The G.E. Rule is still Right

 I've written before about how G.E. is Right in not paying taxes:

You may have seen that GE, despite having a massively profitable year, will pay zero federal income taxes for 2010.  That’s right, less than you!  And this is the second year in a row.  I have no love for GE and its hearty embrace of crony capitalism, but they are doing the right thing by not paying any taxes. How can I say this? Because I believe no business entity should pay taxes, and that includes behemoth GE.

Let me ask you a question: How many people do you think would die of cancer each year if all cancer cells could be somehow trained to start growing on the tip of your nose? Every morning the first thing you would do is look in the mirror and see if you had any cancer. If you saw something, you would immediately have it removed. That would be the end of cancer, right? 

The price of runaway government today is like cancer in that it hides undetected until the symptoms begin. By then, it’s often too late. If every citizen woke up every morning and could see the true cost of runaway government on the tips of their noses, they would never allow it to metastasize, and that would be its ultimate demise.

Business taxes are a good example of this disease. The fact is, businesses don’t actually pay taxes. Citizens do. Businesses merely collect taxes and pass the cost along to the next entity in the supply chain until an ultimate “end-user” buys the product and pays the cumulative tax. Economically literate politicians, (an oxymoron) know this full well, but will never end stealth taxes unless forced to because they are a perfect way to ensure that the cancer they caused stays undetected. 

Today, Jeff Immelt addressed this issue, but claimed the reports were wrong, and asserted G.E. did pay taxes.  That's a shame.  Regardless of the facts, I'd have preferred he embrace my G.E. Rule, which states that no business should pay more taxes than G.E., which allegedly pays zero.  "The G.E. Rule" would solve "The Buffett Rule" along with a plethora of other economic issues:

• Unemployment would plummet

• Growth would flourish

• Capital would flood into the US

• Your pay would go up

• Your company would be able to compete with the Big Boys who currently get special treatment

• It would end the deduction for employer health insurance freeing you to make your own health choices  

• You could leave your job and your health insurance would go with you 

• Obama’s  Buffett Rule could be satisfied as it would end double taxation on dividends and  capital gains which could then be taxed at the same rates as income 

• Overseas profits could be repatriated instantly

• It would end taxation without representation for businesses 

• It would deal a serious blow to Stealth Taxes (more taxes would be transparent to voters once and for all)

• Most corporate lobbyists would be out of a job

• Crony capitalism would be seriously curtailed

• Prices on all goods and services would plummet 

• Stock bubbles, like the Tech Bubble of the 90s, would not happen as stocks would be rationally valued and taxed once at the individual level.   

• Companies, even Warren Buffett’s Berkshire Hathaway, would pay dividends!

Of course your taxes would go up, but that would alert you to the TRUE size of government and how long would it be before you did something about that?

Jeff Immelt should be defending G.E.'s tax avoidance instead of denying it.  

The G.E. Rule – Part 2

In an earlier post I proposed The G.E. Rule, which is that no company should pay more tax than General Electric, the nations largest corporation and President Obama’s favorite company.   Since G.E. pays ZERO taxes, this would end income tax at the business level and solve a plethora of major problems today:

• Unemployment would plummet
• Growth would flourish
• Capital would flood into the US
• Your pay would go up
• Your company would be able to compete with the Big Boys who currently buy influence
• Your health insurance choices would be yours and not your boss’s (it would end the corporate deduction for employer insurance) 
• You could leave your job and not worry about your health insurance 
• Dividends and capital gains could be taxed at the same rates as income (Obama’s  Buffett Rule would be satisfied)
• Overseas profits could be repatriated instantly
• It would end taxation without representation 
• It would satisfy the Tea Party and end Stealth Taxes (all taxes would be transparent to voters once and for all)
• Most corporate lobbyists would be out of a job
• Crony capitalism would be seriously wounded
• Washington’s manipulative power would be greatly reduced
• Prices on all goods and services would plummet 
• Stocks would be rationally valued as the double taxation would end (this would end stock bubbles like the Tech Bubble of the 90s) 
• Companies, even Warren Buffett’s Berkshire Hathaway, would pay dividends

And this is just a partial list of instant benefits from The G.E. Rule.  (Update:  For much more on this, check out my older post - GE is Right!) 

Of course, this would be politically impossible because almost no politician in Washington wants to cede power to business, markets, or voters.  Lobbyists would freak out.  In fact no politician, even Ron Paul, is proposing anything like this.  If I was a Republican frontrunner, I’d take a good hard look at The G.E. Rule.       

The GE Rule

President Obama is making his "Buffett Rule" a central part of his re-election campaign.  According to Obama's "Buffett Rule", Warren Buffett should pay a higher tax rate than his secretary.  Currently, Mr. Buffett pays about 15% tax on his dividends and capital gains, while his secretary, who lacks dividends and cap gains, pays perhaps a 35% income tax on her last dollar of salary earnings.

Unfortunately, like most of Mr. Obama's statistics, this one is misleading.  Worse still, his cynical bet that he can pedal this nonsense and ride it back into the oval office is, I fear, not really a long shot.  With most Obama voters being either government dependents, government employees, the liberal professoriat,  the liberal media, student dependents, artists, union members, or the uneducated,  this kind of arcane taxation issue will never be understood.

The truth is, Mr. Buffett is actually paying about 45% total tax because his income is taxed twice.  All dividends and capital gains are double taxed - once at the corporate level and once at the personal level.  Moreover, this double taxation amounts to Taxation Without Representation.  If one is taxed twice, shouldn't one be able to vote twice?   Didn't we fight a revolution over this very concept?  Isn't this what the original Tea Party was about?

I say Republicans should campaign on the "GE Rule".  General Electric, President Obama's favorite corporation pays ZERO income taxes!  That's right, one of the largest corporations in the US pays nothing.  This is due to cozy relationships with lawmakers and effective lobbying efforts which have resulted in loopholes and kickbacks in all the right places.  Smaller corporations could never afford that kind of influence and it represents everything that is wrong with the Crony Capitalism model favored by Obama and the Democrats.

I say, let every corporation pay ZERO income tax.  Let everyone enjoy the "GE Rule".  End corporate lobbying.  End Taxation Without Representation.  End double taxation on dividends and capital gains.  And, finally, make the dividend and capital gains rates the same as the income tax at the individual level.

The GE Rule would satisfy the Buffett Rule, the Tea Party Rule, the Crony Capitalism problem, and the excessive lobbying problem.  A Magic Bullet if ever there was one.  

(Update: Check out GE Rule - Part 2)