In fact, Crosby’s rant about GE (which declined comment) is based on a March New York Times article that’s inaccurate; the paper has since printed material that contradicts that piece but has never owned up to doing so (see www.fortune.com/ sloan for details). Many public policy analysts make the same mistake the Times did, conflating the “current tax” number that companies use to calculate earnings with how much they owe in tax; however, the tax-incurred number isn’t the same as “current tax” and isn’t public.
All these mistaken numbers have taken on a life of their own. But do you know whose fault it is for these mistakes continuing to resonate? It’s the companies’ fault for being stubborn and prideful, and refusing to provide information to disprove what they say are false allegations.
Earlier this year, Ed Outslay, a professor at Michigan State University and a leading tax expert, generated no fewer than 16 tax metrics for a GE story that I was pursuing in partnership with Jeff Gerth of ProPublica. However, despite having all these numbers, Outslay couldn’t tell us how much federal income tax GE incurred in any given year or over any given period. Neither can Robert McIntyre of Citizens for Tax Justice, one of Washington’s most respected tax mavens. In a recent study, McIntyre — who is way too astute to conflate the “current tax” number with “taxes incurred” — went through the agonies of the damned to calculate how much tax 280 big companies have paid over the past three years. He paid special attention to GE and thinks he’s got the numbers right. But there’s no way to know.
During the past few months, I’ve repeatedly asked three big companies in the tax-wars crosshairs — GE, Verizon and Exxon Mobil — to voluntarily disclose information that would refute allegations that they incurred no U.S. federal income tax for 2010. All have refused, saying they won’t disclose anything not legally required. They still manage to complain about the allegations, however. I suspect that if I called the rest of the Fortune 500, I’d get 497 similar responses.
As a society, we need the “taxes incurred” information to inform our “current tax” debate. Investors, too, would benefit; knowing the tax that companies incur would be a useful analytical tool.
The solution, as I’ve said before, is for the Financial Accounting Standards Board to require companies to disclose information on Lines 31 and 32 of their tax returns for the most recent available year and the nine years before that. This would take at most one person-hour a year per company to provide. Adding a 17th tax metric to the 16 available hardly seems like an invasion of corporate privacy.
FASB told me in September that it doesn’t require “taxes incurred” information because it has not been asked to require it. Bloomberg View has since joined me in asking informally, and McIntyre says he’ll submit a formal request soon.
If companies are truly getting a bum rap, as they claim, disclosing this information will save them from themselves. And from Crosby, Stills and Nash, too.
Sloan is Fortune magazine’s senior editor at large.