GE steals from Montgomery County. Taxpayers revolt?

While facing budget cuts, including layoffs, reduction in services and reduction in tax collections– the County still insists on handing out our tax dollars to poor underprivileged corporations:

The Montgomery County Economic Development/Government Equity ED/GE Advisory Committee on Friday recommended funding eight projects, totaling $1.6 million.Among the recommended projects is $500,000 for the GE Aviation “Episcenter” in Dayton off River Park Drive. GE Aviation plans to construct a 115,000 square-foot $51 million center by mid-2011 and begin operating it by the end of 2012.GE will initially hire 10 to 15 scientists for t

via GE, other projects recommended for $1.6M in funding.

[Another ADDITION]

A $7.6 million Third Frontier grant recently helped entice General Electric to commit to a $51 million research and development center on land along River Park Drive.

via Group says bonuses tied to job growth around Wright-Patterson.

[End addition]

Just to be clear, GE has been struggling of late, with “flat earnings” on their measly $37.44 billion in sales. Their CEO, Jeff Immelt only took home a paltry $10 million, ranking him a lowly 237 on the Forbes list. He is also a director of the Federal Reserve Bank of New York, Guaranteed, Ohio won’t see a nickel of his paycheck, the Federal Government even has a hard time collecting in 2009:

General Electric filed more than 7,000 income tax returns in hundreds of global jurisdictions last year, but when push came to shove, the company owed the U.S. government a whopping bill of $0.

How’d it pull off that trick? By losing lots of money.

GE had plenty of earnings last year — just not in the United States. For tax purposes, the company’s U.S. operations lost $408 million, while its international businesses netted a $10.8 billion profit.

That left GE (GE, Fortune 500) with no U.S. profit left for Uncle Sam to tax. Corporations typically face a 35% federal income tax on their earnings. Thanks to its deductions and adjustments, GE reported an actual U.S. federal income tax rate of negative 10.5%. It got to add a “tax benefit” of $1.1 billion back into its reported earnings.

via GE: 7,000 tax returns, $0 U.S. tax bill – Apr. 16, 2010.

[ADDITION- Thanks to reader Teri L] The Fed also helped GE through the meltdown in 2008:

By the fall of 2008, credit had frozen across the financial system, including the commercial paper market. The Fed then purchased commercial paper issued by GE 12 times for a total of $16 billion.

via Fed aid in financial crisis went beyond U.S. banks to industry, foreign firms. [End ADDITION]

Why are Montgomery County tax payers contributing at all to GE’s profits? And what kind of services will we be able to provide when we have no money? And why do we pay tax dollars so the County can invest in GE? Are they giving us stock options for our investment? Is their a guaranteed return? Maybe we should be buying gold coins instead (or did we see how that turned out already?). Tax dollars are for public services- not for investment in private companies- especially ones that don’t even pay US taxes.

It’s time to have a little tea party in Dayton. It’s time to demand a stop to all redistribution of wealth by our “elected officials” to private companies. GE doesn’t need our money, we do. And until this stupidity stops- we, as small business people, should start putting our tax collections and property taxes in escrow, payable to the county once these kinds of theft stop.

The only problem will be finding a banker who would be willing to hold the account. Any takers?

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Bob from the Borojoe_mammaJeff DziwulskiRick KaczmarekJeremy Recent comment authors
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This plan is like unilateral disarmament.  Do you really think GE would have built here, and not in, say, Columbus, if Dayton had said “no breaks, you will pull your weight in taxes” and Columbus had said “sure, here’s your tax break”?
The only way to stop this sort of corporate handout is to get it done nationally, so that no state or municipality can legally set tax rates differentially.
That probably requires a constitutional amendment.
Then municipalities will have to compete in the old-fashioned way; infrastructure, education, and culture.  Dayton, incidentally, is quite good at one of those currently.

Teri L
Teri L
Civil Servants Are People, Too
Civil Servants Are People, Too

Truddick is exactly right on this one.


The only kind of local jurisdictions that can get away with the policy DE wants are those in highly desirable locations, with robust, growing economies. I think we can reasonably demand our city and county engage in this kind of corporate cooperation in a smarter, less corrupt way, and I also think we can reasonably demand they do less of it, focusing more on basic services and fostering small business growth. (And this website is a great resource for pressing our local elites on both those fronts!) But not doing it at all isn’t a realistic option–pretending we don’t like in a country in which fiscal federalism is the law of the land.

Rick Kaczmarek
Rick Kaczmarek

David, I still disagree with the premise of your argument. 

When GE, who could locate this facility ANYWHERE, agrees to invest $51,000,000 in the city AND locate ten or twelve scientists here, doing work that they expect will lead to greater leveraged return on their investment, it is reasonable for local government to step up and ask how they can allocate government resources in ways that will help GE make the decision to pour dollars into the community.

It is wrong to pretend that allowing partial tax forgivness of NEW tax collections is the same as writing a check.  It isn’t. 

It is entirtely appropriate for governments to act like business partners (because they are, whether you and they realize it or not).  When my friends and neighbors seek to improve their lot in life, I often ask how I might contribute to their betterment, because I know that doing so will enrich me far more than the “sacrafice” of wealth today – which actually isn’t even the case here.  Without these incentives, there would be ZERO future tax collections from GE for these jobs and these property improvements. 

Important to restate.  No incentives = zero new tax collections.  Some incentives = millions atop millions of future tax collections, plus millions more in local economic impact from the development project and future employees.

I would encourage you to rail about many other areas of corruption, instead of asking people to get riled up about something that costs them ZERO and actually makes the government and the community money.

Jeff Dziwulski
Jeff Dziwulski

The approach reported in the DDN is fairly interesting as it’s a joint venture between the state, city/county, UD (who I think is kicking in some $$$ for computers and equipment as well as the property) and GE.  So its a mix of funding to make this happen. The $500K is pretty small changes in a $50M effort.

However, I think this GE R&D coup should not be oversold as a big job creator for unskilled or semiskilled people who used to work in manufacturing.  GE’s research will benefit GE, and they do manufacturing elsewhere (except for that plant in Vandalia).

The benefit to the Dayton area will be more employment of scientist/engineer types, and, maybe (depending on how GE does business) more cooperative research agreements with UD, and perhaps contract work to consultants with the expertise GE would be looking for.


Keep up the good fight David E.  Gov’t should not be playing favorites and arbitrarily picking winners other people’s money.  It should be providing a highly competitive but level playing field for all businesses.

Bob from the Boro
Bob from the Boro

Some of the things you say Mr. Esrati make sense, but at other times you seem quite clueless.  There is a big difference between not liking the rules of the game (and wanting to change them) and lambasting our elected officials for having successfully brought home a big prize for our local community.  I am very happy that the local economy will benefit from this development.  If we had not offered the incentives then G.E. would have gone somewhere else.  It does not make it right, but it does make it the right thing for our local officials to do.