So GE told one journalist that it didn’t pay federal taxes last year and didn’t owe any, while it told others that it did pay federal taxes and does expect to owe them. Somewhere around this time, Dow Jones filed a story reporting a third version:
General Electric Co. (GE) said Monday that it expects its U.S. income tax bill for 2010 to be completely offset by overpayments from prior years and other adjustments, although it noted that it hasn’t filed the return yet.
I got a fourth version from the company:
We will file our 2010 tax returns by September. We expect to have a small federal income tax liability. In 2010, GE paid significant federal income taxes for prior years.
GE needs multiple corrections on its own claims, but again, it hasn’t asked the Times to correct anything in the story it complained so loudly about.
Finally, I have to issue a retort to GE’s first bullet point, which says this:
GE pays what it owes under the law and is scrupulous about its compliance with tax obligations in all jurisdictions. We are committed to acting with integrity in relation to our tax obligations. At the same time, we have a responsibility to our shareholders to reduce our tax costs as the law allows.
Let’s hand that one over to David Cay Johnston, who published this investigation into GE taxes in Tax Notes International in 2008:
In 2005 the new manager of a General Electric sub- sidiary in Brazil that made light bulbs and lighting equipment got a tip, the company says. It led to his discovering something curious in the company’s records: Up to 64 percent of annual sales were re- corded as going to wholesale distributors in lightly populated regions near the Amazon River…
Moreira’s report explained that urban Brazilian states charged the subsidiary a 19 percent VAT on its bulbs, switches, and fixtures, while the rural states charged just 7 percent or none at all…
The internal documents offer a rare and candid look at how, behind closed doors, GE executives, managers, and lawyers dealt with evidence of systematic tax cheating that flourished over many years.
The internal documents show that the scheme Moreira found was no anomaly at the Brazilian lighting operation, known as GE Lighting or GEVISA. The documents discuss a second Brazilian invoicing scheme to escape state-level VAT and a separate system to evade tens of millions of dollars in Brazilian payroll taxes on compensation to the sales force, which did business in other Latin American countries as well…
The amount of Brazilian state-level VAT at issue, based on Moreira’s report and the other documents, appears to be less than $100 million. But that amount is only for the periods for which specific details can be extracted from the documents. Since the VAT scheme appears to have gone on long before the period covered in the Moreira report, the total sum could be much larger and could involve other countries supplied by the Brazil subsidiary.
It’s an interesting read, to say the least.
The second prong of the GE pushback was on Twitter, where its flacks went to help spread their “we pay lots of taxes” message. That began to backfire on Monday.
Before it suddenly quit tweeting about the issue, it pestered multiple Twitterers with its claim that GE paid $2.7 billion in cash taxes in 2010 (not mentioning to whom it paid them). GE also said that “The Times erroneously suggests GE makes use of tax ‘loopholes,’” as if GE, with its thousand-person-strong tax department, is the only big company in America that doesn’t take advantage of tax loopholes. When you say things like that, it’s awfully hard to trust anything else you say.
GE then got into something of a feud with Blodget:
Stop the misleading attacks. No Taxes?? GE paid $2.7 billion in cash taxes alone in 2010. http://bit.ly/goMKB9