DETROIT -- General Motors broadly supports President Donald Trump’s effort to cut corporate taxes but wouldn’t benefit for about five years because of the huge losses it incurred leading up to its 2009 bankruptcy, CFO Chuck Stevens said.
GM, by applying deferred tax credits it was allowed to keep after washing away debt and forming itself into a new company, already pays an effective tax rate of less than the 15 percent Trump has proposed, Stevens said. Trump’s plan, unveiled in sparse detail this week, would cut the business tax rate from its current 35 percent.
“Our cash tax rate is less than 10 percent and we would expect it to remain less than 10 percent for a significant period of time, with or without tax reform,” Stevens said.
Nearly eight years after emerging from Chapter 11 protection, GM still has some $34 billion in deferred tax assets and credits for past operating losses to use, Stevens said. If a tax cut passes, he said GM would have to take a one-time charge to write down the value of the credits it holds, though that wouldn’t affect the rate it actually pays.
Even though GM would see no immediate change, the automaker supports tax reform, Stevens added.
“We think it’s good for the economy, good for consumers, good for businesses,” he told reporters after the company reported first-quarter net income of $2.6 billion. “What was rolled out earlier this week was obviously not very detailed, so it’s hard to provide any real perspective, because there’s still a lot of uncertainty, but from a general overall position we certainly favor it.”