General Electric Co. Chief Executive Officer Jeffrey Immelt said he’s happy to defend the company as it faces scrutiny of its tax rate and policies.
“GE has taken criticism lately over our tax rate over the past two years,” Immelt said in a speech today at the Economic Club of Washington. “Like any American, we do like to keep our tax rate low. But we do it in a compliant way, and there are no exceptions.”
Immelt, who is also chairman of GE, commented on the issue for the second time in 24 hours following a March 24 report in the New York Times that GE had a tax bill of zero in 2010, an assertion the company called misleading on its GE Reports website.
GE, based in Fairfield, Connecticut, is the world’s largest maker of jet engines, turbines for power plants, medical imaging equipment and locomotives. Its GE Capital division includes credit cards, lending to midsize companies and airplane leasing.
The tax rate for GE will rise this year and beyond after $32 billion of losses absorbed by the company’s financial-services business pushed down rates in 2008 and 2009, Immelt said yesterday at a speech at Rice University in Houston. He repeated today that GE will pay more taxes in the future.
‘Higher in 2011’
“Our tax rate will be much higher in 2011 as GE Capital recovers,” he said.
The complexity of the current U.S. federal tax system needs to change because it is hampering competitiveness and the ability to promote job creation, he said.
The system “is old, complex and uncompetitive,” Immelt said. “Like most of our business colleagues, GE favors closing tax loopholes, a lower corporate rate and a territorial system.”
Honeywell International Inc. Chief Executive David Cote said while higher taxes are necessary to cut the U.S. budget deficit, he also favors a zero percent corporate tax rate. He knows that’s out of the question for the American public, he said in a Bloomberg television interview scheduled to air this weekend.
Cote said he would like to see the lowest rate possible on companies, with loopholes stricken from the tax code.
“I would say you need to eliminate all deductions, because all deductions, whether you do them for individuals or you do them for companies, are market distortions,” Cote said in the TV interview.
Immelt said today that people “have a right to write” news stories on tax issues.
“I don’t fault this type of reporting,” he said. “It is what it is.”
“We are happy to defend ourselves. You can’t do a job like this unless you have a thick skin,” Immelt said.
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