It’s no surprise that the chairman of General Electric, Jeffrey Immelt, would use The Washington Post’s editorial page to defend himself and his company from an attack from Democratic presidential candidate Bernie Sanders, who told the New York Daily News editorial board this week that GE is a “good example” of a company that is “destroying the moral fabric of this country.”
What is stunning, though, is that supporters of presidential candidate Hillary Clinton would stand up for Immelt, in the face of GE’s record of tax avoidance under his leadership – including the company’s exodus in a huff from its corporate home in Connecticut, subsidized by Massachusetts taxpayers.
“GE has been in business for 124 years, and we’ve never been a big hit with socialists,” Immelt wrote snarkily. “We create wealth and jobs, instead of just calling for them in speeches.” He also wrote, “We pay billions in taxes, including federal, state and local taxes.”
Immelt’s op-ed was shared on social media by Austan Goolsbee, President Obama’s former chair of the Council of Economic Advisers and a leading critic of Sanders’ economic proposals, and other supporters of Clinton.
Sanders had argued that GE has shut down “many major plants in this country” and has been guilty of “sending jobs to low-wage countries.” He added that GE is “doing a very good job avoiding the taxes.”
Indeed, GE has been doing a very good job “avoiding the taxes.” How good? In 2014, GE earned $5.8 billion in profit in the United States. The top statutory corporate tax rate in the U.S. is 35 percent. The actual rate GE paid on its 2014 profits? 0.9 percent, according to Citizens for Tax Justice.
Over the long term, it gets even better for GE – and worse for the rest of us. From 2010 to 2014, GE earned $33.5 billion in profits and paid taxes at a rate of negative 4.3 percent. It didn’t simply pay no federal taxes; it got $1.4 billion out of the federal treasury.
It is the kind of tax gamesmanship that has proven to be a key factor in maintaining GE’s healthy stock price. That became clear, Institute for Policy Studies senior fellow Chuck Collins recently wrote, when in 2011 the group US Uncut helped pull off an April Fool’s Day prank that led to the Associated Press reporting that GE was swearing off hiding its profits in offshore tax havens to avoid taxes. In the hour between the release of that story and the discovery that it was a hoax, GE lost $3.5 billion in market capitalization.
The drama that GE has been in the center of regarding the relocation of its corporate headquarters is typical of the lengths GE will go to avoid paying taxes, but grab for the government benefits those taxes would pay for. The company announced in January that it was moving its longtime Connecticut headquarters to Massachusetts after Connecticut acted to close a loophole that allowed GE and other multistate companies to hide profits from one state in affiliates in other states. The state had also cut $350 million from its budget, with the programs being cut including early childhood programs, environmental conservation and medical services in prisons and jails, according to a news report, and had retreated from an earlier business tax increase. Nevertheless, it moved to Massachusetts, taking for itself a package of state and local tax giveaways totaling at least $150 million.
“We residents of Boston are getting a crash course in GE’s business model of getting other jurisdictions to pick up their tab,” Collins said in an email message to OurFuture.org. “GE extracted $151 million from Boston and Massachusetts in tax breaks in their move to Boston, plus a bunch of infrastructure improvements. I’m rather surprised the Hillary camp would defend GE in light of their decades of tax dodging.”
GE is not a company that was being overly burdened by state income taxes, either, according to Citizens for Tax Justice. Its average state tax bill from 2010 to 2014 was a measly 1.6 percent of total profits.
“We pay billions in taxes, including federal, state and local taxes”? According to what GE reports to the Securities and Exchange Commission and to its stockholders, that’s simply not true.
GE’s record on outsourcing has recently gotten less attention, but when Immelt was curiously selected by President Obama to serve as a “jobs czar” to help the administration’s push to revive American manufacturing, the Alliance for American Manufacturing’s director Scott Paul was among the people who pointed out in 2012 that “GE has also recently closed more than 20 factories, shifted avionics and radiology businesses to China, and pushed for public policies that will allow them to continue that course.” He added that GE reduced its number of manufacturing jobs from 125,000 in 2000 to 50,000 in 2010.
GE still makes some consumer appliances, locomotives and jet engines in the United States, although it recently announced that it would move one of its gas engine plants from Wisconsin to Canada when the renewal of the Export-Import Bank was held up by Republicans in Congress. That move will cost the state 350 jobs.
Aside from its mixed record on keeping manufacturing jobs in the United States, GE very much fits the mold of the corporation in which, in Sanders’ words, “the only damn thing you are concerned about is your profits.”
“To me, what moral is, I’ve got to be concerned about you,” Sanders said to the Daily News. It is how many corporations used to function, as institutions that cared about their employees and the communities – and ultimately the country – in which they operated. CEOs for the most part understood that part of the compact was to pay a fair share of their profit back to the community and country that enabled them to profit so handsomely, and be fair to the workers who were the bedrock of their success.
We are, of course, a long way away from those days and well into the era in which communities, states, countries – and workers – are entities to be pitted against each other in a ruthless quest for “shareholder value,” the euphemism the rich and powerful use for their greed.
“I think what corporate America has shown us in the last number of years, what Wall Street has shown us, the only thing that matters is their profits and their money. And the hell with the rest of the people of this country,” Sanders said. It’s a sweeping generalization, but it speaks to the rot at the very core of our economy. The last thing any presidential candidate who claims to be a progressive, or the followers of such a candidate, should be doing is defending the people whose actions perpetuate this immorality.