General Motors, sometimes more accurately referred to as Government Motors, announced a 2011 profit of $7.6 billion. Cool, huh? GM certainly must be one of the bad, greedy, horrible corporations Obama is always railing against. So it is a good thing that they will get socked with a huge tax bill on those profits. Taxing GM at the maximum 35% tax rate would yield a nice chunk of change. But wait……
GM managed to retain tax-loss carry-forwards for up to 20 years; carry-forwards that would normally be wiped out in a bankruptcy. GM did go bankrupt, after all. But lo and behold, the tax-loss carry-forwards were not wiped out. The Wall Street Journal was on to this several years ago, but now that GM has a profit, it really illustrates the ongoing rape of the American people by the Obama administration for the sake of the leftist political machine.
Of course, you may be asking why this happened. From the same Wall Street Journal article here is the answer.
“Some insist this doesn’t matter because the government owns 60.8% of GM, and so any tax collection would merely move funds from one federal pocket to another. But the other 39.2% belongs to others who will also benefit from the special exception. And who might that be? Well, after the feds, the biggest stakeholder in the new GM is the United Auto Workers retiree health-care trust, which holds 17.5%. GM says the tax-loss exception will help its “cash position to the benefit of all parties,” and no doubt the tax shelter makes the company more valuable to investors. But it also ensures the company has more cash on hand to pay union retirees, who will vote in 2012.” (emphasis added)
“Congress limited tax-loss carry forwards because it concluded they were being abused to unfairly erase tax liability. If the Administration thinks that’s bad tax policy, it ought to propose changing the rule for all companies, not merely for those it owns. Instead, it has handed a $16 billion tax gift to GM that isn’t available to Ford or other auto makers that didn’t take bailout cash. It’s one more example of the way the political class has stacked the deck in favor of Government Motors.”
Aren’t you tired of this? I know I am.