Two tax stories hit the news this week. The first got big headlines everywhere, the second did not.
The first story is about Sarah Palin’s tax breaks for her reality TV show,
Sarah Palin’s Alaska, that aired on The Learning Channel (TLC). Out of curiosity, after seeing all the hype about this non-story, I Googled “Sarah Palin’s Alaska tax breaks” and 760,000 related stories came up.
According to National Review,
“In case you missed it, small government crusader and Tea Party favorite Sarah Palin’s TLC reality show “Sarah Palin’s Alaska” received a $1.2 million subsidy from the state of Alaska. The show spent $3.6 million on production in the state, meaning that Alaskan taxpayers covered a third of the cost of the show. The show will apparently not have a second season.” Read
here. Of course, Sarah has repeatedly stated she had no intention of doing a second season. Hopefully, she has bigger plans.
(photo courtesy of The Learning Channel) Regardless of whether or not there is a second season, it bears little relevance on the story of the tax break. Let’s consider that the state did pay for some of the show. What will they get in return? They will probably get an increase in tourists. In influx in visitors means an influx of tourism money. Sarah shared a good deal of what the state has to offer on the show. It was a promotion of the beauty of Alaska and what the state has to offer. It beats any 30 second commercial spot.
The bottom line is that everything that Sarah did regarding her show was legal. At the time the law was passed allowing for the tax breaks, there is simply no way Sarah would have known she may benefit from them one day.
The second story is about General Electric (G.E.) and Jeff Immelt, G.E.’s CEO. The Palin story is small potatoes. This second story is all the potatoes in the state of Idaho. Yet when I Googled, “Jeff Immelt G.E. tax breaks,” 206,000 related stories appear. That is quite a contrast in ratio given the severe difference in monetary amounts in the two stories. As I mentioned before, Sarah Palin did nothing illegal and rightly made money on a television show that also made money for The Learning Channel as one of its highest rated debuts.
(photo courtesy of the Center for Environment, Commerce & Energy) In the past year, G.E. has not paid a dime in income tax. According to the New York Times, The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States. The company not only paid no taxes on this, but they claimed a $3.2 billion tax benefit. Its extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore. Read
here. And profit they did! General Electric Co. said Monday that Chairman and Chief Executive Jeff Immelt will receive his first bonus in three years, with pension gains helping lift his total 2010 compensation to $21.4 million. Immelt was granted a $4 million bonus and received $7.4 million in stock awards tied to him remaining at the company for five years, with the 2 million options struck at $16.11 a share, their March 4 closing price. Half vest in three years and the balance in five. In 2010, Mr. Immelt’s pay doubled all while asking his workers to tighten their belts and make sacrifices. Read
here.Did Jeffrey Immelt get reprimanded for using loopholes and foreign accounts to avoid taxes? No, in fact, he was appointed by Obama to the President’s Council on Jobs and Competitiveness. This board was designed by the White House to strengthen our economy and get Americans back to work. I’m wondering whose economy benefits from a company that paid nothing in taxes while other businesses that conducted themselves honestly are finding themselves closing their doors due to high taxes and increases commodity prices.
Jeffrey Immelt may have also done everything legally, but is it ethically correct? Jeffrey Immelt owns GE and GE owns NBC. It’s no secret NBC, part of the mainstream media, has had an on-going love affair with the Obama administration. They have an entire liberal media “news” station, MSNBC, dedicated to promoting this administration’s agenda. Even a political novice could observe this relationship on any given day. Some may even get a “tingle up their legs” after an episode of Hardball with Chris Matthews.
Is the position on the President’s council payback for all the great media support? I think it is. The President appointed his good friend as pay back for all the positive publicity and said the following about him:
“Jeff Immelt’s experience at GE and his understanding of the vital role the private sector plays in creating jobs and making America competitive makes him up to the challenge of leading this new Council.”The only thing GE is going to teach other businesses is how to evade taxes. It seems GE has some very influential lobbyists in Washington DC successfully keeping them off the grid when it comes to paying the Internal Revenue Service. And there is more to the tax shelter story. The tax breaks that Immelt is using to avoid paying taxes were set to expire in 2008, but heavy lobbying with Rep. Charlie Rangel’s office persuaded Mr. Rangel to vote in favor of GE and continue their break. Shortly after, G.E. announced that its foundation had awarded $30 million to New York City schools, including $11 million to benefit various schools in Mr. Rangel’s district. It’s no surprise they chose to lobby a representative constantly under scrutiny for ethics violations.
The NY Times goes on to say,
“Over the last decade, G.E. has spent tens of millions of dollars to push for changes in tax law, from more generous depreciation schedules on jet engines to “green energy” credits for its wind turbines. But the most lucrative of these measures allows G.E. to operate a vast leasing and lending business abroad with profits that face little foreign taxes and no American taxes as long as the money remains overseas.” While this push was going on, the company made $26 billion in profits in 5 years and amassed $4.1 billion in tax credits.
While all this is happening, G.E. is expected to ask 15,000 of their unionized workers to make major concessions in wages and benefits. Mr. Union Obama himself once again double speaks supporting union members in one hand and then appointing this man who would reap the benefits of $21 million himself in 2010.
Ironically, this situation has united the left and the right. Progressives United, Russ Feingold’s new group, and MoveOn.org no longer wish to see Immelt in power. They have started an action committee called Immelt Must Go! Read
here. I agree with them. I think he should go and the President shouldn’t be appointing people to committees that cheat our tax system. I also think the committees aren’t necessary and only add to government expense.
Once again, the story that should have made the headlines was not mentioned on the major networks, but a non-story about Sarah Palin was covered everywhere.
Even Jon Stewart on Comedy Central had better coverage. It’s a sad day when we have to rely on blogs and comedy shows to get accurate news, then again it to be expected when people like Jeffrey Immelt own major networks.
