GE May Pack Up and Move its Headquarters After Connecticut’s Tax Hike
NEW YORK (TheStreet) — General Electric (GE – Get Report) CEO Jeffrey Immelt, discontented with Connecticut’s plans to raise taxes by what he says will be $1.9 billion statewide, informed workers today that he will consider moving its headquarters out of state.
The announcement may be a bargaining chip to get Connecticut Gov. Dannel Malloy to reconsider tax increases in the state’s $40 billion budget, which was adopted Wednesday after passing on a close vote in both chambers of the Legislature: 19-17 in the Senate and 73-70 in the House. The rate hikes in the spending plan are intended to fund substantial infrastructure projects.
Immelt urged employees to reach out to state legislators with grievances on the “significant and retroactive tax increases,” according to a letter to employees obtained by TheStreet. “The passing of this law, despite the concerns we raised, has serious implications for GE, other businesses and for the business climate in Connecticut.”
The CEO, who said he’s considering both lower taxes rates and fair options for employees, argued that tax increases in Connecticut have made the past decade tough.
“The new taxes will raise more than $1.9 billion,” he wrote. “This will be the second-highest tax increase in the state’s history behind only the more than $2 billion tax hike passed in 2011.
Taxes have been raised five times since 2011, “while support for our strategies has been uneven,” Immelt said. “I believe we should pay our fair share and that all of us should give back to our communities. But, we can compare Connecticut with other states where small and large businesses have a better environment to thrive and compete.”
The company didn’t immediately respond to queries about how much GE’s individual tax bill would increase under the new rates. The company, which has 305,000 employees worldwide, set aside $1.8 billion last year for its total income tax bill, compared with total sales of $148.6 billion.
Connecticut’s new budget includes the highest tax increase statewide since a $2 billion jump in 2011, which was the largest in its history, Immelt said. “Throughout the week, we conveyed our concerns that these would not improve the competitiveness of small and large businesses in the state.”
Malloy’s office said in a statement that the budget funded in part by the tax hike includes the largest transportation investments in Connecticut history. The $2.8 billion in additional spending over the next five years includes $1.77 billion for rail, $613 million for highways, $281 million for bridges, $101 million for bicycle and pedestrian trails, and $43 million for bus service.
