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GE Hoax Press Release: Corporate America Is Still the Bad Guy

When I first read about the hoax General Electric press release, in which the company was said to be repaying $3.8 billion in taxes that it saved in 2010 by using tax-loss carryforwards, I hoped the motivation was recognition that the anger inspired by GE's legitimate and understandable accounting moves was entirely unjustified. It turns out that it was just the opposite; some group called US Uncut apparently wants to put pressure on companies to pay more in tax.

"By pretending GE did the right thing by re-gifting their tax refund, we hold them accountable to that better future," a spokesman for US Uncut said. "People are moving very fast and are going to reprint the release, and we think there's also an unconscious motivation that they're happy to see the news."

Lucky for him there's no tax on smugness emissions. GE had big losses during the financial crisis of 2008-09, and it used carryforwards and other accounting devices enshrined in the tax code to reduce their tax liability.

What was not said in the hoax press release, which the Associated Press evidently fell for but not investors - it had no noticeable effect on the stock (GE) - is that corporate tax liability is higher in the United States than in any other country on earth, although Japan may have to raise corporate tax rates to pay for post-earthquake rebuilding.

The main lesson from the hoax and its success are that business continues to be seen as a bad guy in American life. While various surveys show sentiment toward the stock market at or near the highest levels in several years, there is an expanding belief that the market is no place for ordinary folks to try to reach their financial goals. That is a lethal one-two punch that suggests that stocks are risky investments for the short run and maybe the long run too.