GE Responds to Public Outcry – Will Donate Entire $3.2 Billion Tax Refund to Help offset Cuts and Sa Fairfield, CT, 13th April, 2011– GE CEO Jeffrey Immelt has informed the Obama administration that the company will be gifting its entire 2010 tax refund, worth $3.2 Billion, to the US Treasury on April 18, Tax Day, and will furthermore adopt a host of new policies that secure its position as a leader…
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I have to admit, I loved it. It was a brilliant little game.
A focus area of my political communications and political economic research is called the “unfederaling.” In simple terms – trends I’m seeing around government ceding functions and purposes and their related investment price tags to non government entities. When things you thought were done by government/at the center get done outside of government/at the edge. When for profit, not for profit and hybrid structures coordinate, rising to meet service challenges locally and outside of traditional tax code structures.
Or as one of my wiser relatives says, when advances in both technology and the law enable, rather than dis-incent, acts of shared prosperity.
An unfederaling moment seemed to have happened, or so said a GE press release. Except it did not, because the press release was a hoax. GE was going to throw back a few billion towards the US national debt ? To act altruistically. To extend an olive branch to all of those annoyed with its un-taxpaying ways.
Except that it was not doing that at all.
As in the case of any news of this type, I always look past the media narrative.
Who benefits? What really happened? How did the dialogue change via this hoaxing action? Despite the fact that GE isn’t giving back anything to the Treasury, there was a news event.
The news was that everyone was talking about the IDEA of a corporation voluntarily anteing in to the Treasury. Helping address federal debt outside of usual tax channels. As - or so it seemed- a publicity-driven, shareholder supported, wondrous sort of action.
Who benefitted and what really happened? The answers to that will be many and subjective. Here’s one.
The press release is said to have come from the left. From activists wanting to cast light on what they consider less than fair behavior on the part of GE’s tax accountants and attorneys. Who have openly acted to allow GE to get out of paying US taxes that many citizens feel that it justly owes. Sounds feasible.
Yet what if it actually came from the right? Or from GE itself?
I have no evidence that this was the case. This is pure conjecture, and I invite you to have fun with it as I am.
Let’s start with what’s not conjecture: Consider that:
A lot of modeling is afoot around enhancing corporate profits participation in effecting social goals. It's an issue area in which certain portions of the far right and far left ironically agree.
The far right wants most social goals to be effected privately, voluntarily and via corporate notions of ROI (economic/ thrift argument).
The far left wants corporations to participate in ways they so far are not (moral/almsgiving argument).
The middle, ironically, sees government as the beneficent provider of a locus for action. Between these two.
Were GE to have done this for real, it would represent two things: the corporate placing itself above government and above its ways and means – i.e. the tax system (right.) and secondly a corporation meeting a moral obligation to those in greater need than itself via a sort of payment of “taxes.” (left.)
It appeases both at once via the very same action.
Who isn’t into such an action? In theory, the center.
The center not only loses control over how the tax system plays out for corporations. Consider that GE would have started a domino effect - of having acted outside of the box, on a corporation’s own terms, not on government’s terms.
The center also theoretically loses both economic and moral high ground that it tends to take when negotiating argument. Being the center, it borrows argument techniques from each side, right and left, to create its own version of compromise and solution.
Yet this GE ‘solution’ having been driven independently, at the corporation’s own whim, forces the center to sit and observe. To react rather than be directive. And accept the action even as it worries who will try to do it next.
Said another way - GE would be gaining a lot by spending a little, and exerting more power than they would by doing nothing. The power structure would formally flip.
It almost was as if a trial balloon got released by GE.
It was one that said, the government can’t get this done. But hey, we’re a corporation. We can. We’re success defined.
Don’t look to the government – look to us. Look to our choices, our bets, our visions. There’s another way to play this game.
Another thought area, in related: Since the federal debt – and the federal debt ceiling we’ll soon hit – relate to how the US dollar and US debt securities are viewed in international markets, one must ask what GE’s interest would be in either propping the dollar or betting against it. It’s a larger topic, in times when the vast interconnectedness of markets gives extraordinary power to large corporate holders of US debt, especially perhaps to those who do business in a number of countries and currencies, and have greater loyalty to their own bottom line than to a specific reserve currency - or patriotic ideal.
What would a $3.2 Billion dollar ante into the US Treasury do to the perception of the US dollar/US debt securities on the eve of a ceiling hit? How about the equity and commodity markets? What’s that do for GE? Why might the US Treasury – and the White House – both of which sit center or left of center politically right now - want or not want such events to occur?
So yes, the whole thing was a fabricated story of a non story. But the narrative it has begun is far from over. Corporations do not need the blessing of the US Government to act, and their actions may set off significant consequences. Watch closely; this game might get even more brilliant.