The GE paying no taxes meme

While it makes a great soundbite, it is not in fact, factual. See the comments explaining why. [Link]

This is a really bad argument. It's easy to make political hay based on what's happening this year, but the tax rules that allow it to happen make a lot of sense.

In general, for example, taxation is only supposed to apply to profits - which means you're only taxed on the money you earn in addition to the money you spent to earn it. So if you spend $8 on your business and earn $7, the government isn't going to tax you at all.

During and after the recession, companies had record losses - income well below their costs. In order to keep things fair, the tax code allows losses to be carried forward or backward, so that it better reflects the actual profits made by an individual or corporation.

On top of that, the rules are complex when companies are international.

On top of that, corporate taxation is a dubious concept in the first place. Every dollar a corporation pays out to its employees is taxed directly to them, and every dollar of 'profit' that winds up being distributed to shareholders is also taxes (as capital gains upon stock repurchase or as a dividend).

The moral of the story is that we have an extremely complex tax system with many flaws, but it's not a corporation-ass slapping country ruining behemoth. It, by and large, reflects decades of compromise but a more or less fair system of ensuring those who reap profits either pay taxes on them or shovel buckets full of money into legitimate philanthropically or socially useful enterprises.

If you buy a home and sell if for a $250,000 profit, you also won't be taxes, because the government wants to incentive home ownership and decides not to tax certain transactions in that class.

It's really complicated and the shrieking about GE this year blows past all of the nuance for a sound bite. The system isn't perfect and these articles aren't entirely wrong but it's still really depressing to read all of this misinformation.