By Scott Malone
Tue Apr 24, 2012 3:21pm EDT
(Reuters) – An offshoot of the Occupy Wall Street movement, which rose to prominence last year with its anticorporate stance, plans to bring its populist message to General Electric Co’s shareholder meeting in Detroit on Wednesday.
Members of the “99 Percent” movement plan to picket the largest U.S. conglomerate’s meeting to protest its low tax rate. The loosely organized coalition, whose name is a contrast to the top 1 percent of wealthy Americans, expects to have more than 2,000 protesters in attendance, according to organizers.
“It’s the 99 percent and we want to serve notice to the 1 percent that it’s time to start paying your fair share in taxes and being a little more responsible,” said Christian Gary, an organizer with Good Jobs Now in Detroit.
The complaints were a reference to GE’s low 2010 and 2009 tax rates, which the company says were a result of heavy losses at its GE Capital arm during the financial crisis. A 2011 report by left-leaning think tank Citizens for Tax Justice claimed GE had an effective negative tax rate from 2008 through 2010, which the company has denied.
The 120-year-old company, whose wide swath of operations ranges from manufacturing refrigerators to helping finance power plant projects in the Middle East, last year recorded $14.15 billion in net earnings, a 22 percent increase from 2010. It is one of about a dozen companies whose annual meetings the 99 Percent movement is targeting this year – demonstrators are also expected at the Wells Fargo & Co meeting later on Tuesday in San Francisco.
Protesters interrupted a speech by GE Chief Executive Jeff Immelt in Detroit on Tuesday, yelling “pay your fair share,” before being escorted out of the event, a meeting of automotive engineers.
“Enough is enough,” said Shyquetta McElroy, who traveled from Milwaukee to join the protests. “I made the trip to Detroit because Wisconsin is suffering from a debt epidemic right now and I believe that should not be true when we have big corporations like GE who have only paid 11 percent in taxes.”
A Citizens for Tax Justice report released in February said GE had an effective tax rate of 11 percent in 2011, a number the company says is incorrect.
“I don’t know what to do about it. People have to start looking at the facts,” GE Chief Financial Officer Keith Sherin said in a Friday interview. “We were as transparent as we could be about 2011. The overall rate was 29 percent, the U.S. rate was 25 percent. For people to say we don’t pay any taxes when you have those actual numbers, I just don’t know what else they want us to do.”
GE disclosed in filings with the U.S. Securities and Exchange Commission that its overall tax rate – on both foreign and U.S. earnings – was 7 percent in 2010 and negative 12 percent in 2009. It has not broken out U.S.-specific taxes for the prior years.
MOTOR CITY WOES
Taxes are a particularly thorny issue in Detroit, which is coping with a budget crisis that has resulted from the city’s falling tax base as companies including General Motors Co slim down in the city long synonymous with the auto industry.
In recent weeks, protesters have shown up at sites ranging from GE’s Fairfield, Connecticut, headquarters to a speech by Immelt at Stanford University in California.
Immelt, a Republican who is a top adviser to President Barack Obama on jobs and the economy, has called for U.S. tax reform that would include eliminating all corporate deductions and lowering the 35 percent statutory rate.
OCCUPY MOVES ON
The Occupy movement, a diverse group of protesters organized around the idea that the U.S. economic system was not working to the advantage of the majority of people, got its start in September with dozens of protesters in New York’s Zuccotti Park. In the following months, it spread to encompass camps with hundreds of protesters in cities including Boston, Los Angeles and Portland, Oregon. Most of the camps were later broken up by the authorities as winter closed in.
With the camps gone, the group’s members have been looking for a new outlet to focus their energy, and have seized on shareholder meetings. A spokesman for the 99 Percent group said protesters also planned to target upcoming parleys for The Hershey Co, Bank of America Corp and Wal-Mart Stores Inc.
The threatened protests come at a time when even the firmly capitalist have been turning on CEOs. Shareholders of Citigroup Inc stunned the bank’s management last week when they rejected CEO Vikram Pandit’s $14.8 million pay package at the company’s annual meeting in Dallas.
While the vote was purely an advisory one, Chairman Richard Parsons called it “a serious matter” and said directors would meet with shareholder representatives.
GE shareholders will also have their chance to weigh in on Immelt’s pay in an advisory vote. Before the company’s annual meeting last year, GE’s board amended an options award granted to Immelt to include stricter performance targets.
(Reporting By Scott Malone in Boston, additional reporting by John D. Stoll in Detroit; editing byMatthew Lewis)