GE’s tax avoidance: “Imagination at Work”
The General Electric saga took another turn with reports on emails that circulated among city and state officials showing a fevered effort to lure the company, a push that involved significantly increasing the city tax break and state incentives offered to the global multinational in exchange for siting its headquarters in Boston.
Emails obtained through public records requests by WCVB-TV and the Globe show that city officials wound up more than doubling the property tax break offer to GE — from $8 million to $12 million to the final amount of $25 million over 20 years.
Daniel Koh, Mayor Marty Walsh’s chief of staff, tells the Globe the tax deal got sweetened when it became clear GE wanted a much larger footprint for its headquarters. He said it was also driven by competitive pressure to win out over New York City, Providence, and other cities vying to land the firm.
“We didn’t want them to walk away,” Koh said. “We wanted to make sure we closed the deal.”
The city’s assessor, Ron Rakow, seemed stunned by what Boston officials were prepared to offer GE. Before the final $25 million figure was agreed to, the city was considering increasing the abatement offer to $20 million. “Its [sic] the number I’m choking on,” Rakow wrote in an email to John Barros, Walsh’s chief economic development aide, the Globe reports.
The story of how Boston landed GE has never quite added up. Company officials insist that incentives were not the driving factor behind their decision, saying they were drawn by a wish to be in the heart of the region’s rich innovation economy. City and state officials nonetheless are defending the public dollars as worthwhile — and necessary — outlays that will be more than repaid by GE’s economic impact over time. It’s almost as if the incentive package represented more of an expression of just how much GE was wanted, even if was an expression with a public price-tag.
GE’s apparent indifference to tax issues was also on display earlier this week, when the company’s CEO, Jeff Immelt, said at an event in Boston that the possibility of a new Massachusetts tax on personal income of more than $1 million didn’t weigh in the company’s decision.
“Really, I think, believe it or not, most days what we think about is how we can sell more jet engines and gas turbines and we let the rest of the chips fall where they may,” said Immelt.
Immelt almost makes it sound like GE is just an oversized platoon of geeky engineers, too focused on building the “industrial internet” to get all caught up in tax matters.
That picture leaves out the company’s reputation as one of the most aggressive corporate tax avoiders. According to a 2011 New York Times investigation, the company combines “fierce lobbying for tax breaks” with a “giant tax department” that is “often referred to as the world’s best tax law firm.”
“Indeed,” says the Times story, “the company’s slogan ‘Imagination at Work’ fits this department well.”
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