G.E. Claims $3.2 Billion In Tax Benefits Instead of Paying Taxes

General Electric should give their accountants salary raises. And big, fat bonuses.

At year-end 2010, G.E. reported $14.2 billion in annual worldwide profits ($5.1 billion domestic profit), the company paid nothing to Uncle Sam. On top of that, G.E. claimed $3.2 billion in tax benefits. The New York Times had an interesting evaluation of the situation:

Its extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore. G.E.’s giant tax department, led by a bow-tied former Treasury official named John Samuels, is often referred to as the world’s best tax law firm. Indeed, the company’s slogan “Imagination at Work” fits this department well. The team includes former officials not just from the Treasury, but also from the I.R.S. and virtually all the tax-writing committees in Congress.

For those that are interested in the detailed accounting works performed by G.E., depreciation and leasing are two major areas where most tax benefits were achieved.

Over the last decade, G.E. has spent tens of millions of dollars to push for changes in tax law, from more generous depreciation schedules on jet engines to “green energy” credits for its wind turbines. But the most lucrative of these measures allows G.E. to operate a vast leasing and lending business abroad with profits that face little foreign taxes and no American taxes as long as the money remains overseas.