GM Pays Less Tax Than Buffett’s Secretary; UAW Gets Bonuses
General Motors reported year end earnings figures today. The company made about $9 billion dollars in 2011. How much of its "fair share" is GM paying in taxes? Zero. In fact, from GM's financial report, they actually received a "benefit" of $110 million for the year. The UAW benefited as well, as they are set to receive $7,000 per worker in profit sharing bonuses.
The sweet tax deal GM receives was set up by the Obama Administration as the company was granted a multi-billion dollar tax credit for loss carry-overs when they exited their bankruptcy proceeding. Normally, the company would not have received the tax credit but the bankruptcy process was anything but normal. Creditors were put in the back of the line to protect UAW interests and tax code was changed so that GM could profit for years without paying its fair share in taxes. President Obama now campaigns on the perceived success at GM and any help he can give to the company will result in additional votes come November. As taxpayers lose out, GM profits and shares the wealth with the politically favored UAW.
Despite all the claims of sacrifices at the UAW, members continue to benefit as evidenced by the $7,000 profit sharing checks they will receive as a result of the wealth redistribution scheme orchestrated by the Obama Administration. Executives at GM seem to be doing pretty well also as they receive millions of dollars in stock options. For their part, the UAW has agreed to strongly support the President come election time. And the hypocrisy of GM's tax deal is obvious as Obama makes claims that corporations need to pay their fair share. Crony corporations like GM and General Electric (which also is known to avoid taxes) are conveniently left out of the criticisms. Also on the favored list are wealthy purchasers of Chevy Volts who receive federal tax credits of $7500 to buy the cars. President Obama wants the rich buyers to have even more wealth redistributed to them in the form of higher credits, which he reportedly wants to raise to $10,000.
The GM earnings report seems to be getting favorable reviews as the share price rose on the news. Considering the $50 billion that taxpayers forked over to bailout GM along with the sweet tax deal, it is understandable that the company seems to be on the road to recovery. There was some evidence of roadblocks, however, as European woes surfaced and pension obligations rose to over $25 billion. Government Motors has recently announced that non-union salaried employees will have their pensions frozen. The company also is looking in to cutting white collar workers. It seems that the goal of job creation and preservation at GM only applies to union workers.
I can not fault the individual UAW workers at GM for benefiting from the political actions of the Obama Administration and GM. I'm sure many of them are hard working individuals. The problem is, most of the rest of us do not have the benefit of belonging to politically favored unions. Non-union taxpayers are picking up the tab for those favored classes that help with President Obama's election campaign. And that's just not "fair."
Mark Modica is an NLPC Associate Fellow.