It was a popular story last month: General Electric, whose CEO Jeffrey Immelt serves as an adviser to President Obama, would not be paying any taxes for 2010. "None" was the exact word the Times used. And to add to the outrage, the Times also reported GE would be getting a $3.2 billion "tax benefit." Everyone from Fox, to NBC, to Jon Stewart's Daily Show (and The Blaze) covered it. But now, some are saying it's not true.
The Times, of course, made GE and its tax gamesmanship a national issue with its agenda-setting piece on March 25. (By the way, they beat us on the story; we'd been working on it for months.) Unfortunately, for all its good work, the Times story has created at least one major misperception -- that GE paid no U.S. income taxes last year and is actually getting a $3.2 billion refund from the Treasury.
The Times' own headline writers got that impression too. "GE Turns the Tax Man Away Empty-Handed," read the headline on early editions, including the Times' Washington edition, the version that politicians and the DC-based news media and commentariat see. "GE's Strategies Let It Avoid Taxes Altogether," was the original head on nytimes.com, the version the blogosphere reads.
Those headlines are based on the story's third paragraph, which discusses GE's 2010 financial results. "Its American tax bill? None. In fact, GE claimed a tax benefit of $3.2 billion." That seems to say that GE (GE) is getting a tax refund for 2010 -- but the words "tax benefit" are so ambiguous that it's not clear what they mean, and the article never explains them, or mentions them again.
By the time a revised (and accurate) headline got slapped on the later-edition print issues -- "At GE on Tax Day, Billions of Reasons to Smile" -- the idea that the Times was saying that GE paid no U.S. income taxes and was getting a big refund was firmly implanted.
Over at Hot Air, Ed Morrissey explains the new findings in layman's terms, and uses it to remind readers about the ridiculous tax code:
In fact, GE did not get a $3.2 billion refund. They also paid estimated taxes during the course of the year, as all companies do, and they’re pretty sure they’re not getting a refund, either. They will probably end up with a “small tax liability” for 2010, which means they have to write a check to the IRS on the 15th, like many Americans will do.
So how did the Times get the story so wrong? Well, thanks to a ludicrous American tax code, it’s extremely complicated to analyze any company’s tax liabilities even from the inside, let alone from the outside. The Times apparently got confused by a report showing a $3.2 billion “tax benefit” in 2010, which they mistook for an after-profit credit. The term actually refers to estimated pre-profit deductions and credits, which lower the eventual taxable income number on which GE gets billed by the IRS. It’s roughly analogous to mistaking personal itemized deductions on a tax return for a refund figure.