While Congress is grappling with broad budgetary issues, General Electric managed to avoid paying any federal taxes even though the company made $14 billion in global profits.
President Obama's recent appointment of GE's Jeffrey Immelt to head the President's Council on Jobs and Competitiveness has received significant criticism, according to a report in The Hill, after it was revealed that General Electric did not pay a dollar in federal taxes in 2010.
General Electric reported worldwide profits of $14 billion and profits of $5 billion in the US market alone, The New York Times reported on Friday.
While the company's avoidance of US federal taxes represents a legal manipulation of corporate tax loop holes, the additional revelation that the company also received a tax benefit of $3.2 billion due to the financial failures of its GE Capital unit came at a particularly delicate time, as congressional lawmakers are looking at the very real prospect of a government shutdown over fiscal matters.
The Washington Post reported on Saturday that the odds of a government shutdown were considerable, as Congress cannot agree on many elements of the budget talks.
GE's creative accountancy is drawing attention to the White House's economic agenda, as GE has also cut jobs in the United States while investing in operations overseas. But the tax avoidance question at a time when the nation is cutting budgets to the marrow is a public relations challenge for the Obama administration.
The Hill reported that White House spokesman Jay Carney was asked “if in the name of competitiveness and job creation the president feels we have to address our corporate tax structure, why appoint to the head of the competitiveness and jobs council a person who is now the poster child for using the system to get out of paying taxes?”
And as more Americans are asked to pay more and to give up more, the GE income tax questions could echo through the 2012 election season.