A Tax Free First Quarter Profit of $1 Billion for G.M.
3:00 PM, May 3, 2012 • By DANIEL HALPER
The Detroit Free Press reports that “General Motors made $1 billion in the first quarter, beating analysts’ expectations before being dragged down by a special accounting-related $590-million charge in struggling Europe.”
This sizable cash haul, though, is tax exempt, a G.M. spokesman explained to THE WEEKLY STANDARD.
“Basically, at the end of 2011, we had tax laws carry forward and credits that total $16 billion,” Jim Cain of G.M. says. “So, what that means is, in round about numbers, that we won’t be paying U.S. federal income taxes on $45 billion worth of income.”
Cain explains that it has to do with the state of the current auto market in America. “It’s all because of the significant losses that G.M. accrued leading up to bankruptcy,” says Cain. “It’s reflective of the state of the industry and the deep distress.”
But just because the federal government will not be receiving a piece of the hefty profit posted by G.M., the company—critically termed Government Motors, after the multi-billion dollar federal bailout it received a few years back—will still be responsible for other tax bills.
“I should point out that we do pay taxes around the world, we do pay state taxes,” Cains says, “and other taxes and property taxes, but in terms of U.S. federal income we don’t have a current liability.”
In 2011, embattled G.M. earned $7.59 billion, according to the Wall Street Journal.