Gary Sheffer responds to David Cay Johnston's article that compared the tax rate of General Electric Co. with that of The New York Times, saying that GE's tax rate was low because of the global financial crisis.
To the Editor:
David Cay Johnston's April 11 column ("Regressive Tax Inc.," Tax Notes, p. 215, Doc 2011-7291, 2011 TNT 69-9) made a tortured attempt to criticize GE, suggesting that GE paid no federal income taxes in 2010, and questioned the integrity of GE's tax compliance practices, referencing a 2008 story he wrote in Tax Notes International (June 30, 2008, p. 1067) concerning Brazilian sales tax incentives. We would like to clarify a few points.
First, like any American, GE likes to keep our tax rate low. We do it in a compliant way and there are no exceptions. The reason our tax rate was so low from 2008-2010 is simple. We lost $32 billion in GE Capital as a result of the global financial crisis. As we've said many times, GE expects a small tax liability when we file our 2010 U.S. federal tax returns, and we paid significant federal income tax during 2010 for prior tax years. Moreover, with GE Capital having rebounded in 2011 and with our sale of NBC Universal, GE's consolidated tax rate was 53 percent in the first quarter of 2011.
At the same time, we do believe our current tax system is old, complex, and uncompetitive. The purpose of the tax code should be that everyone pays their fair share, including GE. But, it must also promote jobs and competitiveness, and it does the opposite today. Like most of our business colleagues, GE favors closing loopholes, a lower corporate tax rate, and a territorial system in line with every other developed country in the world.
Finally, GE addressed Brazil with Mr. Johnston and his editors when his original article was published in 2008 (Tax Notes Int'l, Aug. 11, 2008, p. 521). We presented facts that thoroughly and directly refuted Mr. Johnston's assertions. In response, Tax Analysts removed the story from its free website, limiting it to a subscription site.
Indeed, every issue raised in the 2008 article was first identified by GE employees and addressed in an appropriate manner and in full compliance with all applicable laws and regulations. GE's handling of these matters reflects our strong and proactive compliance process that is scrupulous in every sense of the word.
- Gary Sheffer
Corporate Communications &
General Electric Co.
Apr. 26, 2011
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