General Motors, arguably, the biggest motor manufacturer in America has emerged to be the favorite giant company associated with president Barrack Obama. According to Curt Levy, in his article What the GM Bailout Really Cost American Taxpayers, describes the giant motor manufacturer as on organizations with serious connections with the white house. Apparently, the connection that GM has with the top house is enviable as they may lead to an organization’s exemption from payment of taxes. Curt Levy (1) explains that the decision to bail out GM has led to a bad situation as it has made the average taxpayer bear the burden. The average taxpayer has no links with the white house. The fact that the treasury decided to bail out the perceived giant taxpayer has caused a compromise to the Sec. 382, which concerns itself with payment of personal and corporate taxes (Levy 2).
Levis argues that in the year 2011, the motor giant paid nothing at all. Considering that the organization hit record profits that year, paying a tax of 1.5% was literally, less than nothing (Levis 1). The Obama treasury had exempted the organization from paying a 45 billion dollar tax burden following claims of bankruptcy. The decision to give the organization a tax holiday was the most unwarranted decision as it violated the section 382, which outlines the principles guiding the payment of taxes. The manner in which the Obama treasury treated the GM case has been described by professors as “Obama’s distortion of legitimate tax provisions” (Levis 2). Harvard Law School Professor J. Mark Ramseyer and Indiana University’s Dalton Professor of Business Eric Rasmussen describe the move to allow previous losses forward for tax purposes as illegitimate.
Application
Exempting the organization from taxes is quite unjustified as it makes the organization pose unfair competition to other organizations in the same industry. Chapter three of the textbook outlines various strategies thorough which legitimate competition can be achieved. The strategies, which are legitimate include tax avoidance and make a clear difference between tax avoidance and tax evasion. Worth noting is the fact that in this case, the organization is being aided by the leadership to evade tax. The case can as well be applied to chapter three of the book, which emphasizes various strategies that can be employed so as to make an edge in the industry. Ethical standards that should be embraced by business strategists are outlined by Hill and Gareth 377). It is against ethics for leaders to treat some organizations differently and, in this case, favorably.
Discussion
The article is enlightenment on the role of leaders in creating a favorable business environment for all, while protecting the interests of the common taxpayer. The article illustrates how the Obama administration has failed in its duties relating to policy. The tax policy should not be altered to suit the interests of few parties. It is noteworthy that allowing businesses to backdate their losses in such a way that they become deductable against modern profits is a move that can prove to be detrimental in the sense that it reduces the amount collected by the IRS in terms of income tax (Hugh and Arnold 78). Since individuals have no losses against which to offset current profits, they will be the ones to bear the burden of big corporations avoiding tax.
Works cited
Ault, Hugh J, and Brian J. Arnold. Comparative Income Taxation: A Structural Analysis. S.L: Kluwer Law International, 2010. Print.
Curt Levy. “What the GM bailout really cost American taxpayers.” FoxNews.com, 2012
Hill, Charles W. L, and Gareth R. Jones. Strategic Management Theory: An Integrated Approach. Boston, South Western Cengage Learning, 2010. Print.
