Only The Little People Pay Taxes...

...as the late Leona Helmsley, the "Queen of Mean", famously said.

It turns out to be true.

Most individuals don't look forward to Tax Day. And, as corporations are "persons" too, we can freely anthropomorphize and assume that corporations don't like Tax Day either.

But they have resources that aren't available to most of us.

In today's New York Times, David Kocieniewski reports that the 2010 tax bill for General Electric, the country's largest corporation, isn't, in fact, a bill: It claimed a tax benefit of $3.2 billion (on worldwide profits of $14.2 billion, of which $5.1 billion came from U.S. operations).

In a country that has a relatively high corporate tax rate by global standards (top rate: 35%), how is this even possible? And how has GE managed to cut its US tax bill year after year?

Kocieniewski writes,

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. G.E.'s giant tax department, led by a bow-tied former Treasury official named John Samuels, is often referred to as the world's best tax law firm. Indeed, the company's slogan "Imagination at Work" fits this department well. The team includes former officials not just from the Treasury, but also from the I.R.S. and virtually all the tax-writing committees in Congress.

Don't you wish you had that kind of team?

What's wrong with this, you might ask. After all, they're just using the rules of the game to maximize profits for their shareholders.

Since G.E. does business in so many countries, it can book revenues from one country in another (with a lower tax rate). According to Kocieniewski, in the last three years, "46 percent of the company's revenue was in the United States, but just 18 percent of its profits." The company asserts that the disparity results from "ordinary business factors, such as investment in overseas markets and heavy lending losses in the United States recently."

It may be "smart business", but critics argue that "the assertive tax avoidance of multinationals like G.E. not only shortchanges the Treasury, but also harms the economy by discouraging investment and hiring in the United States."

In fact, G.E. employment in the U.S. has declined by one-fifth over the last decade, while overseas hiring has increased.

G.E. now has a tax team of close to 1,000 employees. Their focus isn't only on adhering to the letter of the law, but equally on finding ways around it: "At a tax symposium in 2007, a G.E. tax official said that the department's 'mission statement' consisted of 19 rules and urged employees to divide their time evenly between ensuring compliance with the law and 'looking to exploit opportunities to reduce tax.'"

With a lobbying budget in the tens of millions of dollars to win new tax breaks, and a tax team expert in exploiting them, it's not surprising that G.E. has been so successful in reducing its tax burden. But it's wrong.

Companies like G.E., that got their start and owe their continued success to American laws, American enterprise, and the American consumer, owe the American taxpayer too. If G.E. isn't going to bring at least a fair portion of its profits home for reinvestment here, why should we taxpayers continue to support them?