It's no secret that General Electric (GE) has avoided paying any taxes this year. GE made $14.2 billion but paid zero taxes in 2010. It infuriates most of us tax-paying Americans and encourages many to wonder how to do it themselves. When you look at the reasons that GE largely avoids tax liability, it is a lesson to us all.
The truth is that GE has largely avoided paying taxes on overseas employment and lending activities because they WILL NOT be taxed in the United States. And are we not concerned about the state of unemployment in the United States? A new Council on Jobs and Competitiveness has been created by President Obama and what about the possibility of placing a fox in the hen house not only infiltrating, but leading that think tank?
According to President Obama, (concerning the charge of this board): "Our job is to do everything we can to be sure that businesses can take root and folks can find good jobs and America is leading the global competition that will determine our success in the 21st Century."
Here is the fox in the hen house; Chairman and CEO Jeffrey Immelt has been appointed by President Obama as the Chair of the President's Council on Jobs and Competitiveness. Okay, it's understandable that Immelt would be an adviser for American business on competitiveness, but on jobs? These are two completely different issues. If Immelt has his way, even more jobs will be relocated overseas at least you conclude when you look at his practice. Where will that leave us and the unacceptable unemployment rate? I just can't imagine that Mr. Immelt will advocate for more businesses to send American jobs off shore... or will he?
According to the Economic Policy Institute, "American companies have created 1.4 million jobs overseas this year, compared with less than 1 million in the U.S." How about tackling that issue?
Maybe Immelt is just what the commission needs to identify the methods that GE has perfected to avoid liabilities and to fix for future employment potential. Maybe his tax avoidance process will only apply to GE and not to others.
No wonder they can get away with the foreign business practices and avoid paying taxes. It makes us question the legality of their practices BUT, the answer is that they perfectly comply with tax laws and have a cast of a thousand in their tax department watching over their legal tax evasion process.
GE's top tax executive and former US Treasury tax official, John Samuels describes the philosophy of sending jobs abroad as an incentive to defer taxes on overseas profits. He teaches a class at Yale Law School about taxes and you can bet he espouses the benefits of sending jobs elsewhere. No help for the American unemployment rate there.
I, for one, would like to see a statement from Mr. Immelt about how he intends to lead this important council and turn around the AMERICAN job market. Will he encourage off shoring of jobs and investments to avoid or limit tax liability? ...or will he say that we need to grow American job opportunities? I will be waiting with baited breath. Is President Obama hoping that GE, the largest company in America will jump on the band wagon and follow suit?
There are calls for Immelt's resignation from the President's Council from both the left and right. Former Senator Russ Feingold has initiated a petition calling for Immelt's resignation on the Council and there is tacit support from conservatives.
What should come out of this Council on Jobs is a grounded appeal for the elimination or at least a limitation of tax sheltering for sending jobs off shore. We can't forget, we are in a serious crisis with our American unemployment. Of course American companies can do business abroad and should continue to do so. But the expense is on the backs of the unemployed and job seeking Americans. Companies say that they cannot find the job candidates in America to meet their needs and go elsewhere. It strains logic. What about the companies that won't even consider candidates that are unemployed?
It's time to tax the jobs going off shore providing a disincentive to send them elsewhere. We need help in this job crisis and our tax laws need to reflect the difficult times we are experiencing. I can't see Immelt leading this charge. If he encourages more jobs at home, I salute him and his Council. If not, he will advocate for a direct contradiction of his practices.
But GE is not alone as many other companies are also involved in the mass exodus of American jobs. For years, competitors have been bought by GE and others leading to mass layoffs of thousands of employees and subsequently outsourcing their jobs to companies outside of the United States.
Immelt is bad for this position... or is he? Many of us are interested in seeing the game of "Do as I say not as I do." We can learn a thing or two from the experiences of others.