The New York Times has gotten a lot of attention for a story published a few days ago with claims that General Electric paid zero US federal taxes last year. Not only is that not true, but GE is facing a much bigger tax bill in 2011 because of the sale of a majority interest in NBCUniversal to Comcast.
One needs only to look as far as the company’s 10-K filed with the SEC to find that GE paid $2.7 billion in cash income taxes in 2010. It looks like the company is expecting a refund at some point, since its provision for income taxes in 2010 is just over $2 billion. For the previous four years that line had ranged from $2.5 billion to $3.4 billion.
That tax bill is going to skyrocket this year due to the closing of the NBCU sale. GE’s filing with the SEC says the tax liability this year for the NBCU transaction alone will be in excess of $3 billion.
The New York Times article claims that GE’s tax rate of 7.4% of US profits is about a third that of other multinational companies and that some of that 7.4% isn’t actually being paid because some of the profits are being parked overseas and will only face US taxation when the profits are actually brought back to headquarters. That still doesn’t explain how the Times determined that $2 billion-plus was equivalent to zero.