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July 13th, 2011
From the Files of "Do As I Say, Not As I Do"

Should the CEO of GE, Jeffrey Immelt, be advising the president on business?

The top tax bracket for U.S. corporations stands at 35 percent, one of the highest rates in the world. So how is it possible that a giant of American business, General Electric, paid nothing in federal taxes last year, even as it made billions in profit?

For two years, President Obama has been talking about the need for corporate tax reform, declaring that the system is too complicated and that companies pay too much.

"Simplify, eliminate loopholes, treat everybody fairly," Obama said in February.

For those unaccustomed to the loopholes and shelters of the corporate tax code, GE's success at avoiding taxes is nothing short of extraordinary. The company, led by Immelt, earned $14.2 billion in profits in 2010, but it paid not a penny in taxes because the bulk of those profits, some $9 billion, were offshore. In fact, GE got a $3.2 billion tax benefit.

In a statement, General Electric said that it "pays what it owes under the law and is scrupulous about its compliance with tax obligations in all jurisdictions." The company claims that its zero-dollar tax bill is largely a result of losses at its financial arm, GE Capital, due to the Wall Street meltdown.

When President Obama announced his decision to appoint Immelt to the unpaid advisory role on job creation in January, some critics wondered whether the move was appropriate. Under his leadership, GE laid off 21,000 American workers and closed 20 factories between 2007 and 2009. More than half of GE's workforce is now outside the United States.

Now, The head of General Electric told a jobs summit at the U.S. Chamber of Commerce Monday that businesses needed to take the lead on job creation.

At a conference where many of the comments were focused on government barriers to hiring, GE (GE, Fortune 500) Chairman and CEO Jeffrey Immelt acknowledged there needed to be some policy changes by Congress and the Obama administration. But he said that the responsibility for hiring lay with businesses.

"The people who are part of the business sector, the people in this room, have got to stop complaining about government and get some action underway," he told the group. "There's no excuse today for lack of leadership. The truth is we all need to be part of the solution." 


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