General Electric’s tax department is famous for inventing ways to pay Uncle Sam less. So it should come as no surprise that its CEO, Jeff Immelt, is in the crosshairs as the new chairman of the President’s Council on Jobs and Competitiveness.
The job puts him in the limelight as Washington debates ways to make the tax system fairer, respond to competition from low tax countries and cut the federal deficit — competing imperatives sure to confound reform efforts. If the debate does get serious, attention is likely to focus on whether to get rid of some of the special tax advantages that benefit GE and other multinational companies.
Still, GE is in a class by itself. Here are five ways the company pares its tax rate well below the top U.S. corporate rate of 35 percent — sometimes into the single digits.
Strategy No. 1: The Tax Department as Profit Center
GE’s tax department is well known for its size, skill and hiring of former government officials. About 20 years ago, GE’s tax employees totaled a few hundred and were decentralized. Today, there are almost 1,000. The department’s strong suit? Reducing the taxes GE reports for earnings purposes.