In a jaw-dropping exposé in The New York Times, David Kocieniewski explains how General Electric, the country's largest corporation, has managed to accumulate $26 billion in the last five years while not just paying zero taxes but receiving a net tax benefit of $4.1 billion from the IRS. The author dives deep into the company's regulatory filings and interviews a number of tax law and policy experts. Below, we've pulled out from the multi-page report the various schemes and tactics the corporation uses to keep exploiting the tax system. It's worth reading in full here.
-Lobbying The company spent more than $200 million in the last ten years, according to the Center for Responsive Politics. One of its major lobbying coups includes the 2004 American Jobs Creation Act, which allowed it to "defer taxes on overseas profits from leasing planes to airlines." That law saved the company more than $1 billion just three years after it was enacted.
-Greasing Palms When GE needed to change Rep. Charlie Rangel's mind about support for a key tax break, it awarded $11 million to various schools in Rangel's district. Afterward, Rangel, who then headed the tax-writing Ways and Means Committee, pledged his support for the tax provision. He says the donation had no effect on his decision. Rangel has also been under intense scrutiny recently for ethics violations unrelated to GE.
-Anointing Tax Kings At many of its major manufacturing facilities across the world, GE has elevated the role of tax strategist to an executive decision-making post. The company's tax department has expanded to 975 employees.
-A Culture of Tax Avoidance The
company's mission statement of GE's tax department urges employees to "evenly" divide their time between obeying the law and "looking to exploit opportunities to reduce tax.”
-Leasing and Lending Abroad In the late '90s GE won passage of a tax provision known as "active financing" allowing it to "avoid taxes on lending income from abroad," that in turn gave the company an array of tax credits and write-offs used to offset taxes on its U.S. operations.
-Cutting Its Domestic Work Force "Since 2002, the company has eliminated a fifth of its work force in the United States while increasing overseas employment," writes the Times. "In that time, G.E.’s accumulated offshore profits have risen to $92 billion from $15 billion."
Update: GE has posted a response to the article here
This article is from the archive of our partner The Wire.