GE's Taxes

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   JaxsonRaineposted 11 years ago

   I apologize, this is messy as I had to work with 4 documents to gather the data. For the conclusion, skip to the end.
   
   Citizens for Tax Justice released a report earlier this year claiming that GE has only paid an average tax rate of 1.8% over the course of the last 10 years.[1] I can show why this is incorrect, and provide incontrovertible proof that this information is simply wrong.
   
   Before we start, it is very important to understand that GE has two different operating branches, GE, and GE Capital Services(GECS). GECS is an investment branch, so profits and taxes are calculated for that branch than for GE, just as income taxes and capital gains taxes are separate for an individual. We will look at both branches of GE.
   
   (Quick answer is to click on the link [2] at the end of the post and look at page 8
   
   First, I will show where CTJ went wrong in their report. They reported for GE in 2011(Actually the return for the fiscal year 2010, it's just filed in 2011) the following:
   
   $9.156 billion in pre-tax profits.
   $1.032 billion in federal income taxes.
   11.3% tax rate.
   
   If we examine the SEC filing for FY 2010[2], we find the following information:
   
   "GE earnings from continuing operations before income taxes" - $12.036 billion(page 82, the line you are looking for is the "total")
   
   Honestly, I have no idea where CTJ got the figure of $9.156 billion, as that figure doesn't appear anywhere in the filing. Similarly, we will see that most or all of their figures don't actually match the SEC filings.
   
   Also on page 82 we find the "GE provision for income taxes" figure - $2.024 billion.
   
   So, 2010, GE(not including GECS) paid an effective tax rate of 16.8%. You can see this figure, and the figure for the previous two years on page 82 as well. GE paid 16.8%, 21.8%, and 24.2% for 2010, 2009, and 2008 respectively.
   
   For 2007, 2006, and 2005, we have to look in GE's annual report 2007[3].
   
   Page 110 - 21.8% 21.9% and 24.3%
   
   GE's annual report 2004 gives us this:[4]
   
   2004, 2003, 2002
   19.0%, 26.7%, 26.7%
   
   And for 2001:[5]
   
   22.9%
   
   
   
   So we have the following effective tax rates for GE:
   
   2010 - 16.8%
   2009 - 21.8%
   2008 - 24.2%
   2007 - 21.8%
   2006 - 21.9%
   2005 - 24.3%
   2004 - 19.0%
   2003 - 26.7%
   2002 - 26.7%
   2001 - 22.9%
   
   So, for GE, that's an average tax rate of 23%. Not quite the 1.8% CTJ claims.
   
   
   [1]http://www.ctj.org/taxjusticedigest/archive/2012/02/press_release_general_electric.php
   [2]http://www.sec.gov/Archives/edgar/data/40545/000119312511047479/d10k.htm
   [3]http://www.ge.com/ar2007/pdf/ge_ar2007_full_book.pdf
   [4]http://www.ge.com/files/usa/en/ar2004/pdfs/ge_2004_form10ka.pdf
   [5]http://www.sec.gov/Archives/edgar/data/40545/000004054502000012/f10k.txt

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      Wizard Of Whimsyposted 11 years agoin reply to this

      Jaxson, I'm impressed with your wonk-ish skills.  I stand corrected and the disparity in my visuals and their actual tax payments is glaring— so I sincerely apologize for posting misinformation.
      
      However, I still note that what they pay is not the 35% that most taxpayers pay and I wonder what you think of the inequity ?
      
      Oh and here is a ProPublica piece that explains The NYT, et al screw-ups thant may be of interest to you . . .
      
      http://www.propublica.org/article/setti … -ges-taxes

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         JaxsonRaineposted 11 years agoin reply to this

         I really appreciate you looking at the issue objectively.
         
         As for the disparity between the marginal and effective rates, well that discussion gets difficult. I'm in favor of a simplified tax code, and plugging up loopholes(not tax deductions, but ways that companies take advantage of them when they aren't meant to, like banks getting deductions meant for real-estate agencies), but I don't think a straight tax without deductions would work as well. The way it is right now, some industries have an effective rate of ~20%, and others have an effective rate of ~40%.
         
         I think it would be best to simply put the corporate tax rate at 20%, and only allow deductions for activities that are involved in expansion, hiring, and research/development for the most part.
         
         Honestly, I'm just glad that I'm not the IRS team in charge of auditing GM, our tax code sucks

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   JaxsonRaineposted 11 years ago

   GECS rates will come next.

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3. 77

   lovemychrisposted 11 years ago

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      JaxsonRaineposted 11 years agoin reply to this

      ?

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         lovemychrisposted 11 years agoin reply to this

         Sorry Jaxson....wrong thread!

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         Ron Montgomeryposted 11 years agoin reply to this

         #

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         American Viewposted 11 years agoin reply to this

         Jaxson, you made LMC speechless, a first

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4. 75

   Hugh Williamsonposted 11 years ago

   The story that GE pays no taxes is an exaggeration. Here's a summary quote from factcheck:
   
   We’re not going to weigh in on Warren’s larger point about whether corporations like GE aren’t paying their fair share. (Warren is Mass. Senate candidate Elizabeth Warren). That’s up to voters to decide. Again, the company has clearly been aggressive in reducing its tax burden through various tax credits and deductions created by the federal government (one example is clean energy incentives). It also has been creative in moving a good deal of its profits offshore. But Warren overreached with her claim that GE pays “zero” in taxes. The company does pay payroll taxes and local and state taxes. And GE says it also pays federal income taxes. How much? We don’t know, and GE isn’t saying. Nor is it required to.
   – Robert Farley
   
   http://factcheck.org/2012/04/warren-ge-pays-no-taxes/
   
   The core issue should be how do we get a fair tax rate for corporations without the loopholes that favor corporate giants like GE, who can use their power to influence tax legislation.
   
   In pre-election periods, like now, things get exaggerated if it's to someone's advantage, but the shocking and "sorta true" NY Times article was not a stellar piece of journalism.

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      JaxsonRaineposted 11 years agoin reply to this

      I call it a stinking pile of irresponsible journalism
      
      But, you touch an important issue. Personally, I think that we need to simplify the tax code, close as many loopholes as possible(to make it where GE and Joe Bob LLC can pay the same rates), and bring rates down to where the effective rates are around 20%. That would put us ahead of most of the developed world(by 3-4%) in corporate taxes, and encourage new business ventures and investing in the American economy.
      
      I haven't looked at it in detail, but I've read that Romney cracked down on loopholes as governor, and put more emphasis on verifying corporations' tax filings to make sure they don't cheat.

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