GE's Frustration With Connecticut Tax Hike Gives Opening to New York

NEW YORK (TheStreet) -- Officials in General Electric's (GE) hometown of Fairfield, Conn., are working to keep the multinational manufacturer's headquarters there -- and out of the clutches of neighboring New York -- after state tax increases this week prompted CEO Jeff Immelt to consider relocating.

GE employees have contacted Connecticut legislators to share their concerns that the company founded by Thomas Edison has already been approached about moving its headquarters to the Empire State, State Rep. Brenda Kupchick, R-Fairfield, said in an interview. New York Gov. Andrew Cuomo's office didn't immediately respond to requests for comment, and GE declined to comment.

GE has a long and storied connection with New York. Its founder, Thomas Edison, built the first central power station in New York City in 1882 and the company has operated a research laboratory in Schenectady since 1900, according to its website. GE was the exclusive provider of switches and switchboards for the Empire State Building, and its headquarters for much of the 20th Century was at 570 Lexington Avenue in Manhattan.

The company moved to Fairfield in 1974, according to the New York Times, and today, about 6,000 of its 305,000 employees worldwide are based there. Immelt said in a letter to them obtained by TheStreet that the company would look to locate in a state with a more business-friendly environment, noting that Connecticut's new taxes would generate more than $1.9 billion statewide. GE declined to specify how much it pays in state taxes.

The increase comes largely in the form of a "unitary tax," which would place a levy on income that GE and other Connecticut-based corporations like Travelers  (TRV) and Aetna (AET) earn outside the state, Kupchick said.

"If you were a corporation, you would obviously not be set up in a state that has a unitary tax -- you get hit in every which way," she said. "The bottom line is 24 states have this tax and the rest do not. I would venture to guess that the states that do not have it would generate a lot more corporate revenue for their states."

Connecticut's tax increase is the highest since a $2 billion jump in 2011, which was the largest in its history, Immelt said in his letter. "Throughout the week, we conveyed our concerns that these would not improve the competitiveness of small and large businesses in the state."

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