Jay Carney On GE's Zero Income Tax Payments: One Might Say 'What The Heck'

WASHINGTON -- White House Press Secretary Jay Carney acknowledged once more on Thursday that average Americans would be confused, if not appalled, by the fact that General Electric Co. did not pay any federal income taxes in 2010 despite more than $5 billion in profits.

One "might say, 'what the heck, I don't get this,' " Carney said during his daily briefing, adding that, "the president shares that opinion. ... He believes our corporate tax structure needs to be reformed."

But in having to reiterate the administration’s continued commitment to tax reform and equity (and with it, the closing of corporate loopholes), Carney underscored the extent to which GE’s non-existent 2010 payments have become a political liability. The company’s CEO, Jeff Immelt, serves as the chair of the president’s Council on Jobs and Competitiveness. And despite the apparent advantages that he was able to secure for his company, the White House has indicated no willingness to drop him from that post.

“The tax system is complex,” Carney said in a briefing back on March 25, “it is filled with loopholes and other pieces of it that make it possible for corporations to reduce their tax burden. And it's not good for the companies in terms of their competitiveness and potential for growth and this is obviously not good overall for job creation in the United States.”

Immelt, to his credit, has not ducked the issue. On Thursday, the GE CEO spoke at the Economic Club of Washington D.C. and was pressed on a wide-range of company practices -- from the company’s outsourcing of jobs to its seemingly lax tax requirements. "Like any American, we do like to keep our tax rate low,” he acknowledged.

Both there and in a follow up interview with ABC News’ Jake Tapper, however, he was forced to defend charges that his company had somehow beat or cheated the system.

In an excerpt of the interview that Tapper provided to The Huffington Post in advance of broadcast on ABC World News Thursday, Immelt was asked to respond to the critique that GE “was not there for taxpayers.”

“On taxes we had billions of dollars of losses on GE Capital,” he responded. “Our taxes are going to go up this year, over the last five years we’ve paid more than 14 billion dollars in taxes. I’m going to work my best on behalf of the president on the jobs council, I’ll do it with passion and focus and that’s what I’ll do.”

This story was edited after publication.

Comments

[Aquinnah1]

10:06 AM on 04/03/2011

And corporate America wonders why we're skeptical:
http://eightfits.blogspot.com/2011/04/and-corporate-america-wonders-why-were.html

[BLGould]

08:06 AM on 04/02/2011

Here's how our Internal Revenue System SHOULD work...

0$ of overseas costs (pesonnel, facilities, insurance, etc.), should be deductible from U.S. taxes. Deduct whatever you're allowed from taxes imposed by the foreign government where you operate, but NONE of it should be deducted from U.S. taxes.

In fairness then, 0$ of profit acquired overseas should be reported on federal returns. If you made $2 billion selling products or services IN India or China, that profit is theirs to collect taxes on. However, anything sold to Americans (including those serving our government overseas), SHOULD be taxable by the I.R.S.

EXAMPLE: If you had $10 million in operating costs IN China and made $2 billion in profit IN China, NONE of those costs or profits need be reported on your federal return. But, if $1.2 billion of your $2 billion profit was from goods or services sold to Americans, that $1.2 billion should be reported, even if NONE of the operational costs are deductible.

On the flip side, if you have $10 million in operating costs from facilities within the U.S. or personnel costs for U.S. citizens (NOT H1-B workers) either here or overseas, those costs should be deductible.

Overly simplistic, perhaps, but it does seem to me a fair solution.

[MirageRF]

12:38 AM on 04/02/2011

Few Americans even understand how to balance a checkbook, don't expect them to understand corporate tax law. No laws have been broken.
You are being baited by a media that knows you enjoy a good "it ain't fair" story before April 15th.

[bobcat99]

04:36 PM on 04/01/2011

There goes that Marxist Obama again, refusing to have anything to do with business and capitalists. The corporations have absolutely no voice today. Who is going to fend for the corporatists rights against the lazy masses that just want a handout? Let old people freeze and children come to school hungry. That will teach them to get off their lazy arses and do for themselves, it will.

[stryker]

08:24 PM on 04/01/2011

This is your April Fool's comment, right?

[soybeaner]

10:37 PM on 04/01/2011

How could paying more in taxes make a business more competitive?

[genboomxer]

03:49 PM on 04/01/2011

Business is doing very well in the United States, it's just not doing good in the United States.

Republicans campaign on "Country First" but they don't really mean it. If they did then they would be advocating that corporations have an obligation to the country that provides their public infrastructure and protection; close the loopholes and collect the revenue necessary to maintain the commons.

Do good to do well and vice-versa.

[genboomxer]

03:44 PM on 04/01/2011

Why was this story pulled from the front page?

[hamsteronwheel]

02:24 PM on 04/01/2011

some things NEVER change

Supermob - by Gus Russo

"Samuel "the Emperor" Insull" "a former private secretary to inventor Thomas Edison, ..., INHERITED Edison's General Electric power company and, thanks to massive political corruption, built it into a $2 billion empire." "Insull built his paper colossus on the hot coals of corruption. Corrupt politicians and predatory law firms kept it precariously fire proof for forty years in a continuing conspiracy that provided LOW TAXES, and favorable legislation, plus safe judges, reasonable mayors, pliable alderman, patronage officeholders, and anybody else who could serve Insull's undivided interests."

3/24/2011

"The assortment of tax breaks G.E. has won in Washington has provided a significant short-term gain for the company’s executives and shareholders. While the financial crisis led G.E. to post a loss in the United States in 2009, regulatory filings show that in the last five years, G.E. has accumulated $26 billion in American profits, and received a net tax benefit from the I.R.S. of $4.1 billion.

...amounts to corporate welfare, allowing G.E. not just to avoid taxes on profitable overseas lending but also to amass tax credits and write-offs that can be used to reduce taxes on billions of dollars of profit...

“But in our system, there are corporations that view their tax departments as a profit center...”

http://www.nytimes.com/2011/03/25/business/economy/25tax.html?_r=3&ref=business&pagewanted=all

[Cautiously optimistic]

01:09 PM on 04/01/2011

No taxes. No Military Protection. One of your facilities in a foreign country comes under attack. Let the outsourcing workers and their country deal with it.

[Kenneth Patterson]

12:57 PM on 04/01/2011

So why did 60 minutes do a segment about Corporations setting up empty offices overseas to avoid 35% corporate tax, when many don't pay any at all? If we cut the rate in half, does that mean they just save by hiring have as many accountants?

[madame48]

02:46 PM on 04/01/2011

Amerca is on its way out as a civilized country...the last out, turn off the GE lights please

[DarkKarma]

12:52 PM on 04/01/2011

"{ The company’s CEO, Jeff Immelt, serves as the chair of the president’s Council on Jobs and Competitiveness"

Another day of Hope and Change We Can Believe In from the stench filled, corrupt White House !

[Political Piggy]

01:02 PM on 04/01/2011

GE is one of America's most successful and competitive companies, and it is a leader in several manufacturing sectors. The fact that it outsources jobs argues that there is something fundamentally flawed in the approach the US takes to the manufacturing sector, so who better to head a group of folks trying to describe what can be corrected in this fundamental part of America's economy?

By the way, are the only corporate executives that are acceptable to the Republican Tea Party the ones who happen to support Republican Tea Party candidates? Isn't a good capitalist a good capitalist regardless of his or her political leanings?

[jerrydenim]

12:48 PM on 04/01/2011

Talk, talk, talk but of course there will be NO action from Obamaco on this or anything else. His spokespeople and PR doctors and and spin wizards will no doubt spend a good bit of energy and resourcing attempting to project an illusion of concern and activity, but in the end nothing will change and GE will pay less tax next year, offshore more jobs, get more bailouts and subsidies and high ranking GE executives will continue to get prestigious appointments to economic policy positions in the White House. What a cruel joke, the Potemkin Presidency.

[scoobanchi]

12:58 PM on 04/01/2011

You can't pay less than $0. You can however expose great ignorance through a short paragraph. Congratulations.

[SeanMMasters]

01:18 PM on 04/01/2011

You can, actually. GE got a REFUND.

[madame48]

02:51 PM on 04/01/2011

then tell the treasury sending out the refund checks...and look how many other corps are doing the same...theres a reason all those fancy company lawyers are in Mercedes

[McCauley]

12:47 PM on 04/01/2011

GE's tax deal is what you get when corporations can lobby congress and shell out campaign contributions. Congress is corrupt, period. Legally corrupt, yes, but corrupt.

[Bill Roth]

12:51 PM on 04/01/2011

Sounds to me like grounds for dismissal.

[LivingDebtFree]

12:42 PM on 04/01/2011

We need a flat tax on consumption. The only exclusions would be on some consumables like groceries.

Nice and simple.

Companies would spend less on lobbying and tax preparation, which would increase profits and lower cost of goods.
Congress wouldn't know what to do with themselves if they couldn't argue about changing tax rates every 2-3 years.
It would encourage saving in the public sector and allow those that are financially responsible to benefit from it.

[McCauley]

12:48 PM on 04/01/2011

A flat tax on consumption would be hugely regressive.

[westcoastpimpin]

12:54 PM on 04/01/2011

on what grounds? LivingDebtFree at least tried to back up his/her claim (which is not a bad idea.

[lefthandedmenace]

12:57 PM on 04/01/2011

That sounds great unless you're lower class. A flat tax would have you spending a grotesquely larger percentage of you're earnings and putting you at a further disadvantage. Thank you for thinking about those poor, defenseless corporations, but try looking through the ruthless, greedy eyes of the single mother who struggles to get her children to school with something in their little entitled stomachs.

[westcoastpimpin]

12:40 PM on 04/01/2011

http://www.forbes.com/2010/04/01/ge-exxon-walmart-business-washington-corporate-taxes.html

the article outlines the economic realities, with globalization at the point it is now, if tax rates on multinationals are increased in the US they will continue to outsource and leave the country.

[McCauley]

12:52 PM on 04/01/2011

Forbes is a poor source for realistic tax talk. The truth is that American corporations pay LESS than corporations in other countries. The corporate tax rate is higher, but no one pays it. End the loopholes and subsidies, and reduce the nominal rate, and you would get a rational system.

[3RawBob]

12:54 PM on 04/01/2011

Forbes is simply talking points for Republicans. GE is not going to outsource its jobs. The things GE does in the USA are not easily outsourced. For example, yesterday GE ordered $2,800,000,000 worth of planes from Boeing, and will lease them. Asset based leasing takes a lot of salespeople, tax lawyers, CPA’s and financial types. This is not something you outsource to some cheap labor country. The profits however will be outsourced.

[SeanMMasters]

12:37 PM on 04/01/2011

You know why we don't simplify the tax code? It would put hundreds of thousands of people out of work. The number of people working in the accounting, bookkeeping, and other taxation fields is absolutely staggering. Why? Because of the ridiculous complexity of the tax code.

Make it one page. No loopholes, deductions for children/1st property only (1 bullet point each works fine), and simple addition. The entire taxation business shuts down overnight, the govt collects its revenue in days instead of months, etc.