General Electric and the Effective Corporate Tax Rate
During NBC’s 2014 Olympics coverage, General Electric commercials show a cute kid proudly talking about what her mom does at GE. These slick public relations ads give one a warm, fuzzy, positive feeling about GE and their corporate slogan, “Imagination at Work,” confirming that GE symbolizes everything that makes America great.
Here are some facts GE may not want viewers to know:
• From 2006 to 2011, GE’s net federal income taxes were negative $3.1 billion, despite $38.2 billion in
pretax US profits over those six years.
• From 2002 to 2011, GE’s effective federal income tax rate on its $81.2 billion in pretax US profits was at most 1.8 percent.
• Corporate lobbying for tax breaks and innovative accounting enabling concentration of profits offshore
have reduced the corporate share of US tax receipts from 30% of all federal revenue in the mid-1950s to
6.6% in 2009.
Big corporations and the politicians and economists they bought through their lobbyists, campaign contributions and corporate-funded think tanks continually harp that the 35% US corporate tax rate cripples American companies because they can’t compete with foreign businesses whose tax rates are lower, never mentioning that the effective tax rate is nowhere near 35%.
GE’s giant tax department, consisting of former Treasury, IRS and Congressional tax-writing committee officials, uses aggressive strategies to reduce its tax liability. It is often referred to as the world’s best tax law firm.
GE and other multinational corporations benefit greatly from federal tax dollars spent on our military, which protects their investments both here and abroad, our infrastructure, including roads, bridges, airports, water and sewer, our public schools that provide them with an educated workforce, and a myriad of other services.
Contact US Representative Duffy (855-585-4251) and US Senators Johnson (202-224-5323) and Baldwin (202-224-5653) to ask them what corporate tax loopholes they propose to close in order to assure GE and other big companies start paying their fair share of federal taxes.
“In the mid-1980s, President Ronald Reagan overhauled the tax system after learning that G.E. — a company for which he had once worked as a commercial pitchman — was among dozens of corporations that had used accounting gamesmanship to avoid paying any taxes.
“I didn’t realize things had gotten that far out of line,” Mr. Reagan told the Treasury secretary, Donald T. Regan, according to Mr. Regan’s 1988 memoir. The president supported a change that closed loopholes and required G.E. to pay a far higher effective rate, up to 32.5 percent.”