The Artful Dodgers: Telecommunications and Technology
From net neutrality to patent law to taxes, telecommunications and technology companies have significant business interests regulated at the federal level. As two of the largest capitalized companies in the industry, Verizon and General Electric are also among the biggest players in Washington, spending hundreds of millions of dollars each year to influence policymakers and lobby regulators. Their investments have paid off handsomely: due to tax loopholes related to overseas profit, neither firm has paid significant federal income taxes for years.
Verizon’s television ads feature a man walking around with his cell phone asking, “Can you hear me now?” One might think it was the IRS on the other line futilely trying to ask the company when it would start paying its fair share of taxes. In 2010, for instance, Verizon was the subject of congressional outrage when it exploited a tax loophole to sell 4.8 million rural phone lines at a profit while avoiding $600 million in taxes.22 And in 2010, the company paid nothing in federal income taxes on $12 billion in profits.23
Verizon’s broad interests on Capitol Hill have been matched by an even greater effort to use the political and regulatory process to maximize profits and minimize tax liability. Over the past ten years, Verizon’s PAC and employees have given $12 million in federal campaign contributions, with $1.1 million of that going to members of the relevant tax-writing committees. Verizon’s lobbyists have also been extremely active: the company has spent $131 million on their efforts over the same time period.
General Electric is the world’s second largest company, with more than 300,000 employees in 100 countries worldwide.24 It is also one of the worst polluters—number six in the world—according to the Political Economy Research Institute, 25 and a committed tax avoider. Since 2006, the company has earned $26 billion in profits, but not only has it not paid any income tax, it benefitted from a refund of $4.1 billion for that time period.26
General Electric takes tax avoidance so seriously that its tax department, headed by a former Treasury official, “is often referred to as the world’s best tax law firm,” according to the New York Times. The department’s mission statement, according to one company official, urged employees to split their time between normal compliance operations and “looking to exploit opportunities to reduce tax.” In addition to reducing its tax burden by sheltering profits overseas, it has spent heavily on lobbying efforts to gain advantageous green credits for its wind turbines and generous depreciation schedules that allow it to quickly write off long-term expenses against income.27
General Electric is also one of the country’s most generous givers of campaign donations. Over the past ten years, the company’s PAC and employees have given $13 million in federal contributions, with $1.6 million of it going to members of the House Ways and Means and Senate Finance Committees. The company also has one of Capitol Hill’s busiest lobbying operations, spending $205 million over the past ten years to influence lawmakers and regulators.
22. “Lawmakers Aim to Stop Verizon Sale to Frontier,” PC World (January 7, 2010). Available online: http://www.pcworld.com/businesscenter/article/186250/lawmakers_aim_to_stop_verizon_sale_to_frontier.html.
23. U.S. Uncut (accessed April 12, 2011). Available online: http://www.usuncut.org/targets/verizon.
24. General Electric (accessed April 12, 2011). Available online: http://www.ge.com/company/factsheets/corporate.html.
26. U.S. Uncut (accessed April 12, 2011). Available online: http://www.usuncut.org/targets/generalelectric.
27. “G.E.’s Strategies Lets It Avoid Taxes Altogether,” New York Times (March 24, 2011). Available online: http://www.nytimes.com/2011/03/25/business/economy/25tax.html?_r=1.