Thursday, April 7, 2011

Columbia Journalism Review Disses Fortune, ProPublica on General Electric's Taxes Story (GE)

This is a bit harsh. From the CJR's The Audit blog:
ProPublica and Fortune’s Unhelpful Post on GE’s Taxes

Taking the company’s word for it to rebut The New York Times

Fortune’s Allan Sloan and ProPublica’s Jeff Gerth asserted a couple of days ago that The New York Times got it wrong when it said GE paid no American tax last year.

Fortune even gives it a Business Insider-style headline: “The truth about GE’s tax bill.”
What’s the truth they spent all these months digging up?
The company says that it’s not getting any refund for 2010 — validating Outslay’s analysis. Its 2010 tax situation? “We expect to have a small U.S. income tax liability for 2010,” GE chief spokesman Gary Sheffer told us. How big is small? GE declined to say. The number is unlikely to ever be disclosed unless GE goes public with it, or is forced to do so.
Wait a second. That’s not news. GE said the same thing to various people, including Business Insider and me, last week. It also said at other points last week that it “did not pay US federal taxes last year because we did not owe any,” and that its 2010 U.S. taxes would be offset entirely by overpayments and “other adjustments.”
Here are Sloan and Gerth’s conclusions regarding the Times:
Did GE get a $3.2 billion tax refund? No.

Did GE pay U.S. income taxes in 2010? Yes, it paid estimated taxes for 2010, and also made payments for previous years. Think of it as your having paid withholding taxes on your salary in 2010, and sending the IRS a check on April 15, 2010, covering your balance owed for 2009.
Will GE ultimately pay U.S. income taxes for 2010? After much to-ing and fro-ing — the company says it hasn’t completed its 2010 tax return — GE now says that it will pay tax.
First of all, the Times didn’t say that GE got a $3.2 billion tax “refund,” as Sloan and Gerth admit. The paper’s David Kocieniewski called it a “tax benefit.” But I do agree that the Times should have better explained what that tax benefit was. Still, ProPublica/Fortune here purport to correct something the Times never said. Better just to have said what we said: the Times should have spelled out what it meant by “benefit.”

But the major problem here is that Sloan and Gerth’s big conclusion—that GE paid taxes after all—is based on the word of GE alone. GE says it will end up paying net U.S. income taxes last year (estimated taxes don’t matter if you get them back). But as I wrote last week, GE has squandered whatever credibility it had on this subject with its bumbling misinformation campaign....MUCH MORE