This report examines the growing wealth of billionaires and other ultra-high net worth individuals in Massachusetts — where voters will have the chance to levy a 4 percent surtax on those making more than $1 million a year this November.
“We want to get off on the right foot in Massachusetts,” said GE CEO Jeffrey Immelt. “We usually expect jurisdictions to pay for the privilege of hosting us in their community, state or nation. But we’re taking a different approach.”
General Electric has decided to contribute $18,318 in taxes to the City of Boston, enough to cover the costs of one student in the Boston Public Schools.**
GE is relocating their global headquarters from Fairfield, Connecticut to Boston, Massachusetts after the city and state agreed to hand over more than $150 million in tax breaks and financial incentives. This is roughly $181,000 for each of the 800 employees that GE is relocating to Boston. Boston also tossed in a cool $100 mill to repair the Northern Avenue Bridge as part of G.E.’s relocation deal. Go big or go home, right?
So given all the gifts laid at the feet of Mr. Immelt by the City of Boston and Commonwealth of Massachusetts, why would he decide to chip in his fair share of taxes?
It all started with the busboy Immelt met during a meal at Legal Seafoods. Caleb Hannon, a junior at Boston Latin School casually brought up the the school system budget shortfall to Immelt while picking up the CEO’s lobster shells and refreshing his water glass.
“I heard about the school’s troubles and thought General Electric should chip in something,” said Immelt. “Everyone should do their part.”
“We’re moved by General Electric’s generosity,” said Boston Mayor Marty Walsh. “They are truly a corporate leader and we look forward to having them in Boston.” Walsh indicated hope that in the future G.E. might chip in for snow removal on public streets around their headquarters.
General Electric has historically gamed the tax system to keep their contributions extremely low, routinely paying little or no state or federal taxes.
A Real April Prank
The April Fools Day story above was inspired by a real prank on General Electric.
In April 2011, the YES Men and US Uncut issued a press release, allegedly coming from General Electric’s press office, announcing the company’s intention to pay taxes that the company had been dodging through the use of off-shore tax havens.
The Associated Press circulated the news that General Electric would pay a $3.2 billion tax refund to the U.S. Treasury. The faux release quoted G.E. CEO Jeffrey Immelt as saying the company “will furthermore adopt a host of new policies that secure its position as a leader in corporate social responsibility.”
Upon news of G.E.’s newfound religion on taxes, Wall Street investors punished the company, driving share prices down 1.6 percent from the day’s opening price. Over $3.5 billion in market capitalization evaporated in the first hour before recovering as the hoax was revealed.
General Electric was under scrutiny in 2011 for its aggressive tax avoidance after a New York Times expose revealed that despite $14.2 billion in global profits, including $5.1 billion from U.S. operations, the company claimed a tax refund of $3.2 billion.
For more information on the prank, watch this video of the news coverage:
Also check out 2011 radio interview with me and Andrew Boyd of US Uncut
**Facts distorted in the first part of this post in April Fools Day jest. Unfortunately, GE has not actually decided to pay their fair share of taxes in Massachusetts or Boston. Yet.
Chuck Collins is a senior scholar at the Institute for Policy Studies, where he coordinates the Program on Inequality and the Common Good. His new TEDx talk, taped in October 2015 at TEDx Jamaica Plain, is now available.