GM Carry-Forwards Worth $45b Off Future Tax Bills
#1
Guest
Posts: n/a
GM Carry-Forwards Worth $45b Off Future Tax Bills
http://www.thetruthaboutcars.com/201...ure-tax-bills/
Perhaps one of the least-covered elements of the auto industry restructuring has been the numerous tax advantages GM has earned as a government-owned automaker. Unlike most bankruptcies, GM was allowed to hold onto some $16b of net operating loss credits (tax-loss carry-forwards), which can be used to offset future tax bills. Typically, companies that restructure in bankruptcy lose existing carry-forwards as the price of wiping out debt, but because the government is invested in GM, it decided to allow old tax losses to flow into the new company even as debt was left behind. In the latest update on this story, The Wall Street Journal notes that some $18.9b of GM’s carry-forwards were from the old company, and that the firm has a whopping $45.4b in future tax savings. And because carry-forwards can be banked up to 20 years before they are spent, GM will have to make massive profits before it starts actually paying taxes to the federal government. The government’s position:
the profit-shielding tax credit makes the bailed-out companies more attractive to investors, and that the value of the benefit is greater than the lost tax payments, especially since the tax payments would not exist if the companies fail
Which is all well and good, but the reality is also that this practically doubles the taxpayers’ cost of bailing out GM. As a policy this makes sense for the reasons given (assuming the bailout was a foregone conclusion), but it would be nice if this “hidden charge” were at least noted on the bill.
the profit-shielding tax credit makes the bailed-out companies more attractive to investors, and that the value of the benefit is greater than the lost tax payments, especially since the tax payments would not exist if the companies fail
Which is all well and good, but the reality is also that this practically doubles the taxpayers’ cost of bailing out GM. As a policy this makes sense for the reasons given (assuming the bailout was a foregone conclusion), but it would be nice if this “hidden charge” were at least noted on the bill.
#4
I have had a few friends who purchase only American vehicles end up scratching GM vehicles off their list as a result of this intervention.
Wha still makes me sick is the fact that there are workers in GM factories earning more than I do in a year now.
#6
Don't forget about Google which basically paid no taxes this year either only 2.4% total!
http://www.bloomberg.com/news/2010-1...loopholes.html
http://www.bloomberg.com/news/2010-1...loopholes.html
Thread
Thread Starter
Forum
Replies
Last Post
-J-P-L-
Car Chat
31
03-30-09 11:46 AM