New GM Is Old GM . . . for Tax Purposes
As everyone else’s taxes rise, one favored outfit may not have to pay
federal taxes for years: General Motors. In another sweet deal from its
benefactors on Pennsylvania Avenue, the government-owned car company is
set to profit from billions of dollars in tax breaks not available to
other businesses in the same predicament.
The new GM will be allowed to claim a tax benefit from some $16 billion
of net operating losses carried over from the old company, allowing it
to avoid paying taxes on future profits, perhaps for years. The issue is
a common accounting practice called “tax-loss carry forward,” under
which businesses can write off losses against future profits for up to
The losses are considered important assets on any company’s balance
sheet, but they typically don’t survive bankruptcy. Under a longstanding
section of the tax code passed to prevent companies from buying other
companies for the purpose of assuming their tax losses, a business that
undergoes a change in ownership usually has to forfeit the old company’s
net operating losses.
That would normally be the case for GM, except that the government is
its new majority shareholder. While transfers of net operating losses
during bankruptcy can sometimes be handled through reorganization plans,
that was not what the Obama Administration did. When GM filed for
bankruptcy, it chose a so-called “363 sale,” which allows the company to
take a fast track to the sale without the due process protections
usually provided to creditors.
According to Duke law professor Jeffrey Coyne, nothing in the tax code
permits the preservation of tax attributes like net operating losses in
the context of an outright sale like GM’s. “The result seems to retain
the cake while eating it,” he says. “They get to sell quickly and
without the many procedural protections because this is not a plan. They
get to keep the [net operating losses] using a provision that requires
the transfer to happen as part of a plan.”
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.
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.
People light as well get used to the idea of working for banks and
corporations like GM. Politicians have sold out the American taxpayer for
special interests. At least before they hid it in special expensive and
excessive contracts for PR and kept the amounts down and off the radar, bnt
now it is in the wide open and one less taboo.
Short of Americans demanding a federal law making it a criminal offence to
use taxpayers money to support corporations this bozo isn't going back in
the bag. People of Canada and the USA now pay royalties to GM & banks when
Our grandchildren will be paying for it with interest, it was put 100% on
debt. Little secret governments don't want you to know, even they can't
borrow the money they need any more. If it were not for the ability to
create inflationary money even DC would be considered bankrupt.
This recovery will come, but the middle class will have a permant reduction
of size as neither the jobs nor quality of jobs will come back for decades.
The only benefactors will be government (higher taxes) and the corporations
they support though our hard work.
No one says this is fair, but it is the price of not thinking before you
Well, I sure did not vote for that bunch of crooks...
Have you ever noticed that you rarely see 'Obama' stickers of cars
that are going to work? Or on work trucks? Or vehicles driven by
people who have dirt under their fingernails from work?
Did you vote for the seantor or congress person that represents you?
Did you try to convince someone that voting for this insane use of tax
dollars does not deserver their vote?
Lib-dims don't work hard, they don't understand the concept. Lets look at a
totally useless waste of money to show how lib-dims like to live it up on
It is time workers and taxpayers unite and tell the rest of the system to
backoff the taxes, eliminate the government waste.
First Lady requires more than 20 attendants
No, Michele Obama does not get paid to serve as the First Lady and she
doesn't perform any official duties. But this hasn't deterred her from
hiring an unprecedented number of staffers to cater to her every whim and to
satisfy her every request in the midst of the Great Recession. Just think
Mary Lincoln was taken to task for purchasing china for the White House
during the Civil War. And Mamie Eisenhower had to shell out the salary for
her personal secretary. How things have changed! If you're one of the tens
of millions of Americans facing certain destitution, earning less than
subsistence wages stocking the shelves at Wal-Mart or serving up McDonald
cheeseburgers, prepare to scream and then come to realize that the benefit
package for these servants of Miz Michelle are the same as members of the
national security and defense departments and the bill for these assorted
lackeys is paid by John Q. Public:
1. $172,2000 - Sher, Susan (Chief Of Staff)
2. $140,000 - Frye, Jocelyn C. (Deputy Assistant to the President and
Director of Policy And Projects For The First Lady)
3. $113,000 - Rogers, Desiree G. (Special Assistant to the President and
White House Social Secretary)
4. $102,000 - Johnston, Camille Y. (Special Assistant to the President and
Director of Communications for the First Lady)
5. Winter, Melissa E. (Special Assistant to the President and Deputy Chief
Of Staff to the First Lady)
6. $90,000 - Medina , David S. (Deputy Chief Of Staff to the First Lady)
7. $84,000 - Lelyveld, Catherine M. (Director and Press Secretary to the
8. $75,000 - Starkey, Frances M. (Director of Scheduling and Advance for the
9. $70,000 - Sanders, Trooper (Deputy Director of Policy and Projects for
the First Lady)
10. $65,000 - Burnough, Erinn J. (Deputy Director and Deputy Social
11. Reinstein, Joseph B. (Deputy Director and Deputy Social Secretary)
12. $62,000 - Goodman, Jennifer R. (Deputy Director of Scheduling and Events
Coordinator For The First Lady)
13. $60,000 - Fitts, Alan O. (Deputy Director of Advance and Trip Director
for the First Lady)
14. Lewis, Dana M. (Special Assistant and Personal Aide to the First Lady)
15. $52,500 - Mustaphi, Semonti M. (Associate Director and Deputy Press
Secretary To The First Lady)
16. $50,000 - Jarvis, Kristen E. (Special Assistant for Scheduling and
Traveling Aide To The First Lady)
17. $45,000 - Lechtenberg, Tyler A. (Associate Director of Correspondence
For The First Lady)
18. Tubman, Samantha (Deputy Associate Director, Social Office)
19. $40,000 - Boswell, Joseph J. (Executive Assistant to the Chief Of Staff
to the First Lady)
20. $36,000 - Armbruster, Sally M. (Staff Assistant to the Social Secretary)
21. Bookey, Natalie (Staff Assistant)
22. Jackson, Deilia A. (Deputy Associate Director of Correspondence for the
There has never been anyone in the White House at any time that has created
such an army of staffers whose sole duties are the facilitation of the First
Lady's social life. One wonders why she needs so much help, at taxpayer
expense, when even Hillary, only had three; Jackie Kennedy one; Laura Bush
one; and prior to Mamie Eisenhower social help came from the President's own
Note: This does not include makeup artist Ingrid Grimes-Miles, 49, and
"First Hairstylist" Johnny Wright, 31, both of whom travelled aboard Air
Force One to Europe .
Copyright 2009 Canada Free Press.Com
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