DAY AFTER TAX DAY MUSING

Taxes, Budgets, Money, Deficits, Debt Ratings-makes my head swim.  There is a wealth of information out there but a dearth of understandable facts about any of the aforementioned subjects. If you read anything on-line, you can be overwhelmed with information that leads no where in particular and every where in general, a circuitous route to crazy land.  I’m there.  Trying desperately to get out. 

DAY ONE:  GE and Federal Taxes

While the chant goes on “Corporations Should Pay Their Fair Share of Taxes”, I wonder about the logic of it all.  Take GE, for example, did they not pay their “fair share”?  Depends on your definition of “Fair”, I suppose.  There are protests springing up all over the place regarding “companies using loopholes in the tax code to avoid paying their fair share.”

“LOOPHOLES”.  Are these loopholes legal?  An entire bevy of tax accountants and lawyers did what they were paid to do, utilize all the benefits of the U.S. Tax Code and the result for GE?  Well, as a result of General Electric Credit Corp having sustained huge losses and a large percentage of income generated off-shore, GE paid no taxes in 2010 for the 2009 Tax Year.  Sounds awful doesn’t it? 

But, if those “loopholes” exist and are legal, wouldn’t you expect any right-minded person (or corporation for that matter) to take advantage of them?  Wouldn’t their shareholders expect, no, DEMAND that they utilize every advantage at their disposal to improve profits by reducing tax liabilities?  Do you, as an individual tax payer, utilize your legal “loopholes”?  I’m betting you do or your tax preparer does.

Giant corporations are not entirely “evil”, like all people and entities, there is another side.  GE employed 134,000 people in the US in 2009, 154,000 in other countries.  GE and the GE Foundation donated millions to various worthwhile charities.  From their website:  “In 2009, GE announced that it will spend $3 billion by 2015 on research and development and focus its healthcare business strategy to deliver better care to more people at lower cost.”  They have also announced they are building a $600M Solar Panel factory which will employ 400 people and produce a thin-film product which produce renewable energy.

All bad, of course not.  And tax incentives, in part, are responsible for the 'good parts'.  So what is the problem?  

Apparently the BIG problem is the U.S. Tax Code.  Ahem, well, YEAH, of course it is.  I can’t begin to understand the code as it applies to my own personal financial situation so it isn’t surprising that I don’t understand the code as it pertains to Corporations.  Is there a Corporate equivalent to the Alternative Minimum Tax for individuals?  Is there a tax on income earned overseas?  Is there some sort of credit for jobs created in the US and/or is there a penalty (of sorts) for jobs created overseas instead of the US? 

Can we fix the code or do we have to throw out the old and start anew?  If so, what happens to the previously promised loss-carry-forwards and tax incentives that exist from the old code?  Do they just “disappear” creating chaos and uncertainties for everyone, including the employees, investors, and debt holders?

I'm still at a loss, still muddling around in crazy-land.  Anyone out there have a simple answer?  Anyone have a reasonable answer?  Anyone have an answer at all?