Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.
That may be hard to fathom for the millions of American business owners and households now preparing their own returns, but low taxes are nothing new for G.E. The company has been cutting the percentage of its American profits paid to the Internal Revenue Service for years, resulting in a far lower rate than at most multinational companies.
Its extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore. G.E.’s giant tax department, led by a bespectacled, bow-tied former Treasury official named John Samuels, is often referred to as the world’s best tax law firm. Indeed, the company’s slogan “Imagination at Work” fits this department well. The team includes former officials not just from the Treasury, but also from the I.R.S. and virtually all the tax-writing committees in Congress.
Category: Politics
Modern muckraking does free speech a disservice
James O’Keefe is either the sleaziest kind of journalist or the most respectable kind of con artist. His Project Veritas group uses lies, scams and hidden cameras to entrap his political adversaries. This week, Project Veritas released a video of its latest victim: Ron Schiller, a fundraising executive for National Public Radio. Mr Schiller and a colleague were lured to a Washington restaurant with promises of $5m in donations from the “Muslim Education Action Center”. Meac, supposedly set up by the Muslim Brotherhood to “spread the acceptance of sharia”, does not actually exist. It was an invention of Project Veritas. But Mr Schiller was voluble in assuring its leaders of his contempt for the kind of middle-class Americans who voted for the Tea Party last autumn. “They believe in white, middle America, gun-toting … it’s scary,” he said. “They’re seriously racist, racist people.” Of course, they also happen to elect the congressional majority that controls the fate of $450m in public broadcasting funding. Mr Schiller has resigned from NPR, as has its chief executive, Vivian Schiller (no relation).
Political pranksterism is all the rage. Sacha Baron Cohen practised a form of it in Borat and, more recently, the editor of the Buffalo Beast news website phoned Scott Walker, the embattled Wisconsin governor, passing himself off as the Republican donor David Koch.
Dollar’s haven status hangs in the balance
Long seen as a place of safety in times of turmoil, the dollar may be losing its haven appeal.
Soaring oil prices, driven by upheaval in the Middle East, falling equities and elevated volatility have all made investors uneasy. A flight to the dollar usually accompanies increased risk aversion.
This time, though, while the traditional havens of the Swiss franc and the yen have benefited, the US currency has suffered.
“It seems the dollar’s haven status has vanished,” says Steve Barrow at Standard Bank. “And, even for long-term dollar bears like ourselves, this is a worry.”
The main reason for the dollar’s underperformance, say analysts, is concern about the effect of rising oil prices.
The dollar has dropped to a record low against the Swiss franc and fallen 2 per cent to Y81.82 against the yen in the past two weeks, just shy of the all-time low of Y79.7 it hit against the Japanese currency in 1995. It has also lost ground against the euro and sterling.
The fear is that higher oil prices will lead to a transfer of funds from oil-importing countries to the sovereign wealth funds of oil-exporting nations.
Why Isn’t Wall Street in Jail?
Over drinks at a bar on a dreary, snowy night in Washington this past month, a former Senate investigator laughed as he polished off his beer.
“Everything’s _______ up, and nobody goes to jail,” he said. “That’s your whole story right there. Hell, you don’t even have to write the rest of it. Just write that.”
I put down my notebook. “Just that?”
“That’s right,” he said, signaling to the waitress for the check. “Everything’s ______ up, and nobody goes to jail. You can end the piece right there.”
Nobody goes to jail. This is the mantra of the financial-crisis era, one that saw virtually every major bank and financial company on Wall Street embroiled in obscene criminal scandals that impoverished millions and collectively destroyed hundreds of billions, in fact, trillions of dollars of the world’s wealth — and nobody went to jail. Nobody, that is, except Bernie Madoff, a flamboyant and pathological celebrity con artist, whose victims happened to be other rich and famous people.
Saturday Afternoon Ice Fishing Panorama: Madison
Panoramas and photos from Saturday’s Pro-union & Tea Party rallies at the Capitol can be seen here.
The “National Insecurity” of Imported Oil
Getting America off imported oil is always urged in the context of national security. No matter how often that refrain is repeated, however, it always points toward how much imported oil American motorists use.
It’s never about the amount of oil imported into the United States, refined into numerous products and shipped back out of the country. Nor are people arguing that we need to quit using imported oil for manufacturing concerns – like making fertilizers to grow corn, to make into ethanol to put into our gas, so we can quit importing oil. (That’s the most comical circular argument currently making the rounds.) But we also use oil for things like asphalt for our roads, and in the plastics industry, and even the most ardent “get America off imported oil” advocates don’t talk about constraining those industries.
In reality, the country from which we import the most oil is Canada. And I’m fairly certain that we aren’t too worried about the national security aspect of bringing that oil into America, now or in the future. Yet we’re still hearing the constant mantra that this is a national security issue, and that’s what troubles me most. And, if you own one of the nation’s 240 million vehicles, the “national insecurity of imported oil” refrain should trouble you, too.
How the crisis catapulted us into the future
Did the financial crisis change very much? That was my question as I went to the annual meeting of the World Economic Forum in Davos last week. The answer is: yes. Above all, it has accelerated the arrival of our future. Even for the winners, this is quite a shock.
It is three and a half years since the financial crisis began and a little more than two years since it reached its worst. Bob Diamond, chief executive of Barclays, gave the financial sector’s thanks to governments for the rescue. Now the mood is one of wary optimism. According to the International Monetary Fund’s World Economic Outlook update, global output grew in 2010 by 5 per cent, at purchasing power parity, and 3.9 per cent, at market exchange rates. This contrasts with declines of 0.6 per cent and 2.1 per cent, respectively, in 2009. The IMF expects growth to slow only slightly to 4.4 per cent at PPP and 3.5 per cent at market exchange rates, in 2011. Optimism continues to reign.
With the crisis fading into memory, how will historians assess its legacy? Journalists do not have the luxury of distance. So here are my guesses. I will start with possible turnrounds.
The crisis was neither the beginning of a depression nor the end of capitalism. But it has caused a tightening of financial regulation, particularly of banks, though this has occurred within the pre-existing intellectual and institutional framework. After three decades of deregulation, movement is in the opposite direction, though not without resistance.
GOP pushing for ISPs to record user data
he House Republicans’ first major technology initiative is about to be unveiled: a push to force Internet companies to keep track of what their users are doing.
A House panel chaired by Rep. F. James Sensenbrenner of Wisconsin is scheduled to hold a hearing tomorrow morning to discuss forcing Internet providers, and perhaps Web companies as well, to store records of their users’ activities for later review by police.
One focus will be on reviving a dormant proposal for data retention that would require companies to store Internet Protocol (IP) addresses for two years, CNET has learned.
Tomorrow’s data retention hearing is juxtaposed against the recent trend to protect Internet users’ privacy by storing less data. Last month, the Federal Trade Commission called for “limited retention” of user data on privacy grounds, and in the last 24 hours, both Mozilla and Google have announced do-not-track technology.
Amazing. I thought the economy was job #1 for the Republicans.
Antitrust bulldog Gary Reback pushes Google probe
In the 1990s, attorney Gary Reback helped goad the Department of Justice into launching the landmark antitrust lawsuit against Microsoft Corp. by hauling willing witnesses and damning information before any government body that would listen.
Reback, of Menlo Park law firm Carr & Ferrell LLP, is now waging a similarly relentless campaign against a technology giant of this era, Google Inc.
In an extensive interview with The Chronicle, he argued the Mountain View search company is engaging in a host of anti-competitive behaviors that are no less egregious than the earlier actions of Microsoft.
He also claims the Federal Trade Commission recently backed off an inquiry into certain of Google’s practices at the behest of the DOJ. It’s known to be conducting a separate investigation into, and possibly preparing to block, the company’s proposed acquisition of travel data company ITA Software. (Read on for his take on what that means.)
Avoiding a U.S.-China cold war
America’s exceptionalism finds it natural to condition its conduct toward other societies on their acceptance of American values. Most Chinese see their country’s rise not as a challenge to America but as heralding a return to the normal state of affairs when China was preeminent. In the Chinese view, it is the past 200 years of relative weakness – not China’s current resurgence – that represent an abnormality.
America historically has acted as if it could participate in or withdraw from international affairs at will. In the Chinese perception of itself as the Middle Kingdom, the idea of the sovereign equality of states was unknown. Until the end of the 19th century, China treated foreign countries as various categories of vassals. China never encountered a country of comparable magnitude until European armies imposed an end to its seclusion. A foreign ministry was not established until 1861, and then primarily for dealing with colonialist invaders.
America has found most problems it recognized as soluble. China, in its history of millennia, came to believe that few problems have ultimate solutions. America has a problem-solving approach; China is comfortable managing contradictions without assuming they are resolvable.
American diplomacy pursues specific outcomes with single-minded determination. Chinese negotiators are more likely to view the process as combining political, economic and strategic elements and to seek outcomes via an extended process. American negotiators become restless and impatient with deadlocks; Chinese negotiators consider them the inevitable mechanism of negotiation. American negotiators represent a society that has never suffered national catastrophe – except the Civil War, which is not viewed as an international experience. Chinese negotiators cannot forget the century of humiliation when foreign armies exacted tribute from a prostrate China. Chinese leaders are extremely sensitive to the slightest implication of condescension and are apt to translate American insistence as lack of respect.