DETROIT (Reuters) â General Motors Co (GM.UL) can get a tax break of up to $45 billion as part of its U.S. government-financed restructuring, documents filed with federal regulators earlier this year showed. The Wall Street Journal earlier reported that GM would not have to pay federal taxes on up to $50 billion in profits. A later version of this story revised this figure to about $45 billion. This figure also includes $18.88 billion of carry-forwards, according to the automaker's annual filing from April. Under the Troubled Asset Relief Program, losses racked up by GM before its government-funded bankruptcy can be used to offset its future tax liabilities. ----------------------------------------------------------------------------------- This tax break ends up costing each of the 116,000,000 individual tax payers $400. Exactly how does government funded bankruptcy work and how can i apply?
GM is a fucking joke of a company. Why is this company even going public again, why do they even deserve another chance, they fucked the consumer for how many decades??? Tax payer bails them out, how many more bailouts is the tax payer going to pay for, especially to keep a failing company in business. Seems this country rewards failure.
GM employs 68,500 in US, 245,000 world wide. GM sold 2,084,492 vehicles in US out of 8,350,000 globally. The US Tax payers are subsidizing $6000 per vehicle through tax breaks. Greater than 75% of these subsidies are in foreign markets with foreign workers. On July 10, 2009, a new entity, NGMCO Inc. purchased the ongoing operations and trademarks from General Motors Corporation. The purchasing company, in turn, changed its name from NGMCO Inc. to General Motors Company, marking the emergence of a new operation from the "pre-packaged" Chapter 11 reorganization. Under the reorganization process, termed a 363 sale (for Section 363 which is located in Title 11, Chapter 3, Subchapter IV of the United States Code, a part of the Bankruptcy Code), the purchaser of the assets of a company in bankruptcy proceedings is able to obtain approval for the purchase from the court prior to the submission of a re-organization plan, free of liens and other claims. GM's remaining pre-petition creditors' claims are paid from the remaining assets of Motors Liquidation Company, the new name of the former General Motors Corporation, although the directors of that company believe its debts far outweigh its assets. This means that while the former GM's bondholders may recover a small portion of their investment, former GM shareholders (now shareholders of Motors Liquidation Company) will likely not receive anything. Also on July 10, 2009, GM announced plans to trim its U.S. workforce by 20,000 employees as part of its reorganization by the end of 2009 due to economic conditions. Why are US tax payers bailing out a corporation where the majority of their sales, operations and employees are foreign? We are providing tax breaks to this corporation of $800K per US employee. They will simply grow their foreign operations pocket profits from off shore activities through these tax breaks. Once the tax incentives have run its course they will autonomize each foreign operation and we get screwed again.
The real question is how the hell does GM get to keep its tax breaks *after* bankruptcy. That is not normal (and very irritating).
If we really wanted to make GM work we would have sold it to the Japanese for $1. Need a car? Buy Ford.
Decades ago, Congress severely restricted the ability of money-losing companies to cash in on the tax breaks if they are taken over by other companies. The goal was to discourage corporate takeovers for the principle purpose of avoiding taxes, Willens said. The government, however, doesn't want to penalize firms for taking part in the taxpayer-financed bailout, so the Treasury Department has issued several notices in recent months creating exceptions for firms that receive bailout money. Under the new rules, corporations can keep their tax breaks if the government becomes a majority owner. "Why would we want a corporation paying taxes to the government when we own it?" Nick Gruidl, managing director at the accounting firm RSM McGladrey. The notices have the full effect of a law, even though they aren't reviewed or approved by Congress. They also apply to banks and other financial firms receiving money from the Troubled Asset Relief Program, or TARP. But the new rules don't apply to corporations that are taken over by other private companies. That means Chrysler could lose the value of its tax write-offs in its merger with Italy's Fiat Group SpA, depending on the structure of the company after it emerges from bankruptcy protection, tax experts said. Under the proposal, the U.S. Treasury, which already has lent GM $19.4 billion, would get 72.5 percent of the new company's shares and provide $30 billion in additional financing needed to keep the new GM operating. When the government eventually sells its stake in GM, tax experts expect the Treasury Department to issue new rules for how the tax breaks will be treated. The rules issued in the past several months protect the government's ability to use the tax breaks as an incentive for new buyers. ---------------------------------------------------------------------------- Exactly how is this sham legal? Government ownership in a private company enacting special laws and tax breaks for the company.
Ever notice how the "Economic Stimulus Plan" was really just an organized labor bailout - union construction workers for the road work, union state and federal public sector workers, union auto workers.
Yes! One of the many reasons why I said earlier, on a different thread, we don't live in a Capitalist Society anymore. In Capitalism you take a risk and if you are successful you are rewarded. If not, you fail and lose your capital or the capital of your investors. That's Capitalism. Today, if you're big enough and if you have enough connections you get bailed out. As Rogers would says, "you're taking resources away from the competent and giving them to the incompetent." No way that's Capitalism.
On second thought, the tax break thing doesn't really bother me that much because GM would have to make a profit for the tax break to works its magic. Considering its history, that won't happen.