Federal Politics

Published — April 25, 2012 Updated — May 19, 2014 at 12:19 pm ET

FACT CHECK: Elizabeth Warren attacks GE’s controversial tax practices

Screen shot of the Elizabeth Warren for Senate ad titled "Kids Like Me."

Massachusetts Senate candidate makes sweeping, inaccurate statement about corporate tax loopholes

Introduction

Massachusetts Senate candidate Elizabeth Warren evoked corporate tax punching bag General Electric Co. in a recent ad, claiming the corporate giant pays “nothing — zero — in taxes” to make a point about misplaced values. But that’s not accurate.

We should preface this by saying that we are wading into a heated media debate about the amount of taxes paid by GE, and the most crucial number — the amount paid in corporate income tax — is unknown.

This much is certain: As the New York Times and others have well documented, GE has employed a number of aggressive (and legal) strategies that have greatly reduced the company’s corporate tax burden.

But the claim that it pays no federal income tax at all is disputed by GE. Moreover, aside from corporate income taxes, GE pays payroll taxes, state taxes and local taxes. So Warren’s blanket assertion that GE pays “nothing — zero — in taxes” is simply inaccurate.

Warren, a Democrat running against incumbent Republican Massachusetts Sen. Scott Brown, says in her ad, “Today, Washington lets big corporations like GE pay nothing — zero — in taxes, while kids are left drowning in debt to get an education. This isn’t about economics; it’s about our values.”

The claim about GE paying no taxes stems from a March 24, 2011, story in the New York Times headlined “GE’s Strategies Let It Avoid Taxes Altogether.” It was part of a 2012 Pulitzer Prize-winning series titled “But Nobody Pays That” by David Kocieniewski.

According to the New York Times story, GE reported U.S. profits of $5.1 billion in 2010 (and $14.2 billion worldwide). “Its American tax bill?” asked the Times. “None. In fact, G.E. claimed a tax benefit of $3.2 billion.” The company accomplished this, the story said, due to “an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore.”

On April 4, 2011, ProPublica and Fortune co-published their own analysis of GE’s taxes and concluded that the New York Times had left the mistaken impression that GE got a $3.2 billion tax refund, when, in fact, it did not. The company also paid U.S. income taxes in 2010, the authors wrote.

ProPublica/Fortune, April 4, 2011: Did GE pay U.S. income taxes in 2010? Yes, it paid estimated taxes for 2010, and also made payments for previous years. Think of it as your having paid withholding taxes on your salary in 2010, and sending the IRS a check on April 15, 2010, covering your balance owed for 2009.

GE chief spokesman Gary Sheffer told ProPublica: “We expect to have a small U.S. income tax liability for 2010.” How much? The company wouldn’t say.

We emailed one of the story’s authors, Jeff Gerth of ProPublica, a former investigative journalist with the New York Times, and asked him about Warren’s claim. Here’s what he wrote back:

Gerth, April 23: The fact is that GE’s tax returns are not public. The basis for the statement that they paid a small amount of taxes is the company’s official statements to the press. The basis for the NYT’s original report that they paid no taxes was a reading of their financial statements, which are not the same as their tax returns. I don’t know where Warren gets her facts from.

Andrew Williams, a spokesman for GE, told us via email that “there is a lot of misinformation out there about what we pay in taxes, but at the most basic level: we pay taxes and we did not get a refund.”

According to Williams, GE paid $1 billion in federal, state and local taxes in the U.S. for 2010. He declined to say how much of that was for federal income taxes, except to say that some of it was.

Williams also pointed to a company press release, from April 17, on taxes paid by GE. According to that release, GE paid an effective global tax rate of 7 percent in 2010, counting money paid “to the IRS and foreign counterparts” in other nations. That rate was particularly low, Williams said, because the company lost $32 billion in its financial business during the global financial crisis.

According to the company release, GE’s effective tax rate jumped to 29 percent in 2011. The company paid $2.9 billion in worldwide corporate income tax in 2011, and another $1 billion in other U.S. taxes that year, the release states.

We asked Williams how much of the $2.9 billion in worldwide corporate taxes was paid to the U.S. government, and how much the company paid in U.S. corporate income taxes in 2010. “Like virtually all other companies, we do not break out tax data on a country by country basis,” Williams said. “Instead, we disclose our worldwide payments and rates. However, we did pay federal income taxes.”

We’re not going to weigh in on Warren’s larger point about whether corporations like GE aren’t paying their fair share. That’s up to voters to decide. Again, the company has clearly been aggressive in reducing its tax burden through various tax credits and deductions created by the federal government (one example is clean energy incentives). It also has been creative in moving a good deal of its profits offshore. But Warren overreached with her claim that GE pays “zero” in taxes. The company does pay payroll taxes and local and state taxes. And GE says it also pays federal income taxes. How much? We don’t know, and GE isn’t saying. Nor is it required to.

– Robert Farley

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Mark Sullivan
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Mark Sullivan

Trump needs to conduct these activities because the entire MSM media, excluding Fox, is campaigning against him 24/7/365.

Didn’t Monica’s boyfriend’s wife and various criminal enterprises outspend Trump by almost 2-1?

CapitalistRoader
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CapitalistRoader

Why wouldn’t he get an early start on fund raising? Hillary outspent him two-to-one in 2016. The Dem’s are the party of big money. The President knows this and is attempting to get a jump on it. Of course the Dem candidate will outspend him in 2020 so it’s only rational that he starts fund raising now.

George Young
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George Young

Oh brother. We just 8 years of the Campaigner – in – Chief. Where was this journalistic rectal thermometer then. Just another article about 2000 words too long that merely takes another slap at Trump for something he far from initiated.

j stevenson
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j stevenson

The big difference between Trump and all the rest is his refusing to accept funds from lobbyists, so they don’t have the White House access they are used to. These are the donors who buy the presidency and are as pixxed off that he won the election as are the media and the Dems. Lobbyists have never been shut out of the WH and Trump has told them he is not for sale.

Anonymous
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Anonymous

Trump needs to be impeached and tossed in prison. Then have the key thrown away so he will never be free. Then he can see how it feels not to have freedom.

Mark Sullivan
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Mark Sullivan

Thank you for the usual insightful leftist low IQ Snowflake response.

barney
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hes not imprisoning them hes sending them back to their country chill tf out

SOUTH JERSEY
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SOUTH JERSEY

WHY DONT YOU HAVE FREEDOM?

Tom Larkin
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Tom Larkin

First, something positive. I was happy to learn of empirical information in article. BUT, the article was so slanted against President Trump as to be deemed fake news (“Perhaps Trump just lied.” (Two different issues)). The article mentions that President Trump raised over $67 million, but ended 2018 with $19 million. President Trump spent over $40 million 2016 and 2017. President Trump conducted 57 political rallies. The article notes the hats and T-shirts sold, but NEVER MENTIONS THE INCREASE IN THE NUMBER OF REPUBLICAN SENATORS during a mid-term election that lost the House and the number of political rallies in… Read more »

Ted Sirois
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Ted Sirois

At least Trump is getting donations from willing donors. Fresh from his first election, Obama used billions of our children’s tax dollars to save thousands of union jobs in the car industry and bailed out the banks and many Wall Street businesses. This secured his source of reelection funds for his reelection four years later.

South Jersey
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South Jersey

TRUMP 2020; IS AN AMAZINGLY SMART MAN! VERY ORIGINAL & CREATIVE. I AM HAPPY TO HAVE HIS AS POTUS.

SOUTH JERSEY
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SOUTH JERSEY

THIS ARTICLE WAS OBVIOUSLY WRITTEN BY, A TRUMP-HATE-GROUP. THAT FEELS; IT IS NOT NORMAL TO BE SUCCESSFUL WITH YOUR OWN BRAND NAME. WHEN, IF FACT, IT IS NORMAL! >>>>> THIS IS >>> FAKE NEWS!!! <<<< ie: A PACK-OF-LIES; SPUN INTO; DEFAMATION OF CHARACTER. FOR A SINISTER-AGENDA OF; FASCIST DEMOCRATIC SOCIALIST, COUP D'ETAT

David
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David

Are you on some kind of drugs? Writing in caps makes me think that you are grumpy old fart or a uneducated hillbilly.