backtop


Print


  (Source: H&R Block)
Certain corporate "people" are more equal than others

Tax day is an unpleastant observance for most ordinary Americans, but for a handful of corporate "people", it's a time of joy.  A number of high-tech firms make this year's list of most fortunate of the Fortune 500 -- firms who will pay no taxes this year, according to a report by Citizens for Tax Justice (CTJ).  Qualcomm Inc. (QCOM), Xerox Corp. (XRX), Priceline Group Inc. (PCLN), Pacific Gas and Electric Company (PG&E) Corp. (PCG), Time Warner Inc. (TWX), CBS Corp. (CBS), JetBlue Airways Corp. (JBLU), and General Electric Comp. (GE) are among the high-tech corporate "citizens" to pay little or no taxes this year.

GE, for example, is scheduled to pay a mere 0.9 percent of its profits in taxes.  Its annual profit stacks up at $5.8B USD.  Over the past half decade GE has posted profits of $33.5B USD, all while cumulatively paying no taxes for the five year period.  In fact, GE actually received a net refund of $1.4B USD over the last five year period.

How does GE do it?  Well, analysts are pretty sure it has something to do with clever accounting based on the GE Capital unit.  But to be honest even analysts aren't sure how GE managed to pay so very little.  Deane Dray, an analyst with the Royal Bank of Canada's (TSE:RY) (RBC) Capital Markets unit told The Wall Street Journal in a recent interview, "It's a bit of a black box."

GE Imagination
GE -- "Imaginative Accounting at Work"

The bad news for GE is that it may soon find its tax rate raise to a more typical level (around 20 percent) as it recently dumped the capital unit.  Still, the last half decade has been a terrific run for GE, albeit one many would argue is unfair to ordinary Americans.

Here's how the tech-tied members of the Fortune 500's fortunate few fared in taxes:
  • CBS
    • 2014
      • Profit: $1.790B USD
      • Taxes: refund of $235M USD (a -13.1 percent effective rate)
    • 2010-2014 (cumulative)
      • Profit: $9.290B USD
      • Taxes: $466M USD (an 5.0 percent effective rate)
  • JetBlue Airways
    • 2014
      • Profit: $615M USD
      • Taxes: refund of $2M USD (an 0.4 percent effective rate)
    • 2010-2014 (cumulative)
      • Profit: $1.403B USD
      • Taxes: $8M USD (an 0.6 percent effective rate)
  • Pacific Gas and Electric
    • 2014
      • Profit: $1.836B USD
      • Taxes: refund of $84M USD (a -4.6 percent effective rate)
    • 2010-2014 (cumulative)
      • Profit: $6.668B USD
      • Taxes: a refund of $465M USD (a -7.0 percent effective rate)
  • Priceline Group
    • 2014
      • Profit: $73M USD
      • Taxes: refund of $9M USD (a -12.3 percent effective rate)
    • 2010-2014 (cumulative)
      • Profit: $470M USD
      • Taxes: a refund of $32M USD (a -6.8 percent effective rate)
  • Qualcomm
    • 2014
      • Profit: $3.213B USD
      • Taxes: refund of $98M USD (a -3.1 percent effective rate)
    • 2010-2014 (cumulative)
      • Profit: $15.022B USD
      • Taxes: $1.314B USD (an 8.7 percent effective rate)
  • Time Warner
    • 2014
      • Profit: $4.296B USD
      • Taxes: refund of $26M USD (a -0.6 percent effective rate)
    • 2010-2014 (cumulative)
      • Profit: $21.069B USD
      • Taxes: $3.090B USD (an 14.7 percent effective rate)
  • Xerox
    • 2014
      • Profit: $629M USD
      • Taxes: refund of $16M USD (a -2.6 percent effective rate)
    • 2010-2014 (cumulative)
      • Profit: $3.597B USD
      • Taxes: $193M USD (an 5.4 percent effective rate)
Do these refunds upset you?  Well, remember, under the U.S. legal precedent corporations are "people".  And as George Orwell wrote in Animal Farm, "All animals are equal, but some are more equal than others."

Some animals are more equal than others
[Image Source: Halas and Batchelor]

It appears the same concept is applicable to these fortunate corporate "people" who are a bit more equal than the other people.

Source: CTJ [press release]





"If you can find a PS3 anywhere in North America that's been on shelves for more than five minutes, I'll give you 1,200 bucks for it." -- SCEA President Jack Tretton













botimage
Copyright 2017 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki