GE Becomes Boston’s Leading Abuser of Offshore Tax Havens
General Electric announced plans Wednesday to move its headquarters from Connecticut to Boston’s Seaport District, a move that would seem to validate decades of work on both the city and state level to make Massachusetts a destination for business leaders.
“Greater Boston is home to 55 colleges and universities. Massachusetts spends more on research and development than any other region in the world, and Boston attracts a diverse, technologically-fluent workforce focused on solving challenges for the world,” GE chairman and CEO Jeff Immelt said in a statement. “We are excited to bring our headquarters to this dynamic and creative city.”
If only they would bring their tax dollars, too.
GE isn’t exactly a shining model of corporate conduct. The company is one of most notorious abusers of offshore tax havens, with $119 billion stashed away across 18 overseas locations as of 2015. Democratic presidential hopeful Sen. Bernie Sanders once named GE the nation’s top corporate tax avoider.
From 2002 to 2011, GE eliminated a fifth of its U.S. workforce while its offshore profits multiplied sixfold to $92 billion. In four years during this time, GE paid no federal income tax, yet received subsidies from the federal government. From a 2011 New York Times story, titled “G.E.’s Strategies Let It Avoid Taxes Altogether“:
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.
And from the Times editorial board in 2013:
And, of course, there is General Electric, which achieved a perfect zero on its United States tax bill in 2010. In fact, G.E. was reputed to have the world’s best tax avoidance department until Apple came along with tactics to stash some $100 billion in Ireland without paying taxes on much of it anywhere in the world and, apparently, without breaking any law.
Keep in mind, GE’s tax-dodging is hardly limited to the nifty offshore variety. A 2012 story in the Times noted that GE was one of the thousands of businesses that have a dropbox in a nondescript office building in Wilmington, Delaware—”in some ways the biggest corporate haven of all.”
Though Immelt lauded Boston’s colleges and universities, researchers at MIT published a paper in October demonstrating how artificial intelligence and algorithms could be used to sniff out precisely the kind of tax havens GE currently enjoys.
Of course, GE isn’t making the move to Boston without a little cajoling. The company is expected to receive $145 million in state and city tax incentives for the 800 “high-paying” jobs it will create. In addition, Gov. Charlie Baker and Mayor Marty Walsh said in a joint statement that “assistance for eligible employees looking to buy homes in Boston” would be provided.
Surely they could find someone in this city whose needs are just a smidge more pressing, no?
Update: Wednesday, 3:55 p.m.
A spokesperson for the Mayor’s Office says the assistance mentioned in the joint statement is “an existing home buying program with the city.” More details can be found here.