What goes down, must come up: GE’s latest tax bill
Tell me what happened, Reuters:
The company, which has come under fire over the past month for reports of an unusually low 2010 U.S. tax bill, pointed out that its consolidated first-quarter tax rate was 53 percent as a result of the NBC Universal sale.
And as BBrand X noted:
GE’s consolidated tax rate was 37 percentage points higher than a year earlier, reflecting the company’s projection that the rate would rise significantly after the NBC sale.
The company’s taxes have been in the public spotlight since the New York Times reported March 24 that GE had a tax bill of zero in 2010, an assertion the company called misleading on its GE Reports website. The criticism prompted a hoax press release last week.
GE has rebuffed the tax bill claim specifically and said the company received no rebate, refund or payment from the government on its 2010 taxes.
Indeed, GE predicted this:
GE’s tax rate has been lower in recent years due to financial crisis losses at GE Capital. From 2008-2010, GE Capital suffered nearly $32 billion in losses as a result of the financial crisis. That’s not a “tax avoidance strategy.” Absent such unusual losses, GE’s overall effective tax rate would have been 15 percent over the past several years, which is comparable to the average for other multinational corporations. Our 2011 tax rate is slated to return to more normal levels with GE Capital’s recovery.
And the company has this cold:
The United States is virtually the only major industrialized country that taxes overseas earnings of companies. GE and many other companies — and, for that matter, Congress and administrations over many decades — have supported deferral of tax on foreign earnings for all companies. Doing so makes U.S. companies more competitive globally. This is not a “shelter,” it is good policy.
The U.S. shouldn’t even be taxing overseas income. Better to simplify the system, tax territorially and lower the tax rate to at least 15 percent And don’t forget that even when you factor in various tax breaks and loopholes, the U.S. STILL has the highest average effective corporate tax rate among advanced economies.