We learned today that Government Motors has decided to invest $335 million in a fabulously successful European auto maker. Mercedes, Audi, BMW you guess? Guess again.
Yes, that would be the innovative automaker that has become a household word in all countries of the world.
But, you say, doesn’t GM still owe us taxpayers lots of money, and, by the by, where is GM getting the money?
Yes, GM still owes us lots of money, but, has chosen to “invest” rather than pay some of that money back.
And, GM has boat loads of money. This is because of the GM “bankruptcy” which upended the rules of bankruptcy. GM was allowed to carry its losses before bankruptcy into the “new” GM, and, can use those losses to offset gains after bankruptcy. This is unprecedented in bankruptcy law. But the net effect of it is that GM, which the President proudly proclaimed is generating record profits, is paying little if any income taxes.
Mr. Obama crowed yesterday about GM’s “highest profits in its 100-year history.” We’d be interested to hear how its effective tax rate compares with Warren Buffett’s secretary’s.
Yes, where is Warren Buffet’s secretary when we need her?