Free Republic
Browse · Search
Bloggers & Personal
Topics · Post Article

To: Raycpa
G.E.’s Strategies Let It Avoid Taxes Altogether
9 posted on 10/11/2011 6:45:47 AM PDT by KDD (When the government boot is on your neck, it matters not whether it is the right boot or the left.)
[ Post Reply | Private Reply | To 7 | View Replies ]


To: KDD

GE takes other peoples money, invests it and gives a return to the investors. That is its purpose in life. GE gets money to invest from two sources, stockholders and lenders.

The shareholders want a certain return on their investment. The lenders want a certain amount of interest income on their investment. Raising income taxes on GE will not change the amount investors want for a return or change the amount lenders want in interest income.

In order to satisfy the various markets, GE must obtain a return sufficient to produce the results it needs for its investors and its lenders. If it fails at this the company fails.

If you raise any of the costs of doing business, including energy, regulations and income taxes you reduce the profits of the company. When this happens, the investors don’t really care, they just begin to pay less for the stock and the lenders raise interest rates because the company is riskier.

GE can react three ways to an increase in costs (including income tax), 1) do nothing and it eventually goes out of business for lack of capital 2) Reduce costs by eliminating jobs vendors etc or paying less for same jobs or vendors and/or eliminating the least profitable divisions or 3) raise prices. Most companies will do a combination of 2 and 3.

When GE reacts as it must then all the stuff you demand of it goes the wrong way. It has no choice but to eliminate US jobs in favor of foreign labor, transfer whole divisions to other parts of the world, and finally increase the cost of the good and services you purchase from it.

If you want US companies to do more of what you desire, you should want us to go back to the original income tax passed in 1913 when US companies were only taxed once. We are taxing the income on these companies twice and wondering why they are fleeing our borders.

Listen, you want more jobs here, you want more revenues here, you want companies to play fair with the income tax then change the landscape to one that actually rewards the investors of companies like GE for doing those things rather than punishing its investors by punishing the company.

Punishment as a system only works short term. I see it with my children and my employees. It is rewards that motivate people to take the risks which yield long term benefits.


11 posted on 10/11/2011 7:31:48 AM PDT by Raycpa
[ Post Reply | Private Reply | To 9 | View Replies ]

Free Republic
Browse · Search
Bloggers & Personal
Topics · Post Article


FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson