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Price of Selling GE Capital? Tax Breaks
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GE's decision to exit the banking business ends a period of aggressively reducing taxes using GE Capital operations. This ended in disaster in the 2008 global fianncial crisis with GE shares down to $6 and GE needing a government rescue. GE reported in its securities filing that its tax rate of 10.3% in 2014 would have been 17% without the use of GE Capital operations to reduce taxes. Experts say GE's tax rate is lower using GE Capital because of doing business in lower tax jurisdictions overseas and global funding base. In 2013 securities filing cited in the Washington Post show GE taxes were an astonishing 4.2%. GE will repatriate $36 billion in overseas earnings as the first step and pay taxes to the U.S. Treasury of $6 billion.
GE (General Electric) tax rate on industrial business profits back up to 20% without the tax breaks from GE Capital
04/14/2015
Without the tax breaks from GE Capital- which come from using lower tax jurisdiction countries and overseas business- GE's tax rate will now be the rate for other industrial business companies in the U.S. On the day the decision was announced for exiting the banking business GE shares were up 11%, showing that shareholders value the stability of the industrial businesses and the quality of management above the uncertainty generated by volatile earnings from GE Capital. GE shares once considered safe- before the use of GE Capital to generate higher returns- declined to $6 during the financial crisis of 2008, requiring government rescue of GE Capital.
Grouped Articles
Price of Selling GE Capital? Tax Breaks
Wall Street Journal 04/14/2015
General Electric: Banking on de-banking
Economist 04/18/2015
Wall Street Journal 04/01/2016
GE Warns It Might Put Subprime Lending Unit Into Bankruptcy
WSJ 05/03/2018
G.E. to Spin Off Health Care Division as Part of Major Reshaping
New York Times 06/26/2018
GE (General Electric) decision in 2015 for repatriation of foreign earnings and $6 billion in taxes
04/14/2015
Grouped Articles
Price of Selling GE Capital? Tax Breaks
Wall Street Journal 04/14/2015
GE (General Electric) low tax rate of 4.2% in 2013, 10.3% in 2014, and the move to a normal tax rate in 2015
03/05/2014
An aggressive policy of tax reduction using GE Capital at GE leads to an astonishingly low tax rate. Shareholders see the uncertainty from GE Capital's volatile earnings and tax strategies with great skepticism. GE shares dropped to $6 during the 2008 global financial crisis because of GE Capital losses, and GE needed government rescue funds. The day CEO Immelt announced the decision to exit the banking business GE shares went up by 11%. GE's tax rate without the banking business will go up to about 20%.
Linked Articles
Price of Selling GE Capital? Tax Breaks
Wall Street Journal 04/14/2015
How corporate America is losing the debate on taxes
Washington Post 03/05/2014
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