New York Times article on GE's tax planning

Today's New York Times has a very interesting article (the cliché of choice would be "must-read") concerning General Electric's enormously successful tax planning. This has been a GE trademark since at least the 1980s, or well before the current generation of personnel were there. A bit of disclosure: I know several of the leading tax people at GE, as indeed would anyone in my professional niche. The people at the higher levels of what the article calls the finest tax law firm in the world are definitely interested in academic and intellectual outreach and activity, in addition to any of the topics (such as direct political outreach) that are discussed in the article. They are familiar with and actively involved in the current debate, and are among the players from across the spectrum that anyone seriously interested in this debate, whether sharing their views or not, needs to have in his or her metaphorical Rolodex. This is obviously a genuine corporate asset even though we academics, like cats, have a considerable tendency to do what we like.

In terms of understanding U.S. corporate and international taxation, the article makes two important points, neither of which comes as a surprise. The first concerns the central role of financial activity (banking and insurance, in economic if not regulatory terms) in multinational tax planning. In effect, these activities are highly tax-favored by reason of the global mobility of the income they generate, and there may be tax synergies to combining this with "real" business activity, such as GE's still-important equipment production and the like.

The second is the vital role that ongoing political lobbying plays in cutting-edge contemporary tax planning by U.S. companies. This is not structurally a good way for a country to operate, and does lead one to think about whether fundamental tax reform - even leaving aside political reform, such as to the campaign finance and lobbying rules - could someday make a significant difference.