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LostInParadise's avatar

What makes General Motors an American coporation?

Asked by LostInParadise (25470points) May 15th, 2011

It manufactures overseas and a good portion of its revenue comes from foreign countries as well. Why should it only pay taxes in the U.S.? The same reasoning of course applies to other multi-nationals. Suppose we took this to the point that a company has corporate headquarters in the U.S. and does all of its manufacturing and sales abroad. What makes the company American?

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12 Answers

MyNewtBoobs's avatar

Is this a serious question, or political commentary?

Mamradpivo's avatar

I’m pretty sure GM pays taxes in Canada, Mexico, Germany and other places where it has manufacturing and sales. In fact, every car it sells in Europe will be subject to the VAT.

One thing that makes the company American is that its major shareholders include the US federal government, various state and local governments and American labor unions.

marinelife's avatar

It started in America.
It is headquartered in America.
It manufactures in America.

It is an American company that does business overseas as well.

LuckyGuy's avatar

…and the COE’s bonuses are paid in dollars to an American bank.

jaytkay's avatar

There is The General Motors Company, a US company, and there is General Motors, the multinational.

The General Motors Company is an entity incorporated under the laws of the US. It is two years old, formed from assets of the bankrupt General Motors Corporation. It pays plenty of taxes overseas.

It has lots of overseas operations and customers, too, including locally incorporated subsidiaries controlled by the US company:
Adam Opel AG
GM Holden Ltd
Vauxhall Motors
GM Korea
General Motors do Brasil

It’s customers are spread out around the world. It sold 8,389,769 cars in 2010. It’s two biggest markets are China (2.35 million) and the US (2.22 million). link

Its employees are also located around the globe.
96,000 North America (US, Canada and Mexico)
40,000 Europe
31,000 South America
32,000 other International Operations

If you are curious about more, the GM annual report is a good place to start.

jerv's avatar

@Mamradpivo Whether they pay taxes in the US is debatable but, as @jaytkay points out, there is GM and then there is GM.

WasCy's avatar

It’s pretty simplistic (and inaccurate) these days to imagine large multi-national companies as particularly nationalistic in any sense. Yes, GM was once an All-American company, but those days were long ago. Nowadays GM, like most companies in its class, has global operations and ownership spread across many countries, and may be only nominally “American” in the sense that its primary corporate registration is in the US. (If it is. I don’t know GM well enough to even be sure of that – and I’m too lazy to look up into @jaytkay‘s link to see if it’s still registered in the US or not. I suppose it is, but it wouldn’t surprise me greatly to learn that it’s not.)

But like most multi-nationals, when it has global operations of any size and complexity (other than simple sourcing arrangements, for example) such as brick-and-mortar engineering facilities, manufacturing plants and corporate offices, then it has local entities to “own” those and handle the in-country tax and other accounting issues that will be raised. The local entities, of course, are owned by the parent company, which is no secret or tax dodge. And the parent company surely has teams of lawyers, accountants and tax specialists to work out and arrange the most favorable tax angles to minimize tax liability. But that also has to work in concert with production capabilities and capacities, transportation costs and import duties, scheduling (because overseas shipment of goods by ship takes significant amounts of time) and the quality of goods produced.

So to come back to an answer to your question: Many companies can (correctly, to a point) claim to be “local” to almost any point in the world – and they do that when it suits their purposes for marketing, PR and sales. But when it comes to “official” computation of who owns what, where, and what are the various tax liabilities, that’s very hard-nosed accounting that has nothing to do with PR.

jerv's avatar

@WasCy And that is how the NASCAR crowd justifies their love of Ford and GM as “American” while booing Toyota as “un-American” despite the fact that Toyota makes many cars in the US while Ford and GM generally make theirs in Canada or Mexico.

Jaxk's avatar

The parent company is incorporated in the US. That makes them a US company. They may have many subsidiaries incorporated overseas, but they all report back to the parent company. In a nutshell, that’s how it works. Same with Toyota. The parent company is incorporated in Japan but they have subsidiaries in the US. Those subsidiaries report back to the parent in Japan.

LostInParadise's avatar

Can a country change the location of its incorporation?
I know that corporations have to pay local sales taxes, but isn’t there also a tax on corporate profits? If so, does GM pay corporate income tax only in the U.S., or is the payment spread out over the many countries where it operates?

jaytkay's avatar

Can a country change the location of its incorporation?...If so, does GM pay corporate income tax only in the U.S., or is the payment spread out over the many countries where it operates?

Yes, and companies employ legions of accountants and lawyers adjusting their operations to make profits show up in the least-taxed locations.

For example:
In 2009 the [Google Dublin] office, which houses roughly 2,000 Google employees, was credited with 88 percent of the search juggernaut’s $12.5 billion in sales outside the U.S. Most of the profits, however, went to the tax haven of Bermuda. Link

LostInParadise's avatar

Thanks all. It seems to me that we need a new set of rules for dealing with multi-national corporations. It just does not make much sense to associate each of them with just one country.

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