GM's CEO plots a path for higher tax-free profits
General Motors is enjoying its best growth in the history of the company as we know it. Not surprising, since the company is only a couple of years old. Even when compared to the “Old GM” days, the company seems to be on a path to incredible volume. That volume has not been unprofitable, but GM’s CEO and Chairman, Dan Akerson, pointed out at the GM shareholders meeting yesterday (June 11th, 2012) that although GM is making profits, they are not in line with the company’s goals.
GM's Fortune 500 Ranking
Over the past year GM generated about $7.6 Billion (with a B) in profits. In a recent press release by GM, the company noted that it is a Fortune 500 company with GM ranking near the very top in total revenue, but somewhat lower on the list in profits. Despite the fact that many of those other business are in other types of industries such as the consumer electronics market (think iPAD) and petroleum industry (Remember the term “excessive profits?”) GM feels that its profits should be higher. As part of his statements on the topic Mr. Akerson stated “GM was ranked No. 5 in revenue, but when it comes to profits GM ranked 20th. To be great, GM must close this gap by steadily improving our margins. It’s fundamental to earning a blue-chip multiple for GM stock, and ensure the company will be successful for generations, not just a few quarters or a few years.”
GM Pays No Tax On Profits
Not mentioned in the press statement was where GM ranked in after tax profits. In 2009 GM was granted a $49.5 billion bailout by the US taxpayers by way of the federal government. Since 2009 GM has generated over $13 billion dollars in profits. However, it has not had to pay any tax on those profits, unlike oil companies, unlike Apple, and unlike all the small mom and pop businesses in the United States that did not receive a bailout. This puts GM in the same small fortunate group of companies often referred to as the “Wall Street” companies, such as Citibank, that so many people protested against over the past two years. Although GM does pay other taxes, such as payroll taxes and state taxes, they are small by comparison to the tax that would have been owed by GM on its profits had it been treated like other typical US companies.