TIMOTHY NOAH SEPTEMBER 14, 2011
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Elizabeth Warren's video announcement that she'll seek the Democratic nomination for Senate demonstrates her soft-spoken sincerity, unflappability, and quiet conviction that the middle class desperately needs help. I've seen this woman hold her own in one of the more hostile congressional hearings I ever witnessed. She's going to be a very formidable candidate, and every wealthy Democrat in the country is going to want to contribute to her campaign.
In making her pitch, Warren plunged herself into a headache-inducing factual controversy. "A big company like GE pays nothing in taxes," Warren said, "and we're asking college students to take on even more debt to get an education?" Warren's source that GE paid no taxes (by which she meant income taxes) was a March 24 New York Times story by David Kocieniewski ("GE's Strategies Let It Avoid Taxation Altogether"). But an April 4 Fortune piece by Allan Sloan in collaboration with Jeff Gerth, a former Times man who now works for ProPublica, said that GE actually did pay income taxes for 2010, and will do so again for 2011. It just wouldn't pay very much. "We're certainly not siding with GE," wrote Sloan and Gerth, "which for decades has been an aggressive tax-minimizer."
The Times stood by its story, though its op-ed columnist Joe Nocera hedged his bets, citing both the Times piece and the Fortune piece and concluding, "Whatever. The point remains that the company is going to pay little or nothing in federal income taxes for 2010." (Before he came to the Times Nocera worked for many years at Fortune.) Meanwhile, Henry Blodget of Business Insider tried and failed to get a straight answer from GE. He concluded, initially, that "it is not fair to say that GE's 2010 U.S. tax bill was 'none,'" but subsequently he decided that maybe it was fair, at least with respect to income taxes, because GE spokesperson Anne Eisele told Agence France Presse, "GE did not pay U.S. federal taxes last year because we did not owe any." But on the very same day, Eisele wrote Blodget, "GE did pay almost $2.7 billion in cash income taxes in 2010 on a consolidated basis (almost 19% of pretax income from continuing operations) globally, including significant U.S. federal income tax payments." These two statements appear to contradict one another, but she might have been saying that GE paid no taxes for 2009 and some taxes for 2010.
Blogger Paul Caron, a law professor at the University of Cincinnati, provided a link to GE's Form 10-K that he said demonstrated GE did not, in fact, pay income tax in 2010 (though he was full of tax-nerd contempt for the Times piece). Forbes said GE in 2010 paid $1.05 billion in income taxes. One year before the same reporter said GE paid no taxes at all in 2009. So maybe GE did pay taxes in 2009 but didn't pay taxes in 2010. But that would contradict Caron. The NBC Nightly News said that GE's taxes were "unusually low" for both years, which would suggest they weren't zero, but the fact that NBC is owned by GE makes it hard to know what to make of that assertion. (The Nightly News waited several days after the Times piece appeared before deciding to cover the story.)
A safe conclusion, I think, would be that there was at least one recent year--maybe 2009, maybe 2009 and 2010--in which GE did not pay any income tax. Probably when you work as hard as GE to avoid paying taxes altogether the definition of whether you pay income tax in any given year becomes subject to interpretation. Bottom line is that the Pulitzer committee should feel free to Kocieniewski a prize for his excellent piece, and that Warren is fully justified in saying "GE pays nothing in taxes," because she never said what year she was talking about.
17 comments
http://www.reuters.com/article/2008/08/12/us-usa-taxes-corporations-idUSN1249465620080812 "The Government Accountability Office said 72 percent of all foreign corporations and about 57 percent of U.S. companies doing business in the United States paid no federal income taxes for at least one year between 1998 and 2005."
- IggyPop
September 14, 2011 at 5:50pm
Why get into a debate about whether GE paid any US income taxes. That's not relevant (in a political sense). What's relevant is the taxes paid by hard-working middle class Americans, taxes that are entirely disproportionate to their earnings when compared to America's most profitable companies, companies that have been transferring jobs overseas while avoiding their fair share of US taxes. Warren may be Harvard smart, but she is dumb as a brick (my little Harvard bashing in TNR's Harvard bashing zone).
- rayward
September 14, 2011 at 6:01pm
Um, ray, Elizabeth Warren is a teeny bit smarter than you are. It would be incredibly amusing to watch you run a a campaign against Scott Brown.
- liberalref
September 14, 2011 at 7:22pm
GE hasn't owned NBC since January of this year.
- cbayers
September 14, 2011 at 7:32pm
Jeffrey Immelt, the chairman of GE, currently serves as chairman of the President's Council on Jobs and Competitiveness. He replaced some obstreperous old man named Paul Volker. That tells you something about the Obama administration.
- amidut
September 14, 2011 at 7:38pm
"Warren may be Harvard smart, but she is dumb as a brick (my little Harvard bashing in TNR's Harvard bashing zone)." I don't quite get what you're saying, rayward -- surely one way of making it relevant (in a political sense) is to stack up the GE record against the taxes dutifully paid by middle-class Americans who can't afford a regiment of tax avoidance attorneys. So are you saying that corporation tax is in and of itself an issue that only dumb politicians address, because people simply don't care? Or they take the side of GE? Interestingly, I find Warren's comment refreshing in that it draws (politically) very usefully on Romney's "Corporations are people too" declaration, and makes one ask, well, if they are people, why aren't they behaving like responsible Americans?
- ironyroad
September 14, 2011 at 8:40pm
I think, Irony, that Ray may be in despair over the typical Democratic pointy-headed, smarty pants, politically tone deaf approach to making her pitch. She needs to say something like "big banks are ripping you off to the tune of 500 buck a year per family and I'm going ot stop it. Now." We Dems just can't do that sort of thing to save our lives. Refering to NY times articles, Pro Publica, Joe Nocera - sigh. We just don't get it. Americans don't care if GE pays taxes or not. It's too distant, too visceral, too Harvard, NY Times, blah blah. Think WORK HARD PLAY BY THE RULES, etc. What would Bill Clinton say?
- WandreyCer
September 14, 2011 at 9:29pm
Nocera seems to "hedge his bets" a lot these days. His latest NYT columns have been especially sad as he retreats into a fantasy world where both parties are "extreme" and we as a nation need only listen to "moderate" wisdom of the very rich man who runs Starbucks. Nocera also got into the Krugman/Brooks dust-up when Krugman violated standard Times manners to point out - repeatedly - that David Brooks had no idea what he was talking and had thus disgraced himself in his glowing appraisal of the, in fact, horrific Ryan plan. Nocera was for playing nice and not letting facts or knowledge get in they way of manners and fantasy. Nocera has become yet another classic e.g. of a columnist who refused to acknowledge that the GOP has gone bonkers. His advice of late: let's all just be "moderate" and defer to his wealthier sources for guidance!
- mtinora@me.com
September 14, 2011 at 9:50pm
I have seen Warren on TV (e.g. Jon Stewart) and she was anything but tone deaf. She was folksy and intellectual and punchy, all in a compelling balance -- it's early days yet. I think she may lose -- but if she plays to her strengths I think she will have Brown waking up in the night shivering.
- ironyroad
September 14, 2011 at 9:57pm
Almost certainly in 2009 GE lost money on their US operations. A complete collapse of demand and high fixed costs, little to no investment returns, and most likely Government assistance. GE Probably lost billions. I haven't looked to see what they reported for income in their annual report. But I do know they cut their dividend in addition to other cost savings actions like job cuts. When a company is reporting losses, it should be logical that they don't pay rtaxes. When you lose money, you lose money. Their is no profit to share with the government in the form of taxes. And really, shouldn't the government share in those loses? Doesn't anybody think it's ironic that GM & Chrysler paid taxes in 2009? OK the government gave them Billions, and they paid millions in taxes. Gee thanks for giving us some of our money back. Will we see the rest? What Elizabeth Warren fails to understand is that business has risk that government does not share with them. GE pays billions in many different taxes and passes that along to us. Asking GE to pay more in Income Taxes because she needs the money just means we pay more for our products. But Warren's point isn't about fairness, taxes or corporate responsibility. She wants more money to spread around. Most people understand the recession cut into tax revenue. GE is similar to many other companies and attacking them for their perfomrance in 2009 & 2010 misses the point.
- CRS9TNR
September 15, 2011 at 6:55am
Totally agreed Irony - she needs to get away from the consultants and just be herself.
- WandreyCer
September 15, 2011 at 7:35am
GE's 2009-2010 taxes may be provocative, but they are a tiny capillary in a campaign that needs to go for the jugular. Brown makes a few token moderate gestures and has an ingratiating persona, but Warren must hammer the point that on most important issues, he will be found in the thick of the Republican wrecking party.
- JackR
September 15, 2011 at 9:06am
"why get into a debate"???? Good grief, she didnt' invite a debate. People were going to find something to debate in what she said given the deepseated economic conservatism in the so-called mainstream media. There's no significant difference between the amount of taxes GE paid and zero.
- miceelf
September 15, 2011 at 9:57am
Clinton famously could "feel your pain". And Palin famously is "one of us". My point is the focus should be on the middle class (and only indirectly on the plight of the middle class), not on the failings of US companies (on which the middle class depends for jobs). It takes a very clever politician, but just how clever is Palin, or Clinton for that matter, and they are masters at it. As for Jon Stewart, try though he might to set up his progressive guests to score some points, it's often painful to watch those clueless progressives - they don't even know he is setting them up! And, unfortunately, Stewart won't be there on the campaign trial to help.
- rayward
September 15, 2011 at 10:05am
Yo CRS9TNR - I lost about $40,000 bucks last year in income, where's my zero tax bill man? My husband and I employ three people, we're job creators that are hurting too. Corporate tax coddling but a slap for me? Why? Because one is a big corporation with lots of lobbyists and campaign contributions and one is merely a family? Here you have Republican logic personified.
- WandreyCer
September 15, 2011 at 12:23pm
"Nocera seems to "hedge his bets" a lot these days." That seem to be the hallmark of NYT political pundits. Sadly, their punditry has been reduced to the political equivalent of a horoscope. Paul Krugman is the master of bet hedging, his stimulus stance a mishmash of contradictions - he's for a larger stimulus, but acknowledges it couldn't be passed given political reality, yet goes on to blame the administration for not being bold enough. He advocates for a purely public works infrastructure stimulus, while at the same time acknowledging that infrastructure projects take time to get off the ground, thus aid to states, tax cuts, and unemployment benefits should be part of the package, yet blames the administration for weakening the stimulus by diluting it with tax cuts, unemployment benefits and aid to states. He later revised his stance by saying while the tax cut and aid component was necessary, the percentage was too high. If you want to be always right, you hedge your bets as much as possible and hope your readers are not paying close attention.
- wkwami
September 15, 2011 at 12:49pm
Ironyroad: "I think she may lose -- but if she plays to her strengths I think she will have Brown waking up in the night shivering." I wouldn't say she may lose, as conditions on the ground continue to evolve rapidly. A July poll had Brown leading Warren by 53%-28%, a margin of 25 points. Yet, this month's polling showed Warren narrowing that gap to only 9 points even before she officially entered the race yesterday. July poll...
September poll... rayward: "My point is the focus should be on the middle class (and only indirectly on the plight of the middle class), not on the failings of US companies (on which the middle class depends for jobs)." I live in Boston and I've have heard her speak, all she did yesterday was talk about the middle class. I think the video, which some of you might be drawing from, was meant more for a national audience that for local consumption. From today's Boston Globe: I think this is a compelling narrative that will resonate with average folks. Here's someone who grew up poor, lifted herself out of poverty and ended up a Harvard professor. Never forgetting where she came from, she devoted herself to the cause of average people. This woman didn't just talk the talk, she lives it.- wkwami
September 15, 2011 at 2:00pm