How to Pay Zero Taxes

Zero tax payment. I’m sure that most small business owners and individual investors would love to here those words from their accountants come tax time.

Recently, GE made headlines for their 2010 tax payment (or lack thereof – click here for the details – G.E.’s Strategies Let It Avoid Taxes Altogether).

Let me start by stating that tax law is ridiculously complex, and I do not claim to know all the in’s and out’s.

What I do know, is that GE received part of the government bailout, so it seems totally unfair that they can earn almost $6 Billion from US operations without paying federal taxes.

GE Tax Strategy

THE NEW YORK TIMES – Source: General Electric’s financial statements
Click on the image for a full size version

But as we all know, life isn’t fair. And let’s be honest; if there were ways for you and I to do it, we would also use the tax code to our advantage.

In fact, we all could have purchased GE stock, in which case few people would complain about fairness as long as they made a profit.

Rather than harp on GE specifically, take a look at the “how”; how corporations are able to pay zero federal income taxes.

Click on the picture to see the full size image.

Infographic of Corporate TaxesVia: OnlineMBA.com

Hat Tip to Business Pundit, and The Big Picture.

To me, blaming GE is akin to shooting the messenger. GE is the messenger; they told us that the rules of the game allow them to operate a certain way. They did not break any laws, and gamed the system while staying competitive (but that doesn’t mean I like it).

If we don’t like the results, then we must change the rules. And if we want to change the rules, the graphic above suggests that the first step is to resist the efforts of lobbyists.

Maybe giving American corporations a significantly lowered corporate tax rate would work…if it came with the price tag of no more lobbying!

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