A Lesson in Misinformation: Undocumented Immigrants Paid $11.2 Billion In Taxes While GE Paid Nothing | Wonk Room

The original head for this entry involved a bit of strong language. But then I realized that instead of turning people off with repulsive language, I’d try to emphasize a point: A little bit of bad information goes a long way, and if you compare apples to oranges, you can draw any conclusions you like… and you’ll still be wrong.

This entry on the Wonk Room blog, whose title I’ve used above, is a perfectly good example. When I saw that it had made it to my What’s Hot in Google Reader feed, it became apparent that a lot of people saw the entry and thought it was worth a read, and most likely believed it, too.

The premise of the entry is that General Electric, a multi-national and, to the casual observer, a very profitable company, paid $0 in income taxes in 2010, but that undocumented immigrants paid $11.2 billion in taxes. That’s exactly… infinity times more taxes than GE paid, right? And that is really, really bad, at least as the Wonk Room entry’s author would have you believe.

Except that the headline is misleading, and on top of that, the headline is based on factually-incorrect information. The apples-to-oranges comparison involves some rotten fruit, too.

You see, the initial report that GE owes nothing in US income taxes isn’t correct, unless you use some creative definitions of “taxes” and “correct.” It is, in fact, a terribly misleading article which was the culmination of many months of good research which were—essentially—incorrectly and sensationally reported.

I’m not making this up. From this piece at CNN.com:

Unfortunately, for all its good work, the Times story has created at least one major misperception—that GE paid no U.S. income taxes last year and is actually getting a $3.2 billion refund from the Treasury.

It’s a great piece, and you should read it if you care about the issue (whether a “big profitable company” could avoid taxes through slight of hand), but the CNN piece has a few good summary points I’ll include here, at your expense of complete understanding:

Now, we’ll give you brief answers to the main questions, but you’ll have to bear with us afterward for the full explanation.

(Again, worth the read.)

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.

Short story: the Times piece was over-the-top sensationalistic, and misrepresented the facts. For those of you who think the tax codes need to be changed to make GE pay the taxes it supposedly didn’t pay, don’t bother: GE will pay income taxes, and the tax codes don’t need to get any more complicated than they already are.

So what we have in the Wonk Room entry is a headline which is already half wrong, and the author is using it as the orange, so to speak. And it’s rotten.

Now, let’s see what the Wonk Room entry is using as the apple, shall we?

If you read the “apple” side of the comparison, you discover that the taxes the author is listing are things that every single citizen, both documented and undocumented, visitor, tourist, or resident alike, of the United States pays. And, guess what? Every company in the United States pays them, too.

The two everybody-pays-them taxes listed in the source of the data are sales tax and property tax. These two taxes are the primary reason why towns, cities and states love to have businesses—because they pay them, too.

And the last tax listed? The “income tax contributions by the unauthorized population,” whatever those taxes are. How can an “unauthorized population” pay income tax in the first place? Wouldn’t they have to be documented, and theoretically authorized in some way, in order to do so? OK, OK, I’m guessing a little bit because I don’t know the tax process well enough to know if someone who is an “unauthorized population” can file income taxes. But I’m willing to overlook that little piece of “data” since it’s a guess anyway, and it accounts for only 10% of the total estimate used as the “apple” for this widely-circulated piece of misinformation.

The apple is sales and property taxes, and the orange is incorrectly-reported income taxes. Like I said, compare the two and you can conclude anything you like. And, as before, this author is wrong.

So… why? Who wrote this piece? Why make such a false comparison? Well, the author is Mike Elk, “a freelance labor journalist and third generation union organizer based in Washington, D.C.” If you Google the guy you discover that he’s been grinding an axe against GE for quite some time, as one who is a union organizer rightfully should. But unbiased “journalist?” I think not.

Could I do better? Yes, but this headline:

GE Paid $3.7 Billion in Income, Sales, and Property Taxes (and That’s Quite a Bit), and Undocumented Immigrants Paid an Estimated $10 Billion in Taxes (and That’s Quite a Bit, Too)

isn’t quite as sensational, hype-worthy, or anti-corporate America as Mr. Elk’s, now, is it? Leave it to the internet to hype the worthless.

Please, people, think before you read and blindly accept what you find on the internet as fact. At least Google it first, for Pete’s sake!

Or, if that’s too much work for you, I have a friend in Nigeria who could use your help. Contact me ASAP.