General Electric: Bringing Inequality to Life Through Tax Dodging
Perhaps more than any other company, General Electric has turned tax avoidance into an art form. The company’s 975 person tax department annually produces a tax return of more than 50,000 pages. It takes that many pages to fill out the forms for all the special tax breaks GE’s lobbyists have won.
Over the last ten years, General Electric reported $81 billion in U.S. profits and yet paid just $1.8 billion in federal corporate income taxes, an effective tax rate of just 2.3%, according to Citizens for Tax Justice.
General Electric has used its political clout to place its CEO, Jeffrey Immelt, as Chair of the President’s Jobs and Competitiveness Council, where he has direct access to President Obama. It is an odd job for a man who presides over one of the country’s biggest job destroyers. In 2004, the company got a tax holiday on $1.2 billion of foreign income, thanks to a law that promised tax breaks for companies that brought money home and created jobs. Instead, between 2004 and 2010, General Electric slashed 32,000 jobs.
That came on top of GE’s massive offshoring drive in the 1980s and 1990s, when it cut its U.S. workforce nearly in half. Former CEO Jack Welch was so committed to seeking the lowest cost workers that he once famously said “ideally, you’d have every plant you own on a barge.” In 2011, General Electric added back about 10,000 U.S. workers, but not nearly enough to make up for their decades of job-slashing.
General Electric was one of 30 companies highlighted for paying more to lobby Congress than they paid in federal taxes between 2008-10. GE topped the list of 30 in two categories: money spent on lobbying ($84 million) and size of their IRS refund (GE got back $4.7 billion even though they reported more than $10 billion in U.S. profits). General Electric has fought long and hard for one of its most lucrative tax breaks, the active financing exception, which saves the company up to $100 million on taxes each year. The “exception,” first passed in 1997, has been renewed by Congress multiple times.
If tax dodging and job cutting were Olympic sports, GE would be a champion.
Scott Klinger is an Associate Fellow at the Institute for Policy Studies.