Taxing GE and Other Masters of the Universe
Calvin H. Johnson
University of Texas at Austin - School of Law
July 11, 2011
Tax Notes, Vol. 132, p. 175, July 2011
U of Texas Law, Law and Econ Research Paper No. 226
General Electric Co. paid essentially no tax in 2010. A 35 percent tax on GE’s economic income would have been $6.8 billion, or $4.7 billion with inflation taken out. The drop in tax is caused by (1) generally accepted accounting principles and tax accounting, which allow too much expensing of investments, and ignore predictable future income, (2) the use of tax havens, (3) accelerated depreciation, and (4) government-spending-like tax credits and unspecified miscellaneous.
The government can most easily and fairly collect the requisite tax from GE by imposing a tax on the fair market value of its capital. The government can charge GE $6 billion to $7 billion a year for access to public markets and GE and every corporation would be willing to pay that much to give its shareholders access to ready liquidity.
Number of Pages in PDF File: 12Accepted Paper Series
Date posted: June 6, 2012
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