My highly esteemed and well read visitors will no doubt have heard the big news in corporate taxation. General Electric paid $0 in taxes last year! In fact, they got billions of dollars back!!
!!!!!
At least, so says the ever questionable New York Times.
Megan McArdle has a piece about how the Times reporters screwed things up. Fortunately this isn't a case of the reporters maliciously misrepresenting the facts. Instead, it is a case where reporters assigned to report on matters of corporate and tax accounting should have known that those are two very different types of accounting that almost always result in two very different answers.
Ms. McArdle also makes the persuasive case....again....for total elimination of corporate income taxes.
Let's face facts. Corporations do not pay a single penny in corporate income taxes. People do. Investors pay by getting lower returns. Employees and managers pay by getting less in salary and/or benefits. Customers pay by paying higher prices.
Given that the corporate income tax only generates a few hundred billion dollars ($191 billion in 2010) in revenue, is it really the most effective method for collecting taxes? No.
Particularly when so many businesses, including GE, spend so much money on accountants to keep track of the taxes owed, and spend so much time and money getting Congress to tweek the tax code to their advantage. Ever hear of tax credits for wind power? Care to guess what business (among many) GE is in?
Ms. McArdle's stuff is always a great read.
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