General Electric Company
3135 Easton Turnpike
Fairfield, CT 06828-0001
Jeffrey R. Immelt, 48, is Chairman of the Board and Chief Executive Officer of GE. Mr. Immelt, the 9th Chairman in GE's 126-year history, was appointed to this post on September 7, 2001. Previously, Mr. Immelt served as President and Chairman-elect of GE from November 2000, when GE's Board of Directors selected him to succeed John F. Welch. From 1997 to 2000, Mr. Immelt had been President and CEO of GE Medical Systems, which is today a $12 billion leader in the healthcare industry.
He began his GE career in 1982. Over the last 22 years, Mr. Immelt has held a series of global leadership roles in GE's Plastics, Appliance, and Medical businesses. He became an Officer of GE in 1989, and joined the GE Capital Board in 1997. http://www.ge.com/en/company/companyinfo/executivebios/eb_immelt.htm
General Electric Seeking Law to End U.S. Tax on Overseas Income
Bloomberg.com ^ | July 12, 2004 | Ryan Donmoyer
Posted on 07/12/2004 5:19:58 AM PDT by MikeJ75
July 12 (Bloomberg) -- Since 1999, General Electric Co. deferred U.S. taxes on as much as $21 billion in income earned overseas. Congress is now considering changing the law so the company may never have to pay those taxes.
General Electric, which spends more on lobbying than any other U.S. company, has pressed lawmakers for two years for the relief, led by its vice president of taxes, John Samuels. The House of Representatives approved the measure last month as part of a broad tax bill; the Senate excluded the provision in its version. House and Senate negotiators this month will begin negotiating a compromise.
The provision would allow General Electric, the world's largest company by market value, to bring home income it earns in nations such as Ireland and Singapore without being taxed again in the U.S. Those countries' corporate tax rates are as low as 10 percent compared to 35 percent in the U.S. Fairfield, Connecticut- based General Electric gets about 45 percent of total revenue from abroad.
``Anything that cuts their taxes increases their after-tax return on investment, wherever it is in the world they are applying those breaks,'' said Brian James, an analyst at Loomis Sayles in Boston, which owns more than 4.3 million General Electric shares. ``It's pure math: The lower the tax rate, the higher the profits on invested capital.''
$4 Billion Sanctions
The House, under pressure to overhaul the tax code, approved the bill 251-178 on June 17. The World Trade Organization ruled that a clause in the code that provides tax credits to exporters was an unfair subsidy, and Congress is trying to head off $4 billion in annual sanctions that the European Union is imposing to retaliate.
The Capitol Hill negotiations are part of a wider debate in the presidential campaign, where tax policy and jobs are central issues. President George W. Bush backs the House bill, including the provision sought by General Electric. Bush has argued that relaxing international tax rules will make U.S. companies more competitive and create higher-paying jobs at home.
Senator John Kerry, the Democratic candidate, proposed ending most forms of tax deferral on the foreign profits of U.S. companies, including financial services taxed at low rates in other countries.
Much of the $21 billion in income that General Electric is deferring from taxes has been generated by its financial services operations in other countries, a move allowed by Congress in 1998.
Lock In Savings
The company, which gained about $200 million a year from the export subsidies that the WTO struck down according to a General Accounting Office estimate, would likely benefit even more from the proposed legislation. That's because General Electric could lock in savings it has generated by basing some of its financial services businesses in low-tax countries.
Backed by Representative Bill Thomas, chairman of the tax- writing Ways and Means Committee, the company stands a good chance of having the measure survive the House-Senate negotiations, said Louisiana Representative Jim McCrery, who heads the subcommittee on select revenue measures. If enacted, the provision would reduce the amount of revenue collected by the government by $7.8 billion over the next 10 years, according to the congressional Joint Committee on Taxation.
The provision would increase the value of credits the U.S. offers to companies that pay taxes to other governments for income earned overseas from manufacturing or financial services. The more valuable credits would lower their U.S. tax liability, encouraging the companies to invest some of the money in this country, Thomas and McCrery say.
``The provision provides the largest benefit to multinationals that have both large manufacturing offshore and large financing activities offshore,'' said John Buckley, chief tax counsel for the Democratic staff of the Ways and Means Committee.
Samuels didn't return phone calls seeking comment on his lobbying. General Electric spokesman David Frail declined to comment on a specific bill, saying, ``We support legislation that will preserve the ability of U.S. exporters to compete globally, and thereby preserve American jobs.''
Allowing companies to defer U.S. taxes on their international financial services income has been debated since 1997, when former President Bill Clinton vetoed the provision, using authority the Supreme Court later ruled unconstitutional. Clinton said the deferral, restored by Congress a year later, aided only a limited number of companies such as General Electric, Citigroup Inc. and American International Group Inc.
This year, Kerry, a four-term senator from Massachusetts, says he wants to end tax breaks for companies that operate overseas and use the $12 billion annual savings to reduce the overall U.S. corporate tax rate to 33.25 percent.
Kerry, who didn't cast a vote when the Senate approved its version of the legislation on May 11, would allow companies to pay their deferred taxes to the U.S. at a rate of 10 percent for one year. After that, they would pay U.S. taxes on all profits, no matter where they are earned.
``Money made by American businesses overseas should be taxed at the same rate as money made by businesses here,'' Kerry said March 26, when he outlined his proposal in Detroit.
Bush's Treasury Department urged Congress last July to adopt the changes sought by General Electric in testimony before the Senate Finance Committee. The administration says Kerry's proposal is tantamount to a tax increase on multinational corporations and will cost jobs.
``Imposing an immediate U.S. tax on companies operating overseas would be a serious blow to U.S. corporations seeking to compete in the global marketplace,'' said Treasury spokeswoman Tara Bradshaw. She called it ``a self-inflicted wound to our economy.''
160,000 U.S. Jobs
General Electric has maintained employment of about 160,000 in the U.S. during the past decade. The number of jobs outside the U.S. rose from about 60,000 in 1993 to almost 150,000 at the end of 2003. The company, which operates in more than 100 countries, says it must branch into new markets overseas to keep revenue and profit rising.
Representative Charles Rangel of New York, the top Democrat on the Ways and Means Committee, said the measure being sought by General Electric and other companies would provide U.S. corporations incentive to move business out of the U.S.
``The bill says it creates jobs but it contains provisions to make sure the jobs are anywhere but America,'' Rangel said in an e-mail. ``I'm not against corporate tax cuts, but you better believe I want U.S. tax cuts to mean more jobs for U.S. workers.''
Senate Finance Committee Chairman Charles Grassley said the House proposal may derail bipartisan support for the bill in the Senate. ``It's very tough to get just about any bill, especially a business tax bill, out of the Senate these days, and consensus is critical to doing so,'' Grassley said in an e-mail response. ``This bill is very important, and it has to pass.''
The broader tax bill would replace export breaks with a discounted rate on manufacturing profits for companies such as Boeing Co., Microsoft Corp. and Caterpillar Inc., the export credit's biggest beneficiaries.
The legislation also helps companies such as Procter & Gamble Co., Hewlett-Packard Co. and Eli Lilly & Co. by encouraging expansion overseas through tax incentives. That includes changing the way companies allocate interest and a one- time tax holiday for companies to import foreign profits at a discounted rate of 5.25 percent.
Since the debate began two years ago in Congress, General Electric has increased its spending on lobbying. The company last year spent $17.2 million on political contributions and lobbying, according to PoliticalMoneyline, a nonpartisan company that tracks lobbying. That included almost $200,000 in contributions to members of the House Ways and Means and the Financial Services committees.
Samuels made PowerPoint presentations to lawmakers in meetings of the House Policy Committee, moderated conferences sponsored by research groups such as the American Enterprise Institute, and led an association of 36 multinational corporations urging changes to the way the U.S. taxes foreign profits.
More Business Overseas
``GE has been very active,'' said McCrery.
The company is doing an increasing amount of business overseas. About $60.8 billion, or 45 percent, of its $134 billion in sales came from outside the U.S. last year, including $6.7 billion in exports. Revenue from abroad rose 14 percent last year, including $27.8 billion from finance units, formerly called GE Capital.
The company said it expects $5 billion in revenue from China in 2005, up from an estimated $3.6 billion this year. In 2003, $30.5 billion in sales came from Europe, up from $24.8 billion in 2001.
The company is the world's biggest provider of jet engines, turbines for power plants, locomotives and medical-imaging equipment. It's also the biggest aircraft lessor and private label credit-card issuer.
It has taken advantage of growing profit outside the U.S. to reduce its overall tax rate, records show. In 2003, General Electric's consolidated, effective tax rate was 21.7 percent, lowered by 9 percentage points because of international operations, including low-taxed financial services.
Few other companies are in a position to benefit as much as General Electric, even those with both financing and manufacturing operations.
Ford Motor Co., which earns money from loans and selling cars, has lost money in two of the last five years and has only $870 million in foreign profits that have never been taxed by the U.S. Rival General Motors Corp., which also has profitable financial services operations, has more tax-deferred income offshore -- $11.6 billion -- but hasn't reduced its tax rate through low-taxed foreign operations.
Caterpillar Inc., which has manufacturing and financing operations, opposes the House legislation because it gets a bigger benefit relative to net income from the export subsidy being repealed than does General Electric.
In cases where companies such as General Electric have based financing businesses in low-tax countries, they don't generate enough foreign tax credits to wipe out any residual U.S. liability. As a result, they keep that money overseas. From 2002 to 2003, General Electric increased its tax-deferred ``permanently reinvested'' income overseas by $6 billion to $21 billion, the second biggest increase of any U.S. corporation, behind Pfizer Inc., the world's biggest drugmaker.
Overall, the accrued $21 billion General Electric has deferred ranks third among U.S. companies, behind Pfizer's accrued $38 billion and Exxon Mobil Corp., with $22 billion.
The provision in the House bill would unlock that income for General Electric.
Unlike other financial-services firms that operate exclusively in the banking, insurance, and securities sectors, General Electric earns profits from its manufacturing activities, which are often taxed at high rates in places like Europe and Canada.
U.S. Bears The Cost
In 1986, Congress designated various categories of income, called ``baskets'' and said foreign tax credits accrued in one basket, such as highly taxed manufacturing income, cannot be used to wipe out U.S. liability on income in another income category, such as lower-taxed financial services income. There are other baskets for investment income and foreign oil and gas profits.
The House-passed tax bill would eliminate these barriers, allowing General Electric to blend foreign tax credits from two pools of foreign profits to get the lowest net U.S. tax rate, lawmakers such as Wisconsin Representative Paul Ryan said.
Critics such as Buckley said allowing companies to blend their tax credits essentially forces the U.S. to subsidize taxes they pay to other governments.
``The U.S. government, not the company, bears the cost of foreign taxes above our rates,'' he said.
Former New Jersey Senator Bill Bradley is a Democrat who championed the 1986 legislation that put the restrictions in place that General Electric is now lobbying to abolish.
Interviewed at a Sun Valley, Idaho retreat sponsored by his firm, Allen & Co., Bradley said Congress is abandoning the principles that allowed it to curtail special interest provisions in the tax code in exchange for lower tax rates overall.
``What we did in '86 has been dismantled over the past 18 years,'' said Bradley, who unsuccessfully challenged former Vice President Al Gore for the Democratic presidential nomination in 2000. "It's become fashionable to insert tax loopholes for social and quasi-economic purposes, for political purposes." http://www.freerepublic.com/focus/f-news/1169637/posts
NBC Universal (80%-owned by GE, 20% controlled by Vivendi Universal)
- WNBC - New York
- KNBC - Los Angeles
- WMAQ - Chicago
- WCAU - Philadelphia
- KNTV - San Jose/San Francisco
- KXAS - Dallas/Fort Worth
- WRC - Washington
- WTVJ - Miami
- KNSD - San Diego
- WVIT - Hartford
- WNCN - Raleigh
- WCMH - Columbus
- WVTM - Birmingham
- WJAR - Providence
- KVEA/KWHY - Los Angeles
- WNJU - New York
- WSCV - Miami
- KTMD - Houston
- WSNS - Chicago
- KXTX - Dallas/Fort Worth
- KVDA - San Antonio
- KSTS - San Jose/San Francisco
- KDRX - Phoenix
- KNSO - Fresno
- KMAS - Denver
- WNEU - Boston/Merrimack
- KHRR - Tucson
- WKAQ - Puerto Rico
NBC Universal Television Studio
NBC Universal Television Distribution
- Universal Pictures
- Universal Parks & Resorts
- Paxson Communications (30%)
Other General Electric Businesses
- GE Aircraft Engines
- GE Commercial Finance
- GE Consumer Products
- GE Industrial Systems
- GE Insurance
- GE Medical Systems
- GE Plastics
- GE Power Systems
- GE Specialty Materials
- GE Transportation Systems
1878 - Thomas Edison forms Edison Electric Light Company
1892 - Edison General Electric Company merges with Thomson-Houston Electric Company to create General Electric Company
1897 - Wireless Telegraph and Signal Company formed by Guglielmo Marconi
1901 - Emile Berliner and Eldridge Johnson form the Victor Talking Machine Company
1906 - David Sarnoff begins working at American Marconi
1917 - U.S. Government begins using GE produced aircraft engines
1919 - Radio Corporation of America (RCA) is created. RCA is formed after the U.S. Government gives control of the wireless industry back to the public sector following World War I. RCA gains the assets of American Marconi and becomes the controlling body of the patents belonging to General Electric, Westinghouse, United Fruit and AT&T
1926 - National Broadcasting Corporation (NBC) formed. Sarnoff sees the potential of a nationwide network of radio stations and gets RCA, GE and Westinghouse to invest in the acquisition of WEAF in New York City and WJZ in Newark - NBC's "Red" and "Blue" networks respectively -as the flagship stations for the new NBC Radio network
1927 - NBC Radio broadcasts the Rose Bowl to nationwide audience
1929 - RCA purchases Victor Talking Machine Company of Camden, NJ for $154 million and begins manufacturing radios and phonographs
1932 - Due to concerns of a growing monopoly, GE and Westinghouse sell off stake in RCA
1939 - NBC introduces television broadcasting at the World's Fair in New York City
1941 - Federal Communications Commission releases its Report on Chain Broadcasting. The report is critical of the growth of broadcast networks and proposes that NBC sell off one of its two networks - NBC Red & NBC Blue
1941 - NBC receives first license for a commercial television station
1943 - After losing court battles with the FCC over the demand to divest one off its networks, RCA sells of NBC Blue Network to Edward Noble, lifesavers candy creator. Network eventually becomes ABC
1954 - NBC has first color telecast of Rose Bowl parade. Very few people actually see the telecast because there are not that many color sets in use
1966 - RCA purchases Random House
1973 - RCA purchases Ballantine Books - becomes part of Random House
1980 - RCA sells of Random House to S. I. Newhouse's Advance Publications
1985 - GE acquires NBC as part of a $6.3 billion for RCA
1986 - - GE sells RCA's music division to Bertelsmann
1989 - CNBC is formed
1996 - MSNBC is launched. Cable news network is a joint partnership between GE and Microsoft
1997 - CNBC Asia and Europe are formed.
1999 - GE gains 32% stake in Paxson Communications and its PAX TV network
2000 - Present
2002 - Telemundo Communications Group is acquired for $2.7 billion in a deal with an investment group that includes Sony and Liberty Media. In a separate deal, Bravo Network is acquired from a deal with Cablevision and MGM for $1.25 billion
2003 - Deal announced between GE and Vivendi Universal to create NBC Universal. In the deal, GE acquires Vivendi Universal's entertainment holdings which include theme parks and Universal Pictures' movie and television studios, and three cable channels (NYT 10/9/03)
THE MEDIA COVER-UP OF THE GORE VICTORY
PART FOUR: DEMOCRACY, GENERAL ELECTRIC STYLE
Major Media Control
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