While large corporate giants like GE have the resources to hire hundreds of tax avoidance specialists and to lobby Congress for specific provisions, the life-blood of the U.S. economy, America’s small and medium sized businesses do not. America will soon have the highest corporate tax rate in the OECD. Streamlining the corporate tax code, as has been suggested by the president’s Deficit Commission is vital to maintaining America’s economic might. Will we actually see real reform? With Jeff Immelt acting as an outside advisor to President Barack Obama, I wouldn’t bet on it. As this New York Times article points out, GE paid no taxes last year—instead claiming a $3.2 billion tax benefit. When the president asks Mr. Immelt for his input on corporate tax reform, you can bet there will be more than a few loopholes that benefit GE.
G.E.’s Strategies Let It Avoid Taxes Altogether – David Kocieniewski, The New York Times
General Electric, the nation’s largest corporation, had a very good year in 2010.
Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.
While General Electric is one of the most skilled at reducing its tax burden, many other companies have become better at this as well. Although the top corporate tax rate in the United States is 35 percent, one of the highest in the world, companies have been increasingly using a maze of shelters, tax credits and subsidies to pay far less.
Over the last decade, G.E. has spent tens of millions of dollars to push for changes in tax law, from more generous depreciation schedules on jet engines to “green energy” credits for its wind turbines. But the most lucrative of these measures allows G.E. to operate a vast leasing and lending business abroad with profits that face little foreign taxes and no American taxes as long as the money remains overseas.
Company officials acknowledged that the tax department had expanded since he joined the company in 1988, and said it now had 975 employees.
At a tax symposium in 2007, a G.E. tax official said the department’s “mission statement” consisted of 19 rules and urged employees to divide their time evenly between ensuring compliance with the law and “looking to exploit opportunities to reduce tax.”