Did GE Pay Federal Income Tax in 2010?

It seems like a straightforward question, and the New York Times claimed they had found the answer: "[GE] American Tax Bill? None."

Then Business Insider started poking around a bit and found a much more complicated story, with plenty of spin. In fact the spin is continuing. When the room stopped spinning, it appears the facts are:

1. GE did pay plenty of taxes in 2010. Payroll taxes, state taxes, property taxes, etc.


2. GE probably will pay astonishing little federal income tax in 2010; perhaps no income tax after all the tax breaks are claimed.


3. GE stands by its claim that it paid taxes in 2010.


4. The New York Times stands by the accuracy of its story.


5. Americans get infuriated at GE for gaming the tax code, and the NYT for obfuscation.

We have nobody to blame but ourselves. We all want our deductible goodies (interest on mortgage, Making Work Pay, Green Car Tax Credits, etc.) and then we become infuriated that a large company hires enough lawyers to ferret out all of the tax breaks and null out their federal income tax liability. We know what remedy should be applied: abolish most deductions and lower rates. Simplifying the tax code would devastate the Lobbying Corps, though not completely eliminate them. But it would help restore the concept of making business decisions based on markets and products, rather than tax advantages.

The top 5% of AGI earners theoretically pay at least a rate of 28% , but with tax breaks pays more like 20% , and the top 1%, who should be on the hook for 35% pays more like 23%. How about about a tax code where the top 1% are taxed at 23% and actually pay 23%?

Putting $61 Billion in Perspective.

The figure from the Cato Institute shows just how bizarre the outage over the proposed $61B cuts truly is: since 2001 the budget has increased $170B per year, over twice the proposed reduction for the 2011 budget.

If we can't summon the "courage" to cut a mere 3,5% of the increase of the last ten years, then we deserve to have our creditors force our hands and treat us no different than Greece, Portugal, and Ireland.

Famous Nappers.

The Art of Manliness discusses the midday siestas of eight great men.

Frankenbanks.

Andrew Sorkin's financial blog at the NYT reports on the status of the payback of TARP loans. What the authors reveal is troubling. It seems that the taxpayer is getting straight-armed by some banks who still owe us hundreds of millions yet are turning substantial profits or buying up other troubled institutions or loans.

Some of this makes sense: if a given bank's management is floundering, then acquisition by better management using TARP may be a cheaper long-term solution than letting the bank go belly up and sticking the FDIC with the cleanup costs.

Such a decision, however, should not be based on the acquiring bank using only cheap money from the rest of us, but on the bank risking some of their own skin. This may change the attractiveness of such purchases. Other drawbacks for subsidized acquisitions are that it is driving banks to become even larger - more "too big to fail" - and private capital investment decisions become less local.

There are a myriad of unforeseen consequences caused by Uncle Sam fronting cheap money to troubled banks for indefinite period of time. So, bankers, first things first: focus on insuring your solvency, and then pay us back ASAP.

Tax Myths.

We're still feasting on the wealth of data found at the Tax Foundation website, for example the Summary of Federal Income Tax Data.

A recent survey revealed that a majority of Americans believe the myth that the budget deficit can be fixed by eliminating "waste, fraud, and abuse".

The Tax Foundation data, however, dispels another myth, namely that a "millionaire's tax" would solve the budget deficit.

In 2008, there were 140,000 federal returns that claimed an Adjusted Gross Income in excess of $1.8M. This group is the infamous "top 0.1%", with an average AGI of around $6M. The total AGI claimed by this nefarious cabal is $839B.

Therefore, even if the IRS were to take it all, it would cover only half of the 2011 budget deficit of $1.6T. In order to cover this deficit completely, you would have to tax the top 10% of income earners at a rate of 45%, or increase their current tax rate by a factor of 2.5. Note that this bracket begins at an AGI of around $113K.That's just to cover the deficit; the current debt would be untouched.

$60B in Cuts Won't Cut It.

Here is a simple pictorial showing the relative sizes of the budget, the fraction of the budget just to pay interest on the debt, and the size of budget cuts proposed by Congers.

Those cuts won't even make the interest payment. This is simply pathetic.

More Tax Arithmetic.

Let us expand our discussion of income and tax demographics and discern what is realistic in dealing with budgets approaching critical mass. The following is the distribution of 2008 adjusted gross incomes and their accompanying federal income taxes:

Income Percentile	Income Threshold ($K)	Number of Returns (M)	AGI ($T)	AGI - Fraction of Total	Federal Tax Paid ($B)	Tax - Fraction of Total
1%	381	1.4	1.7	20%	392	38%
5%	160	7.0	2.9	35%	606	59%
10%	114	14.0	3.8	45%	721	70%
25%	67	35	5.7	67%	890	86%
50%	33	70	7.4	87%	1000	97%
100%	0	79	8.5	100%	1028	100%

So, given the President's $3.7T budget for 2012, we see that even confiscating all of the income of the top 5% of the country's earners won't pay for it. (Note that although payroll taxes are not included in this estimate, including them still leads to a rapacious level of taxation for this group.)

If we take a bogey of $300B deficit reduction - because any amount below this level is an obscenity - and require all of it be paid by income tax increases, then a 50% increase in the income tax levied on the top 5% would be needed. Constraining this increase to be consistent with the President's pledge to nail only the top 2% of earners would require a 67% increase in income taxes for the elite 2%.

To summarize: it ain't about low taxes, it's about skyrocketing spending.

Are We Taxed Too Little?

The Tax Foundation breaks down the National Adjusted Gross Income (NAGI), and total federal income tax (TFIT) paid by income brackets:

• Top 1% : 20% NAGI , 38% TFIT
  
• 5%-1% : 15% NAGI, 21% TFIT
• 10%-5%: 11% NAGI, 11% TFIT
• 25%-10%: 21% NAGI, 16% TFIT
• 50%-25%: 20% NAGI, 11% TFIT
• Lower 50%: 13% NAGI, 3% TFIT

Indeed, the lower 45% of income earners pay no federal income tax, which is fine by us, we guess, ignoring the fact that this taxpayer group is getting some of this revenue back in forms of subsidies. Where the Left gets verklempt is their "feeling" that the upper 1%, or 5%, or 10% of taxpayers are not paying their "fair share". Hmmm: the top 1% are being taxed at a rate nearly thirteen times that of the lower 50%. We would kindly ask the redistributionists to interpret the entrails of the tax code and tell us what ratio of tax liability should be to bring the universe into order.

A Letter to Our Congresscritter.

Dear Congressman Walberg,

During the 2010 election, the GOP advocated for serious budget reform. The American people concurred with their opinion and voted for a Republican majority for the House of Representatives. We now need for you and your House colleagues to demonstate to the American people that their trust placed in the GOP was justified.

The coming debt crisis is nothing less than the threat of financial insolvency of the United States. This crisis has now hit Europe, will soon hit Japan, and inevitably will be visited upon us if we do not act now. Yet the House leadership has recently backed away from any serious proposals for spending cuts; cutting thirty billion dollars from the budget is simply inadequate to prevent this looming disaster. It will take cuts of hundreds - hundreds - of billions of dollars from the budget make any substantial progress. These cuts will have to be made across the board - entitlements, defense, domestic and discretionary spending. Reductions of 25% in total federal spending are conceivable, and likely necessary in preventing our insolvency. It is not a choice of whether such austerity measures will need to be taken, it is whether they are done now on terms favorable to the interests of the United States, or otherwise forced upon us by our creditors. In either case, our current political leadership is charged with the unpleasant task of telling the American people that we cannot spend at continually accelerating rates, regardless of the nobility and good intentions of the proposals.

I ask you and your colleagues to provide the courageous leadership that is now needed to prevent financial catastrophe.

Dissipation.

Ross Douthat examines the codependent relationship between the media and the trainwreck Sarah Palin.

Palin has squandered a superb opportunity: the recipient of a quantum leap in politics during the 2008 election, Ms. Palin could have consolidated her gains with a continued competent governing of Alaska, sober study of international and domestic affairs (for example, using her experience in Alaskan energy issues to become a principal national expert), and becoming a thoughtful and temperate national political figure. Instead she has quit - quit - as governor, stars in a reality TV show, and has cashed in on the book circuit (as for her "books", Profiles in Courage they are not). She did not quite distinguish herself with her recent highly-produced video responding to the fallout from Tuscon.

You learn a lot about people from what they do with a remarkable opportunity.

No Truer Words...

You see, that's the whole point of being the government. If you don't like something you simply make up a new law that makes it illegal
- Sir Alistair Dormandy, from "Pirate Radio"

Custom-Made History.

Edward Rothstein observes how the curators of "identity museums", by pandering to resentments and grievances, are corrupting the telling of history.

The Digital, Social Networked Nativity.

A brilliant little video forwarded by a friend from Inside Catholic. Avoid Romans.

China Hijacks the Wind Energy Market.

There are consequences when the United States gives China a trillion or so dollars in net trade: the Chinese use that money to capture new world markets and push others out. One example is the wind energy industry. Just a few years ago the United States and some European firms were poised to explosively grow their wind energy markets in the U.S. and China (one remembers Tom Friedman's column on alternative energy being the growth industry for America). Cheap loans and land leases to domestic startup companies, provided by the Chinese government, along with onerous local content requirements on foreign firms have allowed the Chinese to build a world-competitive wind industry on the backs of GE and others. Now the Chinese are moving to capture the U.S. and European wind markets. Our government and our normally rabid anti-free trade unions have hemmed and hawed in creating an effective response to ersatz free trade as practiced by the Chinese.

On Being Irresponsible.

There are too many things we are told to do because they are important to other people and we have been gulled into thinking they must be important to us as well. Richard Feynman reminds us otherwise.

Green Shoots in Winter.

Isaiah 11:1-10

11:1 A shoot shall come out from the stump of Jesse, and a branch shall grow out of his roots.

11:2 The spirit of the LORD shall rest on him, the spirit of wisdom and understanding, the spirit of counsel and might, the spirit of knowledge and the fear of the LORD.

(The picture is of a Bavarian ivory panel, circa 1200, depicting the Tree of Jesse. Image courtesy of the Divinity Library at Vanderbilt University.)

'Tis the Season.

For decades Christians have been hectored regarding tolerance for other religious beliefs or atheism. We wonder whether the self-proclaimed foes of Christianity and its traditional Catholic or Protestant expressions even understand its essence: the reconciliation of Man with God, Man's salvation through Him, and the spiritual transformation of Man by God. This Christian claims no more than epsilon of such understanding, but enough he believes to assert that no human power can bring people to God, but God himself provides this force (through the Holy Spirit). Christians can only bear witness to others of God's grace. Christians can best provide this witness through humble, pious and compassionate living. Tolerance for the religious beliefs of others is axiomatic to Christian life. (Perhaps some would accuse this Christian of advocating a "post-evangelical" life in the world; we think of it more as a "neo-evangelical" life.)

So it is too, during Advent that Christians rejoice at the coming of our Savior, and wish to express our joy of His coming to the world. What others make of this remembrance is for them to decide - Christians should, we believe, understand and accept this for the aforementioned reasons. All that this Christian would humbly ask is that the world not persecute us nor try to humiliate and shame us for our enthusiasm for Advent. In return we present Christmas to the world as a recess from the jungle of everyday living, a respite to provide a time for kindness and civility and love between people.

The poster shown above is a billboard now displayed near a busy thoroughfare an approach to New York City. It ridicules Christians for their beliefs. The spokesman for American Atheists recently stated, “this year, we decided to give the religious right a taste of what war on Christmas looks like.”

We do not understand how this billboard is an attack that is particular to "the religious right" - it appears to be a snide attack on Christians that is completely indiscriminate toward either the Christian "left" or "right". The American Atheists appear to claim that whatever a Christian's political stripes, they are unreasoning boobs for their allegiance to a myth.

So who is the party that really needs to demonstrate tolerance in religious beliefs?

Such a Feast!

This correspondent derives great joy in making the Thanksgiving Feast for loved ones. In particular we like to find recipes that pay tribute to the traditional board, but with a twist:

• Beer-Brined Apple-Smoked Turkey
• Wild Rice with Turkey Stock and Raisins
• Braised Spinach with Bacon and Onion
• Cranberry-Orange Relish
• Blackberry Pie

And a nap (completely traditional).

Thanksgiving 2010.

From Nathaniel Morton's journal of the Plymouth Colony:

...Being now passed the vast ocean, and a sea of troubles before them in expectations, they had now no friends to welcome them, no inns to entertain or refresh them, no houses, or much less towns, to repair unto to seek for succour; and for the season it was winter, and they that know the winters of the country know them to be sharp and violent, subject to cruel and fierce storms, dangerous to travel to known places, much more to search unknown coasts. Besides, what could they see but a hideous and desolate wilderness, full of wilde beasts and wilde men? and what multitudes of them there were, they then knew not: for which way soever they turned their eye (save upward to Heaven) they could have but little solace or content in respect of any outward object; for summer being ended, all things stand in appearance with a weatherbeaten face, and the whole country, full of woods and thickets, represented a wild and savage hew.

If they looked behind them, there was a mighty ocean which they had passed, and was now as a main bar or gulph to separate them from all the civil parts of the world.

Lisa Heart Pork!

Presumptive Senator-reelect Lisa Morekowbell Merkofski Mooorrrkkouzky M%$#@*..ththt Myxlplyx Murkowski (R), citing Alaska's recent entry into the Union(!), has vowed to fight for her right to earmark taxpayer money from the Lower 48 for Noble Projects for the Last Frontier.

A list of these projects, all $80M of them for 2010, are listed here. Note that many of these are defense projects. The DoD normally specifies (earmark) all of the spending in their budget, so these projects presumably are those that Senator M. added as being, in her judgement, critical to the mission of our armed forces.

Oklahoma Senator James Inhofe (R), and Mississippi's Thad Cochran (R, and Earmark Champion) have also vowed to nip the ears of Porky, too.

(Visual: John Q. Public, wearing a five-dollar suit and straw boater, holding a deed to the Brooklyn Bridge. Caption: "You mean they lied to me?")