U.S. corporation General Electric (GE) paid just 2.3 percent in federal taxes over the last 10 years, even as it reaped more than $81 billion in profits over that same period, according to an analysis of the company’s most recent tax filings.
Nonpartisan watchdog group Citizens for Tax Justice said the company’s latest filing with the Securities and Exchange Commission (SEC) reveals that it massively avoided the official U.S. corporate tax rate of 35 percent by using deductions and loopholes in the tax code, allowing them to reap benefits from taxpayers during years when its profits were down.
GE came under fire last year after its 2010 tax return showed that it paid nothing on $14.2 billion in profits, and actually took in $3.2 billion in refunds from the government. In the wake of reports about GE’s finances in 2010, some of President Barack Obama’s Democratic allies called for GE CEO Jeff Immelt to quit his post leading the president’s council on jobs.
Citizens for Tax Justice said Tuesday that GE paid a tax rate of just 11.3 percent on $14.8 billion in profits for 2011 (PDF), although the company claimed its U.S. rate was closer to 25 percent. The group also said that GE actually had a “negative” tax balance from 2006 through 2011, taking back $2.7 billion from taxpayers despite $39.2 billion “in pretax U.S. profits.”
“I don’t think most Americans would consider 11.3 percent, not to mention GE’s long-term effective rate of 2.3 percent, to be ‘normal,” Bob McIntyre, the group’s director, opined in a media advisory. “But for GE, taxes are something to be avoided rather than paid.”
The company suggested that claims of how much tax it avoided are inflated due to foreign earnings are often beyond the long gaze of the U.S. Internal Revenue Service (IRS).
President Obama has proposed taxing foreign earnings and closing many corporate tax loopholes, while simultaneously lowering the U.S. corporate tax rate to 28 percent. The current rate of 35 percent is nearly the lowest the U.S. has seen since the start of World War II. Taxes on the top earning individuals, similarly, are at historic lows, and at least 25 major U.S. corporations paid more to their executives than to tax collectors in 2010.
Billionaire investor Warrenn Buffett, who’s advocated for President Obama’s tax plans, said in a Wall Street Journal op-ed published Monday that there is no such thing as high corporate taxes in the U.S.
“The corporate taxes as a percentage of GDP were 1.2 percent, $180 billion,” he wrote. “That’s just about the lowest we’ve seen. So our corporate tax rate last year, effectively, in terms of taxes paid for the United States, was around 12 percent, which is well below those existing in most of the industrialized countries around the world.”
Polling late last year found that eight in 10 voters, including a majority of Republicans, favor raising taxes on the wealthiest Americans. Despite this, the U.S. corporate tax rate of 35 percent is among the world’s highest, second only to Japan.