Taxing GE and Other Masters of the Universe

12 Pages Posted: 6 Jun 2012

See all articles by Calvin H. Johnson

Calvin H. Johnson

University of Texas at Austin - School of Law

Date Written: July 11, 2011

Abstract

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.

Suggested Citation

Johnson, Calvin Harsha, Taxing GE and Other Masters of the Universe (July 11, 2011). Tax Notes, Vol. 132, p. 175, July 2011, U of Texas Law, Law and Econ Research Paper No. 226, Available at SSRN: https://ssrn.com/abstract=2078163

Calvin Harsha Johnson (Contact Author)

University of Texas at Austin - School of Law ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States
512-232-1306 (Phone)
512-232-2399 (Fax)

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