as GE gets audited every single year. Most companies that size are still working on "closing" the tax books for tax years 5-7 years back. What usually happens is the IRS lists out what it finds it questions in the returns and the company's accountants either make changes in consultation with their independent auditors or they contest it and it can go back and forth in a sort of negotiation.
There have been some pretty tough accounting pronouncements in the past decade which made tax accounting for the publicly released financial statements tougher on earnings than it used to be. Right now companies have to assume everything the IRS mentions will go against the company and that they will have to pay the taxes plus any fines and interest. In reality what usually happens is the IRS settles for less than they originally ask for and they waive some or all of the fines and interest. So when the company and IRS close a tax year, the company actually gets a bump up in its earnings and possibly its EPS by reversing out its worse case scenario. If a number of these tax years get closed in one fiscal year and there were a lot of negotiated items, it can lower a company's tax rate quite a bit.
As for why they didn't pay at least the AMT rate of 20%, its pretty simple. They earned a lot of tax credits. Thank your politicians for that. The tax rate you read about is simply a math equation, what tax was paid divided by what earnings were reported. Its not a tax rate as you might think about it, such as the 35% tax rate of earnings under corporate. So GE did face 35% taxes on earnings to begin with, but then they got a boatload of tax credits mostly for building green energy equipment and a ton of R&D credits from all sorts of countries worldwide.
As for why they didn't pay at least the AMT rate of 20%, its pretty simple. They earned a lot of tax credits. Thank your politicians for that. The tax rate you read about is simply a math equation, what tax was paid divided by what earnings were reported. Its not a tax rate as you might think about it, such as the 35% tax rate of earnings under corporate. So GE did face 35% taxes on earnings to begin with, but then they got a boatload of tax credits mostly for building green energy equipment and a ton of R&D credits from all sorts of countries worldwide.
Please take a look---if you dare---at the calculations you need to compute to see if you, an individual, owe an AMT. I'm a pretty smart fella and this was like trying to untie the Gordian Knot.
PS The AMT was originally set up by Congress to prevent large corps from using these "boatload of tax credits" and other dodges to skirt the AMT.
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