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Honeywell International has responded to a press release that CTJ posted Tuesday and which explained that the company has paid an effective U.S. income tax rate of just 4.1 percent averaged over the past five years.
The company’s CEO, Dave Cote, was a member of the President’s National Commission on Fiscal Responsibility and Reform and speaks frequently about his support for cuts in Medicare and Medicaid. Cote spoke on Tuesday at a public event focused on deficit reduction and was asked twice about the CTJ press release.
Within a matter of hours, Honeywell sent a letter to CTJ essentially saying that the company correctly reported large profits to its shareholders for the last two years but used available tax loopholes to report losses to the IRS.
CTJ’s director, Bob McIntyre, wrote a letter back to Honeywell that concludes:
“So I think we agree on the following: The reason why Honeywell, despite reporting substantial pretax U.S. profits to its shareholders, paid no federal income tax in 2009 or 2010 (or more precisely, paid less than zero) is that it took advantage of legal tax breaks to wipe out its federal income tax liability. We may disagree, however, about whether these tax breaks should exist.”