Mioptic matters
Incompetence, greed and other failure mechanisms




25 Mar 11   Losing Our Way, NYT, BOB HERBERT
24 Mar 11   G.E.’s Strategies Let It Avoid Taxes Altogether, NYT, DAVID KOCIENIEWSKI, 975 comments
30 Oct 10   How the Banks Put the Economy Underwater, NYT, YVES SMITH
13 Dec 09   $352 bn drug money saved banks in global crisis, claims UN advisor, The Observer, Rajeev Syal




The Observer    13 December 2009

Drug money saved banks in global crisis, claims UN advisor
Drugs and crime chief says $352bn in criminal proceeds was effectively laundered by financial institutions
Rajeev Syal

Drugs money worth billions of dollars kept the financial system afloat at the height of the global crisis, the United Nations' drugs and crime tsar has told the Observer.

Antonio Maria Costa, head of the UN Office on Drugs and Crime, said he has seen evidence that the proceeds of organised crime were "the only liquid investment capital" available to some banks on the brink of collapse last year. He said that a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result.

This will raise questions about crime's influence on the economic system at times of crisis. It will also prompt further examination of the banking sector as world leaders, including Barack Obama and Gordon Brown, call for new International Monetary Fund regulations. Speaking from his office in Vienna, Costa said evidence that illegal money was being absorbed into the financial system was first drawn to his attention by intelligence agencies and prosecutors around 18 months ago. "In many instances, the money from drugs was the only liquid investment capital. In the second half of 2008, liquidity was the banking system's main problem and hence liquid capital became an important factor," he said.

Some of the evidence put before his office indicated that gang money was used to save some banks from collapse when lending seized up, he said.

"Inter-bank loans were funded by money that originated from the drugs trade and other illegal activities... There were signs that some banks were rescued that way." Costa declined to identify countries or banks that may have received any drugs money, saying that would be inappropriate because his office is supposed to address the problem, not apportion blame. But he said the money is now a part of the official system and had been effectively laundered.

"That was the moment [last year] when the system was basically paralysed because of the unwillingness of banks to lend money to one another. The progressive liquidisation to the system and the progressive improvement by some banks of their share values [has meant that] the problem [of illegal money] has become much less serious than it was," he said.

The IMF estimated that large US and European banks lost more than $1tn on toxic assets and from bad loans from January 2007 to September 2009 and more than 200 mortgage lenders went bankrupt. Many major institutions either failed, were acquired under duress, or were subject to government takeover.

Gangs are now believed to make most of their profits from the drugs trade and are estimated to be worth £352bn, the UN says. They have traditionally kept proceeds in cash or moved it offshore to hide it from the authorities. It is understood that evidence that drug money has flowed into banks came from officials in Britain, Switzerland, Italy and the US.

British bankers would want to see any evidence that Costa has to back his claims. A British Bankers' Association spokesman said: "We have not been party to any regulatory dialogue that would support a theory of this kind. There was clearly a lack of liquidity in the system and to a large degree this was filled by the intervention of central banks."





October 30, 2010

How the Banks Put the Economy Underwater
By YVES SMITH

IN Congressional hearings last week, Obama administration officials acknowledged that uncertainty over foreclosures could delay the recovery of the housing market. The implications for the economy are serious. For instance, the International Monetary Fund found that the persistently high unemployment in the United States is largely the result of foreclosures and underwater mortgages, rather than widely cited causes like mismatches between job requirements and worker skills.

This chapter of the financial crisis is a self-inflicted wound. The major banks and their agents have for years taken shortcuts with their mortgage securitization documents — and not due to a momentary lack of attention, but as part of a systematic approach to save money and increase profits. The result can be seen in the stream of reports of colossal foreclosure mistakes: multiple banks foreclosing on the same borrower; banks trying to seize the homes of people who never had a mortgage or who had already entered into a refinancing program.

Banks are claiming that these are just accidents. But suppose that while absent-mindedly paying a bill, you wrote a check from a bank account that you had already closed. No one would have much sympathy with excuses that you were in a hurry and didn’t mean to do it, and it really was just a technicality.

The most visible symptoms of cutting corners have come up in the foreclosure process, but the roots lie much deeper. As has been widely documented in recent weeks, to speed up foreclosures, some banks hired low-level workers, including hair stylists and teenagers, to sign or simply stamp documents like affidavits — a job known as being a “robo-signer.”

Such documents were improper, since the person signing an affidavit is attesting that he has personal knowledge of the matters at issue, which was clearly impossible for people simply stamping hundreds of documents a day. As a result, several major financial firms froze foreclosures in many states, and attorneys general in all 50 states started an investigation.

However, the problems in the mortgage securitization market run much wider and deeper than robo-signing, and started much earlier than the foreclosure process.

When mortgage securitization took off in the 1980s, the contracts to govern these transactions were written carefully to satisfy not just well-settled, state-based real estate law, but other state and federal considerations. These included each state’s Uniform Commercial Code, which governed “secured” transactions that involve property with loans against them, and state trust law, since the packaged loans are put into a trust to protect investors. On the federal side, these deals needed to satisfy securities agencies and the Internal Revenue Service.

This process worked well enough until roughly 2004, when the volume of transactions exploded. Fee-hungry bankers broke the origination end of the machine. One problem is well known: many lenders ceased to be concerned about the quality of the loans they were creating, since if they turned bad, someone else (the investors in the securities) would suffer.

A second, potentially more significant, failure lay in how the rush to speed up the securitization process trampled traditional property rights protections for mortgages.

The procedures stipulated for these securitizations are labor-intensive. Each loan has to be signed over several times, first by the originator, then by typically at least two other parties, before it gets to the trust, “endorsed” the same way you might endorse a check to another party. In general, this process has to be completed within 90 days after a trust is closed.

Evidence is mounting that these requirements were widely ignored. Judges are noticing: more are finding that banks cannot prove that they have the standing to foreclose on the properties that were bundled into securities. If this were a mere procedural problem, the banks could foreclose once they marshaled their evidence. But banks who are challenged in many cases do not resume these foreclosures, indicating that their lapses go well beyond minor paperwork.

Increasingly, homeowners being foreclosed on are correctly demanding that servicers prove that the trust that is trying to foreclose actually has the right to do so. Problems with the mishandling of the loans have been compounded by the Mortgage Electronic Registration System, an electronic lien-registry service that was set up by the banks. While a standardized, centralized database was a good idea in theory, MERS has been widely accused of sloppy practices and is increasingly facing legal challenges.

As a result, investors are becoming concerned that the value of their securities will suffer if it becomes difficult and costly to foreclose; this uncertainty in turn puts a cloud over the value of mortgage-backed securities, which are the biggest asset class in the world.

Other serious abuses are coming to light. Consider a company called Lender Processing Services, which acts as a middleman for mortgage servicers and says it oversees more than half the foreclosures in the United States. To assist foreclosure law firms in its network, a subsidiary of the company offered a menu of services it provided for a fee.

The list showed prices for “creating” — that is, conjuring from thin air — various documents that the trust owning the loan should already have on hand. The firm even offered to create a “collateral file,” which contained all the documents needed to establish ownership of a particular real estate loan. Equipped with a collateral file, you could likely persuade a court that you were entitled to foreclose on a house even if you had never owned the loan.

That there was even a market for such fabricated documents among the law firms involved in foreclosures shows just how hard it is going to be to fix the problems caused by the lapses of the mortgage boom. No one would resort to such dubious behavior if there were an easier remedy.

The banks and other players in the securitization industry now seem to be looking to Congress to snap its fingers to make the whole problem go away, preferably with a law that relieves them of liability for their bad behavior. But any such legislative fiat would bulldoze regions of state laws on real estate and trusts, not to mention the Uniform Commercial Code. A challenge on constitutional grounds would be inevitable.

Asking for Congress’s help would also require the banks to tacitly admit that they routinely broke their own contracts and made misrepresentations to investors in their Securities and Exchange Commission filings. Would Congress dare shield them from well-deserved litigation when the banks themselves use every minor customer deviation from incomprehensible contracts as an excuse to charge a fee?

There are alternatives. One measure that both homeowners and investors in mortgage-backed securities would probably support is a process for major principal modifications for viable borrowers; that is, to forgive a portion of their debt and lower their monthly payments. This could come about through either coordinated state action or a state-federal effort.

The large banks, no doubt, would resist; they would be forced to write down the mortgage exposures they carry on their books, which some banking experts contend would force them back into the Troubled Asset Relief Program. However, allowing significant principal modifications would stem the flood of foreclosures and reduce uncertainty about the housing market and mortgage securities, giving the authorities time to devise approaches to the messy problems of clouded titles and faulty loan conveyance.

The people who so carefully designed the mortgage securitization process unwittingly devised a costly trap for people who ran roughshod over their handiwork. The trap has closed — and unless the mortgage finance industry agrees to a sensible way out of it, the entire economy will be the victim.

Yves Smith is the author of the blog Naked Capitalism and “Econned: How Unenlightened Self-Interest Undermined Democracy and Corrupted Capitalism.”


975 Readers' Comments

March 24, 2011

G.E.’s Strategies Let It Avoid Taxes Altogether
By DAVID KOCIENIEWSKI

General Electric, the nation’s largest corporation, had a very good year in 2010. 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. Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.

That may be hard to fathom for the millions of American business owners and households now preparing their own returns, but low taxes are nothing new for G.E. The company has been cutting the percentage of its American profits paid to the Internal Revenue Service for years, resulting in a far lower rate than at most multinational companies.

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.

While General Electric is one of the most skilled at reducing its tax burden, many other companies have become better at this as well. Although the top corporate tax rate in the United States is 35 percent, one of the highest in the world, companies have been increasingly using a maze of shelters, tax credits and subsidies to pay far less.

In a regulatory filing just a week before the Japanese disaster put a spotlight on the company’s nuclear reactor business, G.E. reported that its tax burden was 7.4 percent of its American profits, about a third of the average reported by other American multinationals. Even those figures are overstated, because they include taxes that will be paid only if the company brings its overseas profits back to the United States. With those profits still offshore, G.E. is effectively getting money back.

Such strategies, as well as changes in tax laws that encouraged some businesses and professionals to file as individuals, have pushed down the corporate share of the nation’s tax receipts — from 30 percent of all federal revenue in the mid-1950s to 6.6 percent in 2009.

Yet many companies say the current level is so high it hobbles them in competing with foreign rivals. Even as the government faces a mounting budget deficit, the talk in Washington is about lower rates. President Obama has said he is considering an overhaul of the corporate tax system, with an eye to lowering the top rate, ending some tax subsidies and loopholes and generating the same amount of revenue. He has designated G.E.’s chief executive, Jeffrey R. Immelt, as his liaison to the business community and as the chairman of the President’s Council on Jobs and Competitiveness, and it is expected to discuss corporate taxes.

“He understands what it takes for America to compete in the global economy,” Mr. Obama said of Mr. Immelt, on his appointment in January, after touring a G.E. factory in upstate New York that makes turbines and generators for sale around the world.

A review of company filings and Congressional records shows that one of the most striking advantages of General Electric is its ability to lobby for, win and take advantage of tax breaks.

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.

Company officials say that these measures are necessary for G.E. to compete against global rivals and that they are acting as responsible citizens. “G.E. is committed to acting with integrity in relation to our tax obligations,” said Anne Eisele, a spokeswoman. “We are committed to complying with tax rules and paying all legally obliged taxes. At the same time, we have a responsibility to our shareholders to legally minimize our costs.”

The assortment of tax breaks G.E. has won in Washington has provided a significant short-term gain for the company’s executives and shareholders. While the financial crisis led G.E. to post a loss in the United States in 2009, regulatory filings show that in the last five years, G.E. has accumulated $26 billion in American profits, and received a net tax benefit from the I.R.S. of $4.1 billion.

But critics say the use of so many shelters amounts to corporate welfare, allowing G.E. not just to avoid taxes on profitable overseas lending but also to amass tax credits and write-offs that can be used to reduce taxes on billions of dollars of profit from domestic manufacturing. They say 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 a rational system, a corporation’s tax department would be there to make sure a company complied with the law,” said Len Burman, a former Treasury official who now is a scholar at the nonpartisan Tax Policy Center. “But in our system, there are corporations that view their tax departments as a profit center, and the effects on public policy can be negative.”

The shelters are so crucial to G.E.’s bottom line that when Congress threatened to let the most lucrative one expire in 2008, the company came out in full force. G.E. officials worked with dozens of financial companies to send letters to Congress and hired a bevy of outside lobbyists.

The head of its tax team, Mr. Samuels, met with Representative Charles B. Rangel, then chairman of the Ways and Means Committee, which would decide the fate of the tax break. As he sat with the committee’s staff members outside Mr. Rangel’s office, Mr. Samuels dropped to his knee and pretended to beg for the provision to be extended — a flourish made in jest, he said through a spokeswoman. That day, Mr. Rangel reversed his opposition to the tax break, according to other Democrats on the committee.

The following month, Mr. Rangel and Mr. Immelt stood together at St. Nicholas Park in Harlem as 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. Joel I. Klein, then the schools chancellor, and Mayor Michael R. Bloomberg, who presided, said it was the largest gift ever to the city’s schools.

G.E. officials say the donation was granted solely on the merit of the project. “The foundation goes to great lengths to ensure grant decisions are not influenced by company government relations or lobbying priorities,” Ms. Eisele said.

Mr. Rangel, who was censured by Congress last year for soliciting donations from corporations and executives with business before his committee, said this month that the donation was unrelated to his official actions.

Defying Reagan’s Legacy
General Electric has been a household name for generations, with light bulbs, electric fans, refrigerators and other appliances in millions of American homes. But today the consumer appliance division accounts for less than 6 percent of revenue, while lending accounts for more than 30 percent. Industrial, commercial and medical equipment like power plant turbines and jet engines account for about 50 percent. Its industrial work includes everything from wind farms to nuclear energy projects like the troubled plant in Japan, built in the 1970s.

Because its lending division, GE Capital, has provided more than half of the company’s profit in some recent years, many Wall Street analysts view G.E. not as a manufacturer but as an unregulated lender that also makes dishwashers and M.R.I. machines.

As it has evolved, the company has used, and in some cases pioneered, aggressive strategies to lower its tax bill. In the mid-1980s, President Ronald Reagan overhauled the tax system after learning that G.E. — a company for which he had once worked as a commercial pitchman — was among dozens of corporations that had used accounting gamesmanship to avoid paying any taxes. “I didn’t realize things had gotten that far out of line,” Mr. Reagan told the Treasury secretary, Donald T. Regan, according to Mr. Regan’s 1988 memoir. The president supported a change that closed loopholes and required G.E. to pay a far higher effective rate, up to 32.5 percent.

That pendulum began to swing back in the late 1990s. G.E. and other financial services firms won a change in tax law that would allow multinationals to avoid taxes on some kinds of banking and insurance income. The change meant that if G.E. financed the sale of a jet engine or generator in Ireland, for example, the company would no longer have to pay American tax on the interest income as long as the profits remained offshore.

Known as active financing, the tax break proved to be beneficial for investment banks, brokerage firms, auto and farm equipment companies, and lenders like GE Capital. This tax break allowed G.E. to avoid taxes on lending income from abroad, and permitted the company to amass tax credits, write-offs and depreciation. Those benefits are then used to offset taxes on its American manufacturing profits.

G.E. subsequently ramped up its lending business.
As the company expanded abroad, the portion of its profits booked in low-tax countries such as Ireland and Singapore grew far faster. From 1996 through 1998, its profits and revenue in the United States were in sync — 73 percent of the company’s total. Over the last three years, though, 46 percent of the company’s revenue was in the United States, but just 18 percent of its profits.

Martin A. Sullivan, a tax economist for the trade publication Tax Analysts, said that booking such a large percentage of its profits in low-tax countries has “allowed G.E. to bring its U.S. effective tax rate to rock-bottom levels.”

G.E. officials say the disparity between American revenue and American profit is the result of ordinary business factors, such as investment in overseas markets and heavy lending losses in the United States recently. The company also says the nation’s workers benefit when G.E. profits overseas.

“We believe that winning in markets outside the United States increases U.S. exports and jobs,” Mr. Samuels said through a spokeswoman. “If U.S. companies aren’t competitive outside of their home market, it will mean fewer, not more, jobs in the United States, as the business will go to a non-U.S. competitor.”

The company does not specify how much of its global tax savings derive from active financing, but called it “significant” in its annual report. Stock analysts estimate the tax benefit to G.E. to be hundreds of millions of dollars a year.

“Cracking down on offshore profit-shifting by financial companies like G.E. was one of the important achievements of President Reagan’s 1986 Tax Reform Act,” said Robert S. McIntyre, director of the liberal group Citizens for Tax Justice, who played a key role in those changes. “The fact that Congress was snookered into undermining that reform at the behest of companies like G.E. is an insult not just to Reagan, but to all the ordinary American taxpayers who have to foot the bill for G.E.’s rampant tax sheltering.”

A Full-Court Press
Minimizing taxes is so important at G.E. that Mr. Samuels has placed tax strategists in decision-making positions in many major manufacturing facilities and businesses around the globe. Mr. Samuels, a graduate of Vanderbilt University and the University of Chicago Law School, declined to be interviewed for this article. Company officials acknowledged that the tax department had expanded since he joined the company in 1988, and said it now had 975 employees.

At a tax symposium in 2007, a G.E. tax official said 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.”

Transforming the most creative strategies of the tax team into law is another extensive operation. G.E. spends heavily on lobbying: more than $200 million over the last decade, according to the Center for Responsive Politics. Records filed with election officials show a significant portion of that money was devoted to tax legislation. G.E. has even turned setbacks into successes with Congressional help. After the World Trade Organization forced the United States to halt $5 billion a year in export subsidies to G.E. and other manufacturers, the company’s lawyers and lobbyists became deeply involved in rewriting a portion of the corporate tax code, according to news reports after the 2002 decision and a Congressional staff member.

By the time the measure — the American Jobs Creation Act — was signed into law by President George W. Bush in 2004, it contained more than $13 billion a year in tax breaks for corporations, many very beneficial to G.E. One provision allowed companies to defer taxes on overseas profits from leasing planes to airlines. It was so generous — and so tailored to G.E. and a handful of other companies — that staff members on the House Ways and Means Committee publicly complained that G.E. would reap “an overwhelming percentage” of the estimated $100 million in annual tax savings.

According to its 2007 regulatory filing, the company saved more than $1 billion in American taxes because of that law in the three years after it was enacted. By 2008, however, concern over the growing cost of overseas tax loopholes put G.E. and other corporations on the defensive. With Democrats in control of both houses of Congress, momentum was building to let the active financing exception expire. Mr. Rangel of the Ways and Means Committee indicated that he favored letting it end and directing the new revenue — an estimated $4 billion a year — to other priorities.

G.E. pushed back. In addition to the $18 million allocated to its in-house lobbying department, the company spent more than $3 million in 2008 on lobbying firms assigned to the task. Mr. Rangel dropped his opposition to the tax break. Representative Joseph Crowley, Democrat of New York, said he had helped sway Mr. Rangel by arguing that the tax break would help Citigroup, a major employer in Mr. Crowley’s district.

G.E. officials say that neither Mr. Samuels nor any lobbyists working on behalf of the company discussed the possibility of a charitable donation with Mr. Rangel. The only contact was made in late 2007, a company spokesman said, when Mr. Immelt called to inform Mr. Rangel that the foundation was giving money to schools in his district. But in 2008, when Mr. Rangel was criticized for using Congressional stationery to solicit donations for a City College of New York school being built in his honor, Mr. Rangel said he had appealed to G.E. executives to make the $30 million donation to New York City schools.

G.E. had nothing to do with the City College project, he said at a July 2008 news conference in Washington. “And I didn’t send them any letter,” Mr. Rangel said, adding that he “leaned on them to help us out in the city of New York as they have throughout the country. But my point there was that I do know that the C.E.O. there is connected with the foundation.”

In an interview this month, Mr. Rangel offered a different version of events — saying he didn’t remember ever discussing it with Mr. Immelt and was unaware of the foundation’s donation until the mayor’s office called him in June, before the announcement and after Mr. Rangel had dropped his opposition to the tax break. Asked to explain the discrepancies between his accounts, Mr. Rangel replied, “I have no idea.”

Value to Americans?
While G.E.’s declining tax rates have bolstered profits and helped the company continue paying dividends to shareholders during the economic downturn, some tax experts question what taxpayers are getting in return. Since 2002, the company has eliminated a fifth of its work force in the United States while increasing overseas employment. In that time, G.E.’s accumulated offshore profits have risen to $92 billion from $15 billion.

“That G.E. can almost set its own tax rate shows how very much we need reform,” said Representative Lloyd Doggett, Democrat of Texas, who has proposed closing many corporate tax shelters. “Our tax system should encourage job creation and investment in America and end these tax incentives for exporting jobs and dodging responsibility for the cost of securing our country.”

As the Obama administration and leaders in Congress consider proposals to revamp the corporate tax code, G.E. is well prepared to defend its interests. The company spent $4.1 million on outside lobbyists last year, including four boutique firms that specialize in tax policy. “We are a diverse company, so there are a lot of issues that the government considers, that Congress considers, that affect our shareholders,” said Gary Sheffer, a G.E. spokesman. “So we want to be sure our voice is heard.”

975 Readers' Comments

1.Anonymous BE Belgium    March 24th, 2011, 8:53 pm
    When GE pays no taxes to the United States; its shareholders can be of any nationality; and it is rapidly reducing employment of Americans, in what way can its success be much of a good thing for the American people?
    It is precisely for these reasons that large U.S. multinationals should have a government share required. Not so that the company is run by the government - its management and business structure must be private - but to ensure that in the end, the American people, who contribute so much to the company's success, get a share of the benefit.
    That being said, the corporate tax in America obviously needs reform. Corporate taxation should be imposed as a percentage of revenue from the country, so that multinationals such as GE cannot use transfer pricing and tax havens to evade their responsibilities. As it stands now, they are as much criminal organizations as Al Capone's (who, after all, was convicted for income tax evasion).
Recommended by 514 Readers

2.RAB Boulder, CO    March 24th, 2011, 8:53 pm
    Once again, this shows how corporations have come to control the U.S. government and use this power to legalize criminal activities. We were warned about this over and over:
    "I hope we shall … crush in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country." –Thomas Jefferson (Letter to George Logan, 1816)
    "Corporations have been enthroned. An era of corruption in high places will follow … until wealth is aggregated in a few hands … and the Republic is destroyed." –Abraham Lincoln, after the National Banking Act of 1863 was passed
    "This is a government of the people, by the people and for the people no longer. It is a government of corporations, by corporations, and for corporations." –Rutherford B. Hayes.
    "The real truth of the matter is, as you and I know, that a financial element in the large centers has owned the government ever since the days of Andrew Jackson." –President Franklin D. Roosevelt, November 21, 1933.
    "In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist." –Dwight D. Eisenhower, farewell speech
    One of the definitions of fascism is corporate control over the state, and we certainly have that. Behind all these corporations are the financial puppet masters, who have muscled their way to control over currency and credit, leveraging their position to profit by war and depression. These are the folks Dickens had in mind when he created Ebenezer Scrooge. It remains to be seen whether these people have one iota of moral sense left from which redemption would be possible, for it certainly seems, metaphorically speaking, that they are fully committed to work of the devil.
Recommended by 982 Readers

Highlights
10.  jeff pnyc      March   24th, 2011,  8:53 pm
"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."
 Let me rephrase this in terms we can understand: GE avoids paying taxes by paying legal bribes to politicians, and by employing fraudulent accounting techniques to hide the money it makes in this country.
 Now isn't it time to jail the people who aid and abet this egregiously criminal behavior?
Recommended by 1750 Readers

19.  Shelley San Francisco         March   24th, 2011,  8:56 pm
A company as large as GE should be paying high taxes. To know that as a small business owner I am paying more than GE makes me furious.
Recommended by 1501 Readers

36.  KJudson New York, NY        March   24th, 2011,  9:00 pm
When I discovered on a recent visit that my venerable eighty-four year old mother with breast cancer needed a new toaster to replace the one that was at least half her age, I went out despite her protests and got her the best one that I could find. It was a GE product and a fine piece of machinery. Shiny, well made, could deal with bagels, four slices of toast, the whole nine yards. I felt great buying this for her.
 Except for one thing. When I glanced at the bottom of the box that I was about to toss away after setting up the new addition to her kitchen, I was shocked to discover that our nation's largest corporation had brought this little beauty in from China where it had been made. And I thought about this country with all the people that need work that had been betrayed by its largest corporate body that had outsourced the labor for this magnificent piece of aluminum to a faraway land and got away paying peanuts for the honest but surrogate men and women there who labored in their greedy behalf. It turned my stomach such that I wanted to toss that toaster with the box right then and there.
 You know, if I had read this article on that same night, I surely would have even if I had to drive back later to Mom's home and do the deed.
 Shame on you GE. Shame. What has happened to our country?
Recommended by 947 Readers

40.  LCO Cleveland, OH        March   24th, 2011,  9:00 pm
Isn't it wonderful how a multibillion dollar company can receive a billion+ dollar tax refund? Yet my husband and I, who have two children and earned a whopping combined income this year of $60,000, are going to end up owing $1,900 in federal taxes, several hundred dollars in state taxes, and at least several hundred dollars in city taxes. It's way past time for the wealthy corporations to step up and start paying their fair share of taxes.
Recommended by 1218 Readers

48.  Gudrun Independence, NY       March 24th, 2011,  9:21 pm
This company built 6 reactors next to 1 million people in an earthquake zone and Tsunami is a Japanese word. They were cheap and inferior reactors. The spent fuel tanks were built on top of the reactor and now one cannot get to these vital parts because radiation is emitted in the workroom.
 The US Nuclear Regulatory Agency should have not allowed an American company to do that. Now we find out that they don't even pay any taxes. I hope everybody including the President and John Boehner read this and figure out how to get some money out of these people and others equally rich.
 ON top of that we taxpayers are giving them subsidies for nuclear, oil and gas energy and what happends: Commercials that promise that nuclear, coal and gas are safe and clean too --- sure!!! And we even paid for those lying commercials with those subsidies.
 Mr. President: please take away the subsidies for oil, gas, coal and nuclear and give it to the renewables and to good mass transit to encourage them to catch up before the climate green house gases go over the tipping point.
 Thanks NY times for publishing this and also thanks for adding comments on this important topic.
Recommended by 656 Readers

64.  Mark New Jersey     March  24th, 2011,  9:52 pm
The problem isn't the tax code and simplifying it alone won't help.The problem is the way Congress is constantly changing and playing with it. If tomorrow you reduced the tax code to a one page rule that said everybody pays 20% by then end of the year Congress would have it back to a thousand pages. Within a few years congress would have it at ten thousand pages and then some senator who voted for 9,999 of those pages would have it wheeled into the senate on a dolly for a big show and pound his fist in outrage as if it was the IRS fault that they passed all those loopholes and changes.
Recommended by 385 Readers

85.  LRT DC    March 24th, 2011,  10:07 pm
Before everyone starts throwing darts at GE they should be aware of the fact that many, many corporate giants avoid income tax. However, in many instances, including that of GE, they pay a ton of other local, state and federal taxes. I wonder about Wal*Mart. I would like to see a detailed accounting of the top 50 US companies delineating taxes paid versus gross sales and income. Also, lets not forget wealthy individuals and their tax avoidance initiatives. One of our nation's wealthiest business leaders once told me that he had never had taxable income in spite of being worth well over a billion US dollars. His businesses were all privately held and he would just turn potential profits back into the corporations in the form of new equipment, real estate, aircraft etc.
    Recommended by 176 Readers

110.  Alex California      March  24th, 2011,  10:33 pm
A lower overall corporate tax rate would make sense IF we ended the giant tax loopholes that directly incentivize behavior contrary to American national interests. For example, the US government should reward companies that choose to invest in America, rather than indirectly punish them by giving tax breaks to companies that invest abroad instead. We should give those tax breaks to companies that invest in American jobs and infrastructure, or at the very least not give a direct financial incentive for companies to take the money permanently out of our economy. On a large scale and over time, our own government has actually been promoting LESS investment in American businesses!
 If companies aren't eventually bringing their earnings money home or reinvesting it in America, why should we reward them? It just doesn't make sense for a national government to punish those who invest in its nation while rewarding those who divert funds away, particularly during a recession. This abuse of the corporate tax system is absolutely disgusting. And very prevalent. Our government and the American people are getting played for fools by very wealthy companies and their political sponsors.
 Unfortunately, meaningful reform is tough to push through politically, especially when you have massive $ donations to government officials who oversee the regulation of their own donors. Not to mention the sad fact that a giant self-interested "News Corp." is the most-watched news source in the country. What a demonstration of systemic incentives for corruption and misuse of government...
    Recommended by 252 Readers

143.  mikeoshea Hadley, NY       March  24th, 2011,  11:28 pm
I have been teaching since 1965, and not a year goes by that I don't pay my taxes willingly. I don't begrudge the government my taxes because I appreciate the fact that the fire department came once when there was a fire in my chimney. The police also came when some young people who had too much to drink tried to steal my car. And, of course, I wouldn't be able to get to my classes to teach if the local government didn't keep the roads repaired and clean the snow in the winter (worst winter ever for snow up here in the Adirondacks).
 I do think that we spend a tiny bit too much on our war machine (although I admire the patriotism of our young enlisted men and women) and a whole lot too little on one of our country's great successes - the Peace Corps. Peace Corps volunteers have served in well over a hundred countries in the past (almost) fifty years, and wherever they have served they have convinced people that Americans are open-minded and friendly. We could probably reduce our military budget a tad and give a bit more to this program which has done nothing but win friends for us throughout the world for the past five decades. Why has this never happened? Do we love war more than peace?
 I travel to China a lot, and I also speak Chinese (not because I'm smart but because Chinese is the easiest language in the world to SPEAK). General Electric is selling tons of solar panels, windmills, water purification devices, and locomotive engines in China. They're making lots of money in China after laying off thousands and thousands of American workers. But they don't pay any taxes? What the heck is wrong with our tax system?
 Poor and middle class people have to pay all the taxes that they should pay, but rich folk and big companies pay nothing or next to nothing? What's wrong with that picture? When even Democrats like Mario Cuomo's son refuse to ask wealthy people and big corporations to pay their fair share to help our country you know that we are doomed.
    Recommended by 499 Readers

161.  pdxtran Minneapolis          March  24th, 2011,  11:45 pm
All you people who are advocating repeal of the corporate tax seem to be either self-serving (you love your dividends so much that you'll let your country go down the tubes rather than see your dividends reduced by a penny) or unaware that companies are taxed only on their profits, not on their total earnings.
 With its tax cuts in the early 1980s, the Reagan administration gave the big players on the stock market a sudden windfall, and not surprisingly, the shareholders liked this and began to demand more. This encouraged managers to do ANYTHING to raise share prices and dividends, especially what Robert Reich then referred to as "paper entrepreneurism," making one's company prosper not by providing goods or services but by buying and selling other companies and/or stripping their assets.
 Most Americans work for someone else, so they may not fully realize the effects of corporate taxes on a company's actions. They may assume, without thinking much about it, that companies are taxed like individuals, a certain percentage of their earnings minus a few insignificant deductions. They may even believe the right-wing lie that companies compensate for corporate taxes by raising their prices.
 But here's the truth: pay income tax ONLY on their profits, which broadly speaking, is income minus expenses. Among the expenses paid for with pretax dollars are employee wages and benefits (including executive compensation), cost of raw materials or inventory, costs of equipment and supplies, remodeling and upgrading costs, R&D, and rental or lease payments, among thousands of others.
 Shareholders receive lower dividends if the tax rates are high, but so what? Investing is a gamble. At least it's supposed to be a gamble, although a lot of Wall Street types seem to think that anything less than ever-increasing dividends is outrageous.
 Thus,to take an extremely simplified example, a company that takes in $1 million and has expenses of $999,000 pays income tax only on the $1,000 difference between income and expenses. Raising prices would actually INCREASE the company's taxes under those circumstances.
 Remember that the next time some self-serving corporate type or right-wing media shill tries to tell you that Acme Company will be forced to raise the price of widgets if it actually has to pay income tax.
    Recommended by 223 Readers

175.  as new york          March  25th, 2011,  1:37 am
GE is doing what it must do to survive. The pay and benefits in this country are excellent. They are saddled with the outrageous costs of worker's comp and litigation in the US. Frankly, I don't know how they can make anything in the United States. As a small businessman I have to say that it is simply unreasonable to have employees given the regulatory, worker's comp and legal environment that we suffer under...all driven by the legal profession. Absent the tax maneuvering we can kiss GE good bye. Note that the Chinese are pushing the envelope in reactor technology as outlined in the current Times front page.
    Recommended by 32 Readers

213.  nicedream1 Florida          March  25th, 2011,  8:17 am
Outrageous, unfair, blah blah blah. But are they breaking the law? That's your only valid complaint.
    Recommended by 36 Readers

225.  EJS Granite City, Illinois          March  25th, 2011,  8:23 am
This article underscores the absurdity of President Obama appointing Jeff Immelt, the CEO of General Electric, to chair a Presidential commission on how to create more American jobs. In addition to avoiding taxes, GE is also a world leader in the offshoring of American jobs for fun and obscene profit.
    Recommended by 462 Readers

228.  SusanAtlanta          March  25th, 2011,  9:11 am
GE has received these tax giveaways from laws, written by our elected representatives, that are gifts to large corporations. The 400 richest households in America have an average of a 16% tax "burden" on average incomes of $345MM, another lovely present from our elected representatives. With the deck so legislatively stacked in favor of the rich and powerful, the middle class is being squeezed to pre-Industrial Revolution non-existence. If this is what's called "class warfare", it's pretty clear which class is under attack.
 You can refuse to buy a GE microwave oven, but consumer goods are a pittance of GE's profits. Are you also going to turn off the heat in your house because it's generated by GE turbines? Refuse a MRI for your child because the MRI machine was manufactured by GE?
Refuse to get on a plane because the aircraft has a GE engine? The products aren't the problem. The tax laws are.
 GE and others are, of course, exploiting the system, but the opportunity to do so was created by the individuals in the House and Senate who write tax laws, and the rest of the 535 who voted "yea" to pass them. Flood your Congressperson's and Senator's offices with calls, snail mail and emails. Show up at their public events. Write letters to your local newspaper. Make noise, then make more noise. Never, never stop.
    Recommended by 282 Readers

249.  ChrisNew York, NY          March  25th, 2011,  9:15 am
This is good reporting. I think that the readers' ire should be directed at the individuals in this business rather than the entire business, itself. Keeping corporate taxes low will put more liquid assets at the disposal of a US company. Raise INDIVIDUAL taxes on the wealthy, to discourage them from paying themselves instead of hiring more workers. And penalize government employees that become lobbyists for private interests.
    Recommended by 97 Readers

284.  Kurt NY          March  25th, 2011,  9:23 am
Ronald Reagan cut marginal tax rates along with many tax shelters used by the wealthy and brought increased prosperity along with increased tax revenue from the very sectors for which he cut rates. Would a similar approach work here?
 Actually, this article underscores the need for a European-style Value Added Tax, which would be harder for companies like GE to escape.
This would also enable us to pursue export strategies better as we would be able to refund VAT for goods and services exported, which is allowed under current international trade rules. This would also encourage GE and like minded companies to produce more at home and possibly repatriate much of the profits they are keeping overseas in order to avoid one of the most onerous corporate tax rates in the industrialized world.
 Our high corporate tax rates are discouraging investment here while promoting tax avoidance schemes such as GE's to flourish. We should cut rates dramatically and eliminate most of the tax dodges, while counterbalancing the anticipated loss of revenue with the imposition of a national VAT.
    Recommended by 45 Readers

318.  Rex NJ          March  25th, 2011,  9:34 am
This is shameful!! Shameful that GE can get away with this and shameful that Congress has let the corporate share of our tax receipts fall from 30% in the 1950s to 65 today.
I've worked on Wall Street for 30 years and know that GE is lying when they say they are doing this for shareholders. And, of course they are following the tax laws. They had the laws written to suit their purposes.
Their should be an Alternative Minimum Tax for corporates, just like for inviduals.
    Recommended by 165 Readers

341.  Tulip Eater Los Angeles          March 25th, 2011,  9:36 am
Tax is like drug testing in athletics. Every closed loophole pushes the abuse somewhere else. It is incredibly hard to devise a tax system that would respond to all of the potentials for abuse, but there are some obvious choices for reform. Phase out most deductions, drop the overall rates and eliminate the special treatment of capital gains. The tax system is ossified, and has become too big a drag on the economy. It is time to break it up to let the tax market clear itself out and move capital to more productive uses. And, believe me, there would still be plenty of issues remaining: the tax attorneys and CPAs will not want for work.
    Recommended by 32 Readers

350.  Talbot New York          March 25th, 2011,  9:43 am
I never thought I would say this about Reagan, but his move to make sure GE paid its fair share of taxes is something our current President, and apparently a coterie of both Democrats and Republicans, could learn from.
 And while Washington ponders cutting food stamps, GE executives can be assured of their bonuses. This is not gamesmanship, it's highway robbery. Corporations now have the same rights as individuals when it comes to political contributions, thanks to our Supreme Court, with no responsibility to contribute to the welfare of this country.
 And we want more of this? Who is we? GE executives and shareholders? The people who get their payoffs? Truly, the lunatics have taken over the asylum.
    Recommended by 162 Readers

372.  jljarvis Bristol, VT          March 25th, 2011,  9:47 am
Folks, You don't get it -- and the author didn't get it, either. GE isn't the bad guy, the tax code is! (Sorry Gordon!)
OF COURSE GE has a pile of unrepatriated foreign profits. All US incorporated multi-nationals do. Why? Because the US government taxes those earnings when they're brought back into the states. And we tax at a rate higher than the countries where the profit was earned.
 SO, you say? SO, the result is that GE profits which could be invested here in the US, in plants, production, R&D and jobs, AREN'T invested here. The government takes a third off the top. So why invest in physical plant here, when there are countries with talented labor forces, who
charge NO TAX when funds are invested in their countries? Their people will be put to work, and in turn pay taxes on what they earn.
 If you think I'm wrong about this, look at the flow of jobs in big pharma, or petro-chemicals, or telecom. Or semiconductors and electronics.  It's all out of the US, even when supply lines would dictate that it should be here.
 The sole exception of which I can think, at the moment, are foreign auto makers, who built US plants to serve the US market. And other taxation issues are afoot in those cases.
 Sorry, Folks, but the enemy is the guy you sent to Congress. That's what's broken.
    Recommended by 102 Readers

396.  RRL NYC          March 25th, 2011,  9:52 am
"steal a little and they throw you in jail, steal a lot and they call you king." - BD
    Recommended by 154 Readers

423.  ADN New York, NY          March 25th, 2011,  10:38 am
This tells us as much about President Obama as it tells us about General Electric. What it tell us about the president isn't good. Does anyone still believe in "change we can believe in?"
 As a Democrat who worked for his election, I consider this president to be one of the most brilliant politicians of my lifetime. Most presidents merely promise things they can't deliver and never had any intention of delivering. But this president went them one better: he made promises about who he was as a person, many of which turned out to be not true. The only good news is that virtually everyone else capable of being elected president, then or now, except perhaps for Hillary Clinton, would have been far, far worse. This is where we have arrived early in the 21st century. We give thanks for one man's fraudulence because it's not as bad as everyone else's.
    Recommended by 109 Readers

438.  60feet6inches Florida          March 25th, 2011,  11:17 am
This article is so utterly slanted and intellectually dishonest it defies explanation. It strives to misinform the reader about GE's ultimate tax bill. It makes zero mention of the BILLIONS of dollars GE pays each year in excise, sales, income, use, business and occupational, employment, medicare, and social security taxes each year. The fact that GE overpaid in previous quarters for which it is currently receiving credits, combined with recent REAL losses in several sectors, resulted in the tax bil FOR JUST A SINGLE TAX TYPE being zero. An informed reader can easily come to the conclusion that the author is working on an agenda rather than being connected to reality.
Disclosure: I am a fierce Liberal, and a tax accountant.
    Recommended by 48 Readers

461.  champlainmary Philadelphia          March 25th, 2011,  11:38 am
Excellent, excellent journalism! Although really struggling financially, I will gladly pay when the Times' policy soon changes towards this issue. This should be supported, and of course our free press is so important to our democracy, now, at least as much as at any other time in our history.
 Many interesting and alarming points are raised here, and hopefully this will lead to some actual reform. I couldn't help thinking of the lop-sided playing field that is in place because of China, and the ability of companies to go there and exploit labor and environment, all with the non-democratic Chinese government's very strong support. No wonder that G.E.'s reduced its U.S. labor force while selling us their "fruit of the poisonous tree" Chinese made products. (Personally, I try very hard to not buy anything made in China, especially, and tell merchants, customer service rep's., etc., why...)
 This tax policy need to change. Imagine a company that puts so many high-powered resources into the avoidance of taxes... What a sad state of affairs. I think something should be done about Mr. Imelt's and all top executives of major corporations pay packages, as well.
Another issue, but also another facet of the present clearly immoral and unfair business world. These CEO's have manages to create a new "Gilded Age", and for no justifiable reason; The Great Stock Market Bubble of over a decade ago is proof of that. While education costs are off the charts for our young. these top executives now receive an average of 500 times the average worker's pay at their companies. In 1980 this ratio was about 22 to 1, and while pay for most of us has barely (if that) kept up with inflation, they've managed this gluttonous and ignoble feat, also. And while the middle classes of the West are being decimated, non-democratic, repressive, unfair trading, and
heavily polluting nations like China are strengthened...
    Recommended by 62 Readers

491.  CitizenRI          March 25th, 2011,  12:18 pm
I couldn't get past the first page I was so angered by this article. I understand that large corporations like GE contribute indirectly and directly to the economic growth of our country, but something just doesn't seem right when I, as an individual, pay a higher tax rate than GE does.
Granted, I don't pay any salaries and I don't invest in manufacturing and technology the way GE does, but those indirect methods of contributing, GE-style, get harder to quantify and rely on in a global economy.
 I'd like to see a shift back to corporate tax rates that assuredly bring in revenue to the government. And president Obama needs to get Jeff Immelt away from any work on corporate tax reform - his allegiance is to GE, not the US government.
 All told, this is a glaring example of how the revenue burden in this country has shifted to the working, middle class taxpayer. It's an upside-down pyramid scheme, with the wealthiest at the bottom contributing the least. The middle class is the most numerous economic group in America. Why, as the majority, are we standing for this?
    Recommended by 112 Readers

498.  Lunchbox JoeWilm., DE          March 25th, 2011,  12:19 pm
Corporate Welfare? Not really. GE paid almost $2.7 billion in cash taxes in 2010 on a consolidated basis (almost 19% of pretax income from continuing operations). Over the past 10 years, GE has paid almost $23 billion of corporate income taxes to governments around the world, making it one of the highest payers of corporate income taxes.
    Recommended by 7 Readers

508.  Metro Journalist NY Metro Area          March 25th, 2011,  12:23 pm
Despite all this, the shares of GE have had a dismal record for some 15 years. I know this first hand because I'm a second generation GE shareholder. I once had $50K worth of the stock; now it's less than half of that. I would have been better off stuffing my mattress.
    Recommended by 21 Readers

526.  julie kreutzer boulder colorado          March 25th, 2011,  12:25 pm
I am a small business owner. I pay taxes willingly because I recognize the value of paved roads, fire departments, libraries, environmental protection, etc. My efforts and those like me are not enough since we face huge deficits. I have been emailing my representatives and senators at the state and national level to tell them I am more than willing to pay my fair share but I want the very wealthy and the corporations to pay their fair share. The reason we have to lay off teachers, shut state parks, and have no money for social security is clear. It will take many ordinary Americans contacting their elected representatives to make any difference in tax policy since there is a great resistance to even discussing it. Consider mentioning to them that when Ike Eisenhower was in office, the very wealthy paid 91% of the income tax in this country and despite the great war and Depression we were able to build a new national highway system. Now, we can't afford to maintain those highways. In Reagan's administration we had a 70% tax rate for the very wealthy and then 50%. During the Bush Administration it fell to 35% (don't take my word for it, check the tax rates for yourself at the Tax Foundation website). This fall in the tax rate for the very wealthy and increase in tax loopholes for corporations happens to mirror our growing deficit and it mirrors the ever increasing wealth at the top 2% while the rest of us share very little of the nation's wealth. The majority of this country is not wealthy and does not benefit from these cuts. Our country is suffering massive unemployment made worse by more cuts that decrease our teachers, our food inspectors, etc., while adding to the unemployment. Consider making your voice heard; our future depends
on it.
    Recommended by 50 Readers

551.  Bob Washick Conyngham PA          March 25th, 2011,  12:28 pm
As a first time stockholder, I own some GE stock. I am very pleased to see that they are reducing their taxes - as many billionaire companies did long before GE recognized this policy. Yet, if you note, GE dividends have increased. In short, GE dividend stock, unlike taxes, is returned to potential customers like myself - and we all know, you need to buy in order to keep our system going. Good move GE!
    Recommended by 3 Readers

576.  SamBoston          March 25th, 2011,  12:33 pm
While I reflexively blamed GE for their corporate malfeasance when reading this article, and am happy to blame corporations for many ills in this country, it is really the fault of the government for not making a tax code that ensures that everyone (corporations included) pays an appropriate share. If corporations really had to pay 35% on their profits, they would all be based somewhere else by now. Further, there isn't a single person I know who decides not to claim a deduction/credit they are due on their taxes because they want to make sure they pay their fair share. This is purely the fault of a government that has failed to make a straightforward tax code that ensures that all pay what is fair.
The only reason that GE employs so many people to work to evade taxes is that it is profitable. Make a flat tax of 5% on all corporate profits based on their shareholder statements. This would probably generate more revenue, and would eliminate the disparities.
    Recommended by 14 Readers

619.  MrHopLowell          March 25th, 2011,  12:40 pm
«We are a diverse company, so there are a lot of issues that the government considers, that Congress considers, that affect our shareholders,» said Gary Sheffer, a G.E. spokesman. «So we want to be sure our voice is heard.»
 Beg your pardon sir? One thinks that 1,000 people working to ensure that the tax code is exploited to the maximum benefit of the company, and lobbying efforts that spend more re-writing the code than the company spends on charity for the year is a pretty telling fact that GE's voice is in fact the problem in this equation.
 In addition, it should be clear that the company considers the value of its own stock to supersede the investment in competitiveness that paying taxes should support. In fact, its disgusting to consider that GE benefits from all of the technical expertise and government resources that produce innovative energy technologies and will never have to give a dime back to anyone but these mysterious "shareholders" (read: Company management and their biggest insiders).
 Of course, the myth that tending to "shareholder value" is the one true barometer of competitiveness is the real culprit here.
    Recommended by 7 Readers

631.  Bob Lob NY          March 25th, 2011,  12:43 pm
As a taxpayer and citizen, I find this shocking and deplorable. But, as a shareholder and investor in GE, I find it deeply satisfying. How can I reconcile these feelings?
    Recommended by 11 Readers

644.  Mary Knoxville, TN          March 25th, 2011,  12:52 pm
For many months now, my husband and I have been making a concerted effort to buy U.S.-made products as much as possible. Jobs are disappearing at a shocking rate in this country, and after much discussion and debate we decided to put our money where our mouth is.
 Unfortunately, we are discovering that we hardly have a choice in the matter any longer. There was a fine comment posted earlier, a story of buying a nice GE toaster for one's mother, only to find the ubiqituous 'Made in China' label on the box. Do you know we went to SEARS, of all place, attempting to find a dishware set for our new home, and did not find a single plate - not one! - that was not made abroad?
 We went to Washington DC for our honeymoon back in October. After touring the Capitol building, my new husband and I decided to purchase a Christmas ornament in the gift shop as a memento. We waded through White House ornaments, the Capitol building, the Constitution, and various memorials before finally selecting a small replica of the Bill of Rights as our memento. Everything else - no exaggeration - was made in China. In the nation's capital itself!
 Friends are losing jobs here in TN right and left. I voted for Obama joyfully in 2008, but when he speaks these days I have often wondered who is standing behind him telling him what to say. With articles such as these, and with the recent choices of appointments, I suppose it's no mystery any longer.
 The question is, what can we do about it as citizens - when as far as the Supreme Court is concerned, GE is the same as you and me? Except, of course, when it comes to paying taxes. Those patriotic contributors.
    Recommended by 41 Readers

663.  Scott Jeffries Raleigh, NC          March 25th, 2011,  12:54 pm
GE itself is not to blame for the tax situation. Yes, it lobbies, and yes it uses various tactics to reduce its tax. AS a private company it is doing what is should do.
 The fault lies with Congress and the maize of tax laws created and layered with breaks, loopholes, exceptions and other gimics so Congress and the WH can point to "breaks" they are giving their favored voter or donor groups and claim "reductions" in the deficits (all based oin 10 years).  To me it illustrates that our elected leaders in Washington have let spending and taxes get out of control.
    Recommended by 13 Readers

677.  HM New York          March 25th, 2011,  12:58 pm
Articles like these and the reader replies make me seethe because naive commenters use this information to bash corporations and businesses as a collective group. That makes my own small business, struggling with taxes and the threat of increased costs for all manner of compliance, not to mention Obamacare, a co-equal offender. The Federal government makes enough on income taxes and all other forms of taxation. Please stop bashing businesses.
    Recommended by 8 Readers

694.  Steve N.Y.          March 25th, 2011,  1:04 pm
As someone who was born in the shadow of GE headquarters in Schenectady, I have followed the progress of this corporation for decades. My father-in-law, brother-in-law, mother, father and two aunts all worked there. My father rose to become Director of Customer Accounting in Europe, so I did get an intimate view of corporate skullduggery at a high level. GE has been engaged in this process for many years, beginning with chasing cheap labor around the country, and then overseas, and more recently changing their whole corporate strategy to increase their profits through their lending arm. To see the level to which this once proud company has sunk makes me almost glad that my fathers Alzheimers disease prevents him from seeing what the "Generous Electric" of my youth has become. It makes me sick at heart to think that this is the future of our corporate world, and worse, our country.
    Recommended by 47 Readers

708.  wf FL          March 25th, 2011,  1:06 pm
as a stockholder of GE, I haven't done too well with their stock either. So WHERE are they putting this extra money that they're not giving the government or their shareholders?
    Recommended by 19 Readers

730.  jharris99 Healdsburg, CA          March 25th, 2011,  1:07 pm
Outrageous, unfair, blah blah blah. But are they breaking the law? That's your only valid complaint.
************************************
It's very difficult to break a law that you bribed politicians to pass.
    Recommended by 54 Readers

751.  Franny Honolulu          March 25th, 2011,  1:10 pm
I'm not sure what's worse, the Republicans who give the taxpayers' hard earned money to their corporate buddies for free or the Democrats who give it away for pennies on the dollar for some bread crumbs tossed at their district. Tough call on this one.
    Recommended by 27 Readers

789.  Jeanne Johnstown, PA          March 25th, 2011,  3:10 pm
I guess you really can't legislate morality: «In a rational system, a corporation’s tax department would be there to make sure a company complied with the law,» said Len Burman, a former Treasury official who now is a scholar at the nonpartisan Tax Policy Center. «But in our system, there are corporations that view their tax departments as a profit center, and the effects on public policy can be negative.»
 Yes, it's all perfectly legal. Morality doesn't play a part in numbers. 2x2 is 4 and so is 4x1. Though they are two different means to the same end, one is not inherently morally superior to the other. So the overriding goal of the tax attorneys and accountants is the same as that of the CEO - to maximize profits. What happened to being American and paying your taxes to the country whose people built your company, the country where your employees' children fight the wars ensuring a stable society at home, the country that uses your products, making your armaments divisions very prosperous to boot? I'm not impressed with your "guilt money" either ($30 donation to NYC schools).
 Too bad people have swallowed a false bill of goods – that somehow the principals at these companies are worth hundreds of times the ordinary employee. I don’t care who you are, your time is not worth hundreds of times as my time to me and never will be. All any of us has to give is our time at our labor. There’s plenty of “talentâ€? in the world who are also patriotic.
 Shame on us who keep electing the same clowns who don't have the guts to force publicly-financed elections so that they could insulate themselves from corruption. But I guess they like the gravy train too much . . .
    Recommended by 10 Readers

823.  Truth In Spending Southeastern, MA          March 25th, 2011,  3:34 pm
All this hullabaloo over what GE or EXXON or the big pharmaceuticals pay in taxes is a smokescreen. Here's the truth. None of them pay taxes in spite of what the books may show.
 The bottom line is that you, and I, and others who buy their products or services pay those taxes. They are a part of the overhead that is factored into the price to the distributor/wholesaler, on to the retail market with a markup, and then to you, me, and others with yet another markup.
 That dollar in taxes ends up costing us a dollar and a quarter, or a buck fifty, or even two dollars or more in the price we pay for goods and services. The guy at the end of the line (you, I, and others,) pay those taxes.
 I'd rather give the IRS a buck more in taxes to save more than a dollar in the costs of goods and services I buy.
    Recommended by 7 Readers

824.  dpksyr Syracuse          March 25th, 2011,  3:34 pm
This is why everybody should be required to pay a equal percentage tax regardless if individual or corporation on all money made in US. No deductions allowed. 2% or 3% would be a good starting point.
    Recommended by 0 Readers

827.  jfx Chicago          March 25th, 2011,  3:36 pm
Simplify the tax code. It really is that simple. If politicians can make up rules to encourage whatever special things they want to encourage, why should anyone be surprised when companies spend a fortune on tax advisers to figure out those complicated rules and claim the resulting tax breaks.
    Recommended by 4 Readers

831.  JAC CA          March 25th, 2011,  3:39 pm
A lot of comments about adopting a flat tax ... which is to regressive.
Time to adopt a "Transaction Tax" (0.3%) on all financial transaction including Wall Street Transactions to replace our maze of state and federal taxes.
 Of course republicans will "NEVER" support a fair and balanced tax replacement because it would allow congress to balance the budget, eliminate GWB's $12 Trillion Dollar deficit, pay off Reagan and GWB's $11 Trillion dollar Debt, fund Social Security and Medicare. Support http://www.apttax.com/
    Recommended by 3 Readers

840.  Skeptical USA          March 25th, 2011,  3:42 pm
To LCO from Cleveland (#40), So you say «my husband and I, who have two children and earned a whopping combined income this year of $60,000, are going to end up owing $1,900 in federal taxes, several hundred dollars in state taxes, and at least several hundred dollars in city taxes.»
This means that your effective federal tax rate is only slightly above 3% ($1,900/$60,000). Once you add state and city taxes of several hundred dollars each, your tax rate would climb to something like 6%. This is not that far from what the article reports GE’s tax burden is “G.E. reported that its tax burden was 7.4 percent of ist American profits.“
So why the outrage? Try talking to people whose tax burden is upwards of 25% of their income and see how they feel about your complaint.
 I am not saying that what GE is doing is right, but simply putting this in perspective.
As far as I can see, the general point of this article is – neither people nor companies pay taxes automatically; instead, they change their behavior in response to taxes. Raising corporate tax rate to 90%, for example, is not going to increase tax revenue. All it will do is make companies seriously increase their efforts at avoiding taxes via legal loopholes and lobbying.
    Recommended by 0 Readers

846.  fornelas phoenix          March 25th, 2011,  3:47 pm
I was laid off from GE Capital when they outsourced our jobs to Bangalore India. As I saw Immelt's appointment I kept wondering about his commitment to make the U.S. labor market competitive. Who is kidding who? After reading some comments in Krugaman's column on austerity I have come to the conclusion that whatever is done to fix the great recession effects is actually intended to benefit the top 1%. None cares about the middle class or the labor force. The goals is to keep giving to the wealthy under the premise that their benefits eventually will trickle down to the majority. We shoulder the burden and our taxes are used to protect and enhance their status.
That is why the wealthy will keep taking additional risks, they will always be bailed out one way or another. Therefore, given the current productive scheme of the U.S. economy, we should not be surprised that these bail outs will continue.
    Recommended by 17 Readers

873.  Tony Dolanski Palm Beach FL          March 25th, 2011,  4:22 pm
Companies have a duty to shareholders and other investors to operate their businesses at the lowest cost. All businesses seek to minimize and defer payment of income taxes. GE is conducting itself in the mainstream. The problem lies in our Federal tax code and regulations, not with our companies.
 Corporate taxes recently have yielded less than $200 billion, a small amount relative to the US budget and GDP. Our tax scheme encourages companies to locate operations in low cost countries. A better approach would be to scrap the corporate income tax and institute a simple sales tax on all goods and services sold in the US, including all imports and exports. Such a tax would cause US companies to reassess the location of operations, thereby eventually stimulating job growth. The rate of sales tax would be set at a level to fund about 33% of needed revenue. This approach would create a more reliable flow of tax receipts since the ups and downs of corporate profits would be mitigated. In the short-term companies could also repatriate their overseas earnings without a huge tax bite, which would then be available for re-investment in the US.
    Recommended by 3 Readers

899.  Farmerjohn9 California          March 25th, 2011,  5:20 pm
An afterthought. Can Paul Krugman write an article on the consequences for the country if the largest 500 or 5000 or 50,000 US companies followed GE's example?
    Recommended by 6 Readers

900.  child of babest pete, fl          March 25th, 2011,  5:20 pm
We are indeed, a corporatocracy. Make no mistake about it.
    Recommended by 19 Readers

906.  CharlesNapa, CA          March 25th, 2011,  6:19 pm
This isn't news. The country is morally bankrupt. Simple as that.
    Recommended by 12 Readers

907.  rosemary4289 Hudson, FL          March 25th, 2011,  6:21 pm
My "Buy American" determination in my shopping habits was shattered by this government-endorsed legal fraud and corporate greed. After Maytag moved their manufacturing to Mexico, costing thousands of Americans their jobs, it was added to my "Do Not Buy" list. This list is getting longer and longer as the years pass.
 In my view, GE is Madoff's equal and should be treated as such.
    Recommended by 15 Readers

912.  SaveRepublicGeorgia          March 25th, 2011,  6:23 pm
Eliminate the income taxes and IRS. Institute the fair tax (flat national sales tax) and charge on consumption. The rich will pay for what they use, instead of shielding accumulated wealth. We cannot continue this ponzi scheme where the government can choose who wins and looses. The irony of Immelt being on the 'Competitiveness Council' is not funny.
    Recommended by 6 Readers

918.  Matthew Brooklyn, NY          March 25th, 2011,  6:29 pm
Actually, GE is not the nation's largest corporation: both Exxon Mobil and Apple are larger. Apple by about $100 billion, and Exxon Mobil by about $200 billion.
    Recommended by 1 Reader

920.  Jen of NJNJ          March 25th, 2011,  6:29 pm
I just read this article for the second time today, and I noticed I was clenching my jaw so hard that I was in danger of cracking a tooth. Pass me a pitchfork, please.
    Recommended by 19 Readers

923.  Tatiana Covington Tucson AZ USA          March 25th, 2011,  6:46 pm
If they won't pay taxes, then why should you? Always remember, laws are only pieces of paper with writing on them. They have no powers in and of themselves, any more than do so many shopping lists.
    Recommended by 6 Readers

932.  jhoger California          March 25th, 2011,  7:22 pm
Maybe U.S. should just pass a law granting ourselves a bunch of G.E. stock so we can at least be paid dividends on our "investment."
    Recommended by 4 Readers

936.  dpg47 Maryland          March 25th, 2011,  7:47 pm
I just finished calculating my income taxes. On a modest 5 figure AGI, I'm paying more income taxes than G.E. did on its $14.2 BILLION in global profits. It may be legal, but it ain't fair. It's no way to run a country.
    Recommended by 13 Readers

937.  Dagmar20 Los Angeles          March 25th, 2011,  7:47 pm
SHAME on GE.
Shame on Obama.
Shame on the Republicans.
Shame on the Democrats.
Shame on We, the People, for allowing this to happen.
    Recommended by 17 Readers

947.  Lee CA          March 25th, 2011,  9:02 pm
I can smell the stink of corruption from the white house and it's occupants clear from Sacramento and I have a horrible head cold. Can you smell it or does your own bias smother the smell like the scent of a dead skunk?
    Recommended by 4 Readers

952.  Fiscal Sanity Colorado          March 25th, 2011,  9:03 pm
No wonder Jeff Inmelt loves big government and has a man crush on Obama. TARP, green energy subsidies and a tax refund to boot.
    Recommended by 7 Readers

954.  oakman MA          March 25th, 2011,  9:03 pm
Yet, some would say GE's biggest mistake is not "managing" this news. After all, GE has done nothing illegal. It has followed the letter of the law.
    Recommended by 1 Reader

958.  morbert Florida          March 25th, 2011,  10:14 pm
#631 "As a taxpayer and citizen, I find this shocking and deplorable. But, as a shareholder and investor in GE, I find it deeply satisfying. How can I reconcile these feelings?" Move offshore!
    Recommended by 4 Readers

959.  Liande Germany          March 25th, 2011,  10:14 pm
I demand Mr Immelt to step down and accept responsibility for the enormous failure of the nuclear power station his company has delivered to Japan.
    Recommended by 4 Readers

non-classified comments

3.MarkC NYC    March 24th, 2011, 8:53 pm
    I'm no Tea Partier, but given the diminishing returns to the nation from our current convoluted corporate tax structure, with all its perverse incentives and corrupting influences, I'm thinking perhaps we should consider eliminating corporate taxes altogether at the federal level. Make up the difference with a big increase on the tax rates for dividends and capital gains, which would incidentally make the tax structure more progressive. And while we're at it, use the same legislation to reverse the Citizens United decision.
    Perhaps the path back towards good government begins, ironically, with giving the corrupting influences what they want (well, some of it, anyway).
Recommended by 63 Readers

4.Dan La Jolla, CA    March 24th, 2011, 8:53 pm
    Wouldn't it be simpler to just eliminate corporate taxes altogether? As long as companies keeps re-investing profits (or keeps it in the bank creating capital availability elsewhere), it is doing the economy a bigger favor than anything the government will be doing with the same money. Any money that makes its way to natural persons (salaries, bonuses, dividends, capital gains, etc.) is taxable on the individual level.
    With the ever-more-complicated corporate tax structure, at best, corporations are pushed into activities that make no economic sense; and, at worst, create an incentive for official corruption.
    I had a professor who used to say that whenever you see something that doesn't seem to make any economic sense, there is probably a tax reason behind it.  Dan.
Recommended by 57 Readers

5.steve California   March 24th, 2011, 8:53 pm
    The U.S. tax code is so convoluted that this is no surprise. All of the government seeks to use the U.S. tax code as a means to social change, i.e., encourage this pet project of that. The tax code should be entirely neutral. Income is income, tax is tax. A progressive flat tax is the best means to achieve this. It would mean massive unemployment among lawyers and CPAs, but I'm sure we could all spare them a crocodile tear for the immense expense they have inflicted on us over the years.
Recommended by 153 Readers Report as Inappropriate.

6.wren philadelphia, pa    March 24th, 2011, 8:53 pm
    Breath-taking article. Kudos for the journalism. This issue is huge-- perhaps more important than health care reform.
    I work in big pharma. This huge US industry follows the same playbook. The US tax system incentivizes out-sourcing of high-value, high-tech work to zero-tax countries. The profits are then sat upon until the US congress grants a tax holiday for "one-time repatriation of profits"-- usually every few years, based on lobbying. The net result: continuous US job loss, with a hollowing out of highly-skilled labor in the US. Sure. Profits go up, but the companies do NOT re-invest in the US, dividends trickle to wealthy executives and other shareholders (many non-US) and US high-technology is transferred and lost abroad. The strategic stupidity of this is mind-boggling, and underscores how corrupted BOTH major governing parties are by narrow interests of large international corporations that just happen to be based in the US. The eagerness of congress members to continue such anti-American policies at this time is shameful.
Recommended by 753 Readers

7.Marie Seattle    March 24th, 2011, 8:53 pm
    Consumers can't spend money to create jobs and stimulate the economy at the current tax rates, where's our 0 - 6.6% tax rate? This would benefit our country more than empty corporate promises. As individuals we pay much higher rates. Now that corporations are persons too let them pay what the rest of Americans protected by the Constitution pay. I'm sick of this corporate welfare that companies use to cut wages, move jobs overseas and spend on out of whack executive and CEO pay.
Recommended by 328 Readers

8.seldon8 Lynbrook NY    March 24th, 2011, 8:53 pm
    This is the future of the US. Large corporations and the rich will pay little or no taxes, and the burden will fall on the poor and the working class.
    Meanwhile, gov't workers will be reviled for their union and salary benefits. The rich will retreat behind their gated communities, and meanwhile the right wing media will incite class warfare against public workers, unions, etc. Paging Karl Marx!
Recommended by 765 Readers

9.londoned USA    March 24th, 2011, 8:53 pm
    Isn't it time that this corporate taxation payment became a very visible widely published tabulated measure of each company's good standing, rather like an environmental audit rating, or use of under age labor? Then we as consumers can if we wish use the free market to boycott companies that do not pay their fair share of their US generated profits over say a five year rolling period: 38% would be a good number. Companies depend on the countries they operate in, their laws, infrastructure and defense. They should pay proportionately to their profits like the rest of us
Recommended by 183 Readers

11.Ajit Sunnyvale, CA   March 24th, 2011, 8:53 pm
    Let's do the smart thing and remove all taxes on corporate profits. Increase income taxes appropriately to make this move revenue-neutral. Such a move will bring back money and jobs to the U.S., and corporations will use money more productively than on accountants and tax lawyers.
Recommended by 32 Readers

12.Mattnad nj    March 24th, 2011, 8:53 pm
    That corporations pay little to no tax will not in the least change the rhetoric in washington. Watch for even lower taxes and greater subsidies for the well connected businesses. That GE gets a tax refund ads insult to injury. It's time for a law that requires a direct link between a public company's financial statements and they tax returns.
Recommended by 144 Readers

13.Peter Brooklyn    March 24th, 2011, 8:53 pm
    A brilliant yet infuriating article; especially infuriating because as a small businesman I struggle to stay ahead my quarterly tax payments that are so darn high. And of course, Rangel was a major enabler. The system is clearly broken, and it's so broken that I wonder if it can ever be fixed. Meanwhile, I toil ...
Recommended by 283 Readers

14.Jim Austin    March 24th, 2011, 8:53 pm
    For those Americans who voted Republican this past election, got what you deserve. Sounds like a good place to eliminate take breaks and balance the budget rather than the unemployed and reducing the help necessary for those who need help. The US should tax all monies received by American Corporations. US corporations will never leave the mainland. As much as I dislike my government aat times, there's no place else in the world I would live.
Recommended by 80 Readers

15.Hank NY    March 24th, 2011, 8:53 pm
    The situation is embarrassing for all the parties involved, including the American people for keeping in office those who prostitute themselves and allow their colleagues to do the same.
Recommended by 243 Readers

16.GY New York, NY    March 24th, 2011, 8:53 pm
    I guess the little people, and salaried folks, are the captive audience for purposes of paying taxes.
Recommended by 155 Readers

17.Maui Yankee Makawao, Hawaii    March 24th, 2011, 8:53 pm
    Please. Like all Citizens, Citizen GE is patriotically following the rules, using legal strategy to shrink the size of government to a size that drowns in the bathtub. More we cannot ask from any citizen.
Recommended by 38 Readers

18.Andy Hain Carmel, CA    March 24th, 2011, 8:55 pm
    This is but one reason I own some GE stock. As the old saying goes....if you can't beat 'em, join 'em, and that's one way to pick stocks.
Recommended by 17 Readers

20.Mike Dripping Springs, TX    March 24th, 2011, 9:00 pm
    I can't believe there are NO comments at this point. Yes, let's allow GE to earn lots of $$, but no, let's not tax any of it. What is wrong with this picture?  This story serves to illustrate why our tax code needs to be completely revamped and re-written, to spread the "joy" around to everyone, regardless of Tax status!  Mike
Recommended by 64

21.Bewildered Vermont    March 24th, 2011, 9:00 pm
    Hmm and I pay more than 15% a year for my future SS "entitlement". The "entitlement" that must be cut to save the nation. Seems fair. Charlie Rangel really you be going no where good some day. Maybe I should ask NATO to save me and the rest of the working class right here at home.
Recommended by 122

22.jeffp nyc    March 24th, 2011, 9:00 pm
    Hello? Who do you think runs this country? Why is Jack Welch considered to be a genius? Now stop reading this paper, Mr. and Mrs. Taxpayer, and get back to work so the ludicrously wealthy can enjoy their dinners.
Recommended by 334

23.WC Greenwich CT    March 24th, 2011, 9:00 pm
    So why should anyone be shocked? Does corporate greed shock you? Didn't God put us little guys on earth to pay taxes to support and bail out the large corporations so they can control 90% of the wealth and profits? Jeesh!! Get a grip on reality!
Recommended by 168

24.Gordon CornwallLos Angeles, CA    March 24th, 2011, 9:00 pm
    Brilliant reporting. This is the NYT at its best. If only people actually paid attention, or cared.
Recommended by 534

25.jas new york city    March 24th, 2011, 9:00 pm
    $3.2 billion! That's a pretty big welfare check,I'd say.
Recommended by 461 Readers





March 25, 2011

Losing Our Way
By BOB HERBERT

So here we are pouring shiploads of cash into yet another war, this time in Libya, while simultaneously demolishing school budgets, closing libraries, laying off teachers and police officers, and generally letting the bottom fall out of the quality of life here at home.

Welcome to America in the second decade of the 21st century. An army of long-term unemployed workers is spread across the land, the human fallout from the Great Recession and long years of misguided economic policies. Optimism is in short supply. The few jobs now being created too often pay a pittance, not nearly enough to pry open the doors to a middle-class standard of living.

Arthur Miller, echoing the poet Archibald MacLeish, liked to say that the essence of America was its promises. That was a long time ago. Limitless greed, unrestrained corporate power and a ferocious addiction to foreign oil have led us to an era of perpetual war and economic decline. Young people today are staring at a future in which they will be less well off than their elders, a reversal of fortune that should send a shudder through everyone.

The U.S. has not just misplaced its priorities. When the most powerful country ever to inhabit the earth finds it so easy to plunge into the horror of warfare but almost impossible to find adequate work for its people or to properly educate its young, it has lost its way entirely.

Nearly 14 million Americans are jobless and the outlook for many of them is grim. Since there is just one job available for every five individuals looking for work, four of the five are out of luck. Instead of a land of opportunity, the U.S. is increasingly becoming a place of limited expectations. A college professor in Washington told me this week that graduates from his program were finding jobs, but they were not making very much money, certainly not enough to think about raising a family.

There is plenty of economic activity in the U.S., and plenty of wealth. But like greedy children, the folks at the top are seizing virtually all the marbles. Income and wealth inequality in the U.S. have reached stages that would make the third world blush. As the Economic Policy Institute has reported, the richest 10 percent of Americans received an unconscionable 100 percent of the average income growth in the years 2000 to 2007, the most recent extended period of economic expansion.

Americans behave as if this is somehow normal or acceptable. It shouldn’t be, and didn’t used to be. Through much of the post-World War II era, income distribution was far more equitable, with the top 10 percent of families accounting for just a third of average income growth, and the bottom 90 percent receiving two-thirds. That seems like ancient history now.

The current maldistribution of wealth is also scandalous. In 2009, the richest 5 percent claimed 63.5 percent of the nation’s wealth. The overwhelming majority, the bottom 80 percent, collectively held just 12.8 percent.

This inequality, in which an enormous segment of the population struggles while the fortunate few ride the gravy train, is a world-class recipe for social unrest. Downward mobility is an ever-shortening fuse leading to profound consequences.

A stark example of the fundamental unfairness that is now so widespread was in The New York Times on Friday under the headline: G.E.’s Strategies Let It Avoid Taxes Altogether.” Despite profits of $14.2 billion — $5.1 billion from its operations in the United States — General Electric did not have to pay any U.S. taxes last year.

As The Times’s David Kocieniewski reported, “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. is the nation’s largest corporation. Its chief executive, Jeffrey Immelt, is the leader of President Obama’s Council on Jobs and Competitiveness. You can understand how ordinary workers might look at this cozy corporate-government arrangement and conclude that it is not fully committed to the best interests of working people.

Overwhelming imbalances in wealth and income inevitably result in enormous imbalances of political power. So the corporations and the very wealthy continue to do well. The employment crisis never gets addressed. The wars never end. And nation-building never gets a foothold here at home.

New ideas and new leadership have seldom been more urgently needed.

*                *                *

This is my last column for The New York Times after an exhilarating, nearly 18-year run. I’m off to write a book and expand my efforts on behalf of working people, the poor and others who are struggling in our society. My thanks to all the readers who have been so kind to me over the years. I can be reached going forward at bobherbert88@gmail.com.