Economy

CTJ Report: General Electric Paid 2.3% Federal Taxes on $81 Billion Profit

February 29, 2012 by Brett Wilkins in Business & Corporations, Special Interests with 0 Comments

General Electric paid just 2.3 percent in federal taxes over the last decade, despite earning more than $81 billion in profits over that same period.

So says a new report from the nonpartisan watchdog group Citizens for Tax Justice. CTJ’s report says GE’s latest Securities and Exchange Commission (SEC) filing proves the company has engaged in tax-dodging on a massive scale, taking advantage of loopholes and deductions to avoid paying the official U.S. corporate tax rate of 35%.

Last March, Moral Low Ground reported that despite reaping a windfall $14.2 billion profit in 2010, GE paid zero federal tax. In fact, the company actually got what amounted to a $3.2 billion tax refund.

Now CTJ says that GE paid just 11.3% on $14.8 billion in profits for 2011. The watchdog group also says the company got $2.7 billion in taxpayer-funded credits in the years 2006-2011.

“I don’t think most Americans would consider 11.3 percent, not to mention GE’s long-term effective rate of 2.3 percent, to be ‘normal,’” Bob McIntyre, director of Citizens for Tax Justice, said in a media advisory. “But for GE, taxes are something to be avoided rather than paid.”

GE says claims of corporate tax dodging don’t reflect the amount of foreign taxes it pays.

According to The Raw Story, President Obama has proposed taxing foreign earnings and closing corporate tax loopholes, while lowering the U.S. corporate tax rate from 35% to 28%. Conservative politicians and pundits often claim that the U.S. has some of the highest corporate taxes in the world, and on paper this is true. But very few companies pay 35%. In fact, CTJ says that 30 of America’s most profitable corporations paid “less than 0%” in federal tax over the last three years. And Sen. Bernie Sanders (I-Vt.) has publicly “named and shamed” the nation’s top ten tax dodgers. General Electric is only #3 on his list.

Shockingly, at least 25 major U.S. firms paid more to their own executives than they did to tax collectors in 2010.

Still, President Obama seems to think that corporations pay too much tax. His choice of GE CEO Jeff Immelt as chairman of his Council on Jobs and Competitiveness was as telling as it was appalling. Under Immelt’s stewardship, GE laid off 21,000 American workers and closed 20 factories. According to ABC News, more than half of the company’s workforce is now located outside of the United States.

But GE, the world’s largest industrial corporation, leads all corporations in spending on lobbying Washington for favorable legislation and policies. The company has spent more than $238 million over the last 12 years on lobbying. There is no underestimating the kind of influence $238 million can buy.

GE claims that it “pays what it owes under the law and is scrupulous about its compliance with tax obligations in all jurisdictions.” Perhaps the company is telling the truth and it is just exploiting the appalling state of tax regulations.

Billionaire investor Warren Buffett, who knows a thing or two about corporate taxation, opined in a Monday Wall Street Journal editorial that the notion of high corporate taxes in America is but a myth.

“The corporate taxes as a percentage of GDP were 1.2 percent, $180 billion,” Buffett wrote. “That’s just about the lowest we’ve seen. So our corporate tax rate last year, effectively, in terms of taxes paid for the United States, was around 12 percent, which is well below those existing in most of the industrialized countries around the world.”

Try telling that to the Republicans.