Abstract
On November 1, 2004, Judge S.R. Underhill ruled in favor of a subsidiary of General Electric Corporation in a tax case involving events that took place from 1993-1998 when Jack Welch was Chairman of GE's Board. The important issue is whether a corporation can ethically exploit features of the tax law (the actions were legal). In this case, GE shifted 98% of the taxable income to two non-taxable Dutch Banks, but did not shift 98% of the benefits. Also, the GE tax process resulted in fully depreciated airplanes being depreciated a second time. There are two remaining questions. Should GE have implemented this tax strategy (when Jack Welch was Chairman)? Secondly, should GE's current CEO authorize the payment (in lieu of taxes) to the U.S. Government of $62,000,000 even though Judge Underhill ruled in GE's favor?
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