Occupy protesters chanting “we pay taxes and you should too” interrupted General Electric CEO Jeffrey Immelt today during a speech in Detroit before the SAE World Congress. Other protesters in the hall chanted “we are the 99 percent” before being escorted off the premises by police.
However, that doesn’t jive with what Citizens for Tax Justice found in a recent report. CTJ calculated that GE paid an 11.3 percent tax rate in 2011, which is actually a huge increase over previous years. In 2010, for instance, GE paid -76.6 percent. In 2009, it was -52.9 percent. So in each of those years, the government subsidized the hugely profitable mega-corporation:
GE’s low taxes stem mainly from its finance arm, GE Capital, which makes big profits, but generates huge tax “losses” that reduce GE’s taxable income from its other operations. Over the past decade, GE has paid virtually nothing in federal income taxes, paying a paltry 2.3% tax rate on its $83 billion in pretax U.S. profits.
The Obama administration unveiled its corporate tax reform plan last week, which would lower the top rate from 35 percent to 28 percent, billing it as an effort to help make the American corporate tax code more competitive. Republicans have long crowed for corporate tax reform, saying America’s high marginal rate stifles competition, but they have blocked efforts (including Obama’s) to close many of the loopholes and schemes corporations use to avoid paying taxes.
General Electric, one of the nation’s largest corporations, found itself at the center of the corporate tax debate last year when the New York Times discovered that it paid nothing in taxes, despite billions of dollars in profits. GE responded to the outcry by promising that its 2011 rate was “slated to return to more normal levels” because of the recovery of GE Capital, its financial arm. But according to an analysis from Citizens for Tax Justice, the company’s 2011 effective tax rate was just 11.3 percent. Even worse, over a 10-year period from 2002-2011, the company paid $1.9 billion in taxes on $81.2 billion in profits, giving it an effective tax rate of just 2.3 percent for the decade:
– From 2006 to 2011, GE’s net federal income taxes have been negative $2.7 billion, despite $39.2 billion in pretax U.S. profits over the six years.
– Over the past decade, GE’s effective federal income tax rate on its $81.2 billion in pretax U.S. profits has been at most 2.3 percent.
In the 10-year period CTJ examined, GE’s highest tax rate came in 2005, when it paid 27.5 percent, below the top tax rate in Obama’s reform plan. Four times in that stretch, its tax rates was negative, most notably in 2010, when the company received more than $3 billion in tax refunds, giving it an effective rate of negative 64.2 percent (click the image to make it larger):
While GE is one of the worst offenders, it isn’t alone. The U.S. does indeed have one of the world’s highest marginal corporate tax rates, but the effective rate that corporations actually pay is much lower. In 2009, in fact, only Iceland had a lower effective rate, and only two countries collected less in revenue as a percent of GDP. As investor Warren Buffett noted on CNBC this morning, “It is a myth that American corporations are paying 35 percent or anything like it…Corporate taxes are not strangling American competitiveness.”
By Scott Keyes and Lee Fang on Oct 22, 2011 at 12:00 pm
ThinkProgress filed this report from the Western Republican Leadership Conference in Las Vegas, Nevada.
An unlikely scene emerged at a Republican conference Thursday afternoon: a tea party congressman deplored corporate tax-dodging, and the conservative audience responded with cheers.
Freshman Rep. Raul Labrador (R-ID) spoke to the GOP crowd yesterday at the Western Republican Leadership Conference. Though the majority of his speech echoed standard Tea Party rhetoric, Labrador deviated from a discussion of Republican tax philosophy to condemn corporate tax cheats. Labrador said, “I believe that it is fundamentally unfair that companies like GE are making huge profits and not paying taxes.” The Republican audience applauded Labrador’s criticism:
LABRADOR: When people scream about Republicans being unwilling to raise taxes on the rich, they’re actually partly right. We don’t want to raise taxes on anyone. Not just the poor, not just the middle class, not just the rich. We don’t want to raise taxes on anyone. But we do believe that everyone should pay the taxes that are assessed to them and not find ways to avoid them through accounting tricks. I believe that it is fundamentally unfair that companies like GE are making huge profits and not paying taxes. (Applause)
Thursday’s scene displayed just how fed up Americans of all ideologies are with corporate tax cheats. With polls showing more than three in five Americans supporting increasing taxes on corporations and millionaires (including two-thirds of Republicans), perhaps outcries like these — even among conservative audiences — will become more commonplace.
Labrador aside, most Republican politicians have dismissed or even encouraged corporate tax dodging. In the presidential race, Newt Gingrich told ThinkProgress we should “celebrate” corporate tax dodgers and let them pay whatever rate they please, while Herman Cain said he “would like to see no taxes on corporations.” In the Senate, Ron Johnson’s (R-WI) reaction to corporate tax dodging was to call for a corporate tax cut, John Barrasso (R-WY) dismissed the issue because, in his view, “we don’t need more revenue,” and Pat Toomey (R-PA) said corporate taxes are already too high.
Finally, in the House of Representatives, Rob Woodall’s (R-GA) response to corporate tax dodging was to push for “the lowest corporate tax rate we can get,” Jeff Duncan (R-SC) argued that companies like GE are actually paying their fair share, and Louie Gohmert (R-TX) called for completely eliminating the corporate income tax.
It’s tough out there in the solar manufacturing space. But don’t count American companies out yet.
General Electric announced this week it will open a new 400-MW solar manufacturing facility for producing cadmium-telluride thin film panels in Colorado — creating 355 local jobs in the process.
The announcement comes after a round of high-profile closures at solar manufacturing facilities in the U.S. due to extremely competitive pricing in the global PV market (see “Are the Chinese Using Predatory Pricing to Knock America Out of Solar Manufacturing?“). In 2009, GE closed a manufacturing plant in Delaware that produced conventional crystalline-based solar modules. Today, it has restructured its solar investments and focused on thin film technologies.
At scale, thin film solar costs much less to produce. Industry leader First Solar is able to manufacture cadmium-telluride solar modules at $0.75 per watt, which is $.025 lower than the best conventional PV. But efficiencies are much lower — First Solar modules are about 11.7 percent efficient, compared with a 15.7% efficient module for polycrystalline solar.
A group of multinational corporations — operating under the banner of a campaign called “WinAmerica” — have been pushing for the enactment of a tax repatriation holiday. Such a holiday would allow companies to bring money they have stashed overseas back to the U.S. at a dramatically lower tax rate, rather than the 35 percent that they would usually pay.
The failed history of repatriation is well known to General Electric CEO Jeff Immelt, who is the head of President Obama’s Council on Jobs and Competitiveness. Immelt said on CBS’ 60 Minutes last night that the 2004 holiday didn’t create jobs. However, he thinks that another repatriation holiday should be enacted anyway:
IMMELT: When it happened last time, it didn’t [create jobs].
LESLEY STAHL: Right.
IMMELT: So there’s plenty of evidence that says that I’m not right about that. In other words, do I know how many jobs it’s going to create? I don’t. But it can’t intellectually be any good to anybody to have $1.2 trillion outside the U.S.
To hear Immelt tell it, a repatriation holiday is the only way anything can come of the trillions that America corporations have stashed overseas. But that isn’t true. As Citizens for Tax Justice has pointed out, ending the practice of “deferral” — which allows companies to indefinitely postpone taxes on overseas profits — would achieve the same ends without resulting in a corporate giveaway.
For months, Republicans and America’s corporate titans havebeen coalescingaround the idea that a repatriation holiday would spur job creation. But history — and Immelt’s own admission — show that this simply isn’t true.
While in Florida today to announce the endorsement of Jeb Bush Jr., GOP presidential contender Jon Huntsman took giant corporations to task for not paying their fair share in taxes. The former Utah governor and ambassador to China singled out General Electric and companies like it for avoiding their tax burden by exploiting loopholes in the tax code:
“It’s criminal that you’ve got some corporations not paying taxes,” the former ambassador to China said in Miami, where he was announcing a new endorsement in his presidential campaign. “Like GE, for instance. That’s got to come to an end.”
Huntsman’s remarks came in reaction to a question about the so-called “supercommittee” being formed as a result of the debt-ceiling deal that will consider new ways to reduce the deficit. House Speaker John Boehner (R-Ohio) and Senate Minority Leader Mitch McConnell (R-Ky.) named three representatives each to the panel this morning.
Earlier this year the New York Times reported that in 2010, GE, the nation’s largest corporation, functionally paid no taxes on $5.1 billion in profits in the U.S. alone. In fact, G.E. claimed a tax benefit of $3.2 billion.
Democrats are pushing for the super committee’s deficit reduction plan to include new revenues and tax reform, with a heavier tax burden falling on the wealthy and corporations who have seen their taxes plummet in recent years. Like other Republicans, Huntsman supports ending loopholes and exemptions to pay for lowering overall tax rates.
So I’m reading the Washington Post today and come across a full-page ad for natural gas from the marketing geniuses at General Electric.
Apparently nobody involved with the new ad campaign understands the unintentional irony, that natural gas is one of the most potent heat-trapping greenhouse gases. This, as we’ve seen, is something a lot of people aren’t clear on (see “Natural gas is mostly methane“).
As a former lead engineer at Princeton Plasma Physics Lab explained in an email, this mean that “running a handheld electric hairdryer on US grid electricity delivers a planet-warming punch comparable to [the heat given off by] two Boeing 747s operating at full takeoff power for the same time period.”
ThinkProgress Blog Fellow Micah Uetricht is a staff writer for Campus Progress. He lives in Chicago. Follow him on Twitter @micahuetricht.
At a town hall meeting in Sycamore, Illinois two weeks ago, freshman Rep. Randy Hultgren (R-IL) faced a largely hostile audience that repeatedly questioned his vote in favor of the House Republican budget, and expressed opposition to subsidies for big oil companies and the privatization of Medicare. While Hultgren effectively dodged a number of the questions, he also expressed a desire to see companies like General Electric — which had no federal tax liability in 2010 — pay more in taxes.
Hultgren’s comments about GE came after a constituent asked him about offshoring by American companies:
CONSTITUENT: We’re allowing corporations to move abroad and subsidizing them. What do you think about that?
HULTGREN: I’d like to see policies that encourage companies to stay here… A lot of our work that we’ve been spending time on in Washington is dealing with the regulations. There are so many regulations, there is so much incentive for them to be going elsewhere. I think it’s ridiculous. And I don’t know if it’s true—I gotta find out if General Electric truly is paying no taxes. That’s crazy. That’s wrong. That’s gotta stop.
Notably, Hultgren has done nothing to end tax breaks for companies that ship jobs overseas, or to close the loopholes enjoyed by companies like GE.
Politicians around the country have been peppered with questions on GE’s tax payments and Republicans have had mixed sentiments on whether they should have to pay up. ThinkProgress reported from a South Carolina town hall meeting where Rep. Mick Mulvaney (R-SC) “agree[d] with it generally” that corporations like GE should pay taxes. And House Majority Leader Rep. Eric Cantor (R-VA) stated he is in favor of making GE pay taxes on the Don Imus show. Other Republicans, however, remain insistent that Main Street should foot the country’s bills while large corporations pay nothing.
Despite being America’s largest company and making $14.2 billion in profits last year, General Electric paid zero dollars in federal taxes last year — in fact, it claimed a $3.2 billion “tax benefit.” As ThinkProgress has reported, in a time of strained government budgets, a numberof Republican lawmakers have astonishingly defended G.E.’s tax dodging, with former House Speaker Newt Gingrich even telling ThinkProgress that “we should celebrate” corporations exploiting tax loopholes “as a good thing.” But on CSPAN’s Washington Journal this morning, GOP Rep. Reid Ribble (WI) called G.E.’s tax dodging “offensive” and unfair:
HOST: But when you see a company like G.E., which earned $14 billion last year, it was able to write off some losses, and it paid zero taxes in 2010. Is that fair?
RIBBLE: No, that’s not fair at all! As a matter a of fact, it’s totally disenheartening. It’s offensive to me as a business owner, who pays taxes. I believe that we need to have a flatter tax rate for corporations and make them more competitive around the world, and we need to close loopholes.
Later in the interview, Ribble also said subsidies for oil companies should be “looked at.” Perhaps Ribble will use his position on the House Budget Committee to advocate against these loopholes and subsidies. Although, in March, Ribble joined the entire Republican caucus in voting to protect oil subsidies.
Last week, the New York Times ran an explosive front-page story revealing how General Electric (GE), despite making over $14 billion in profits in 2010, paid absolutely nothing in federal corporate income taxes. It even received a tax benefit of $3.2 billion.
ThinkProgress provided substantial coverage of the story, offering further analysis and insight into the firm’s behavior:
– Despite Paying No Income Taxes, GE CEO Lauded His Company’s Patriotism In 2009 West Point Speech [3/25/11]
– Sen. Johnson’s Reaction To General Electric Paying No Taxes: Cut The Corporate Tax Rate [3/25/11]
– After Paying Zero Income Taxes, GE Plans To Ask Its Union Workers To Make Wage And Benefits Concessions [3/28/11]
Reviewing the television coverage of GE’s tax avoidance, ThinkProgress found that the story was covered 23 times by Fox News between March 25 and March 28. Certainly, with an anti-Obama axe to grind, it is not surprising that the network chose to excoriate a company that is considered close to the Obama administration and whose CEO is the head of an outside White House jobs panel.
Yet, as FAIR’s Peter Hart points out, this blockbuster story received scant coverage on another major cable news outlet: MSNBC. A review of MSNBC coverage finds that, over the same three-day period, the General Electric story received relatively little mention. It was only mentioned three times on MSNBC — one of these mentions was by host Rachel Maddow during a conversation with the Washington Post’s Eugene Robinson and another mention was made by Sen. Bernie Sanders (I-VT), a guest on the network.
To his credit, MSNBC host Lawrence O’Donnell extensively covered GE’s tax dodging. O’Donnell ran a whole segment about the company on his show last Friday night, saying that in a fair world the network’s parent company would pay the most taxes, because it’s the country’s biggest corporation. Watch it:
O’Donnell went on to actually dissect GE’s tax filing on air, providing a useful service to viewers who may be amazed that the tax code allows a mega corporation like GE to avoid paying federal corporate income taxes.
The wider failure of MSNBC to report about GE’s tax avoidance provides a cautionary tale about the dangers of over-reliance on corporate conglomerates to provide news to the American people. And it also highlights the importance of not-for-profit media and public media — like the public broadcasting conservatives are trying to defund.
General Electric’s tax avoidance was mentioned this morning on MSNBC’s Morning Joe. The hosts joked that Comcast was actually MSNBC’s parent company and claimed that it paid a 40 percent tax rate. “You are a good corporate citizen now, Willie Geist!” joked Erin Burnett.