GE defends itself in U.S. tax flare-up
WASHINGTON (Reuters) - General Electric Co (GE.N) went on the defensive on Thursday over a report it paid no income taxes in 2010, unapologetically saying it seeks to reduce what it owes, but expects to pay more this year.
Chief Executive Jeff Immelt said people who assert the corporate tax controversy damages his credibility as head of a White House panel on job creation and economic competitiveness can "think what they think."
"I am completely committed to do a good job," Immelt told ABC News after addressing political and business leaders at the Washington Economic Club.
The New York Times reported last week that GE owed nothing in federal income taxes in 2010 despite earning $14 billion, about a third from its U.S. operations.
The company said, however, it expects to owe the government a small amount in 2010 when it files its return in September. GE also said it paid about $1 billion in other federal, state and local taxes.
The report has fueled criticism from some quarters, including labor groups, that GE and other corporations receive special treatment from the government while millions of Americans struggle in a tough economy.
It also led former Sen. Russ Feingold, a liberal Democrat still vocal on labor issues nationwide, to call on President Barack Obama to dump Immelt from the White House panel on job creation.
The White House fended off questions about whether Immelt should sit on the panel, saying the best way to address the matter is to change the tax code, which Immelt said was outdated and overly complex.
"The president has made clear that he believes we need to reform our corporate tax system," White House spokesman Jay Carney said on Thursday. "He believes that we can lower our corporate tax rate without diminishing revenues if we go after a lot of loopholes that exist, a lot of the complexity."
Immelt said GE, like other businesses, seeks low tax rates. But he stressed the company is fully compliant with federal regulations.
"There are no exceptions," he said.
Immelt said a small tax bill for 2010 was due to more than $30 billion in losses related to GE's financial services business during the financial crisis. In 2009, GE Capital's losses were so large that it company overall lost money on its U.S. operations.
GE's federal taxes, Immelt said, would rise as the performance of its financial arm improves.
Immelt said it was important that "everyone pay their fair share" and noted that GE had paid billions in federal, state and local taxes over the past several years.
Terry Madonna, a political scientist at Franklin and Marshall College in Lancaster, Pennsylvania, said part of the political backlash Immelt faces stems from the fact GE Capital received U.S. government debt guarantees during the financial crisis. It left the debt program in 2009.
On the tax issue, Madonna said the problem "seems to me to be inherent in the tax code."
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