GE is Prize in Bidding War Between Connecticut and New York [TheStreet.com]

Article as it appeared on thestreet.com

The most galling factor of Connecticut’s budget for corporations based there was the introduction of a so-called unitary tax, which would put levies on income generated elsewhere, Boucher said.

That proved to be “the kiss of death,” Boucher said.

Complete article below:

NEW YORK (TheStreet) — General Electric (GE – Get Report) , which is threatening to leave its longtime corporate headquarters in Connecticut over a tax hike, has become the prize in what amounts to a bidding war between its home state and rivals from neighboring New York to Atlanta and Dallas.

CEO Jeff Immelt formed an exploratory committee in June to search for a “more pro-business environment” for GE’s headquarters after the Legislature approved a budget that would raise taxes statewide by $1.9 billion, the second-largest increase in the state’s history. The backlash from Connecticut-based corporations including insurers Aetna (AET – Get Report) , Travelers (TRV – Get Report) and The Hartford Group (HIG – Get Report) , prompted Gov. Dannel Malloy to loosen a number of the new requirements, but GE didn’t back down.

“I have had some discussions with GE lately,” Malloy said this week, after reports that the blue-chip manufacturer was entertaining offers from not only New York, its former home, but urban centers in the South and Southwest. “They are going through a process with respect to where their headquarters may be, and that’s a decision for them to make, but we have had those discussions and stand ready to work with them on issues of concern and be competitive with other states.”

GE, which builds products from jet engines to home appliances and health-care equipment, has been housed in the scenic hamlet of Fairfield since the 1970s, when it was lured from its longtime headquarters in midtown Manhattan. Today, about 6,000 of its more than 300,000 workers are based in the state.

The company has declined to say how much it pays Connecticut in taxes. Its total income tax provisions, however, dipped to a five-year low of $1.6 billion in 2014, according to a regulatory filing, while its operating income has been increasing at a steady clip, rising more than 30% since 2010. Cash tax payments made to the IRS, which aren’t adjusted for future benefits and expenses, ticked up 11% in the past five years to $3 billion in 2014.

“I believe we should pay our fair share and that all of us should give back to our communities,” Immelt said in a memo earlier this summer announcing that the company would consider relocating. “But, we can compare Connecticut with other states where small and large businesses have a better environment to thrive and compete.”

Connecticut officials presented a package of options designed to keep the manufacturer in Fairfield during a meeting with GE executives, Malloy said. But “they’ve had a number of other states in,” he added. “They are not going to all the states they’re talking to, and they’re not necessarily going to stay here or not stay here. We don’t know what the situation is until they’ve made a decision.”

Malloy and the state Office of Policy and Management have been particularly focused on incentives for GE since New York Gov. Andrew Cuomo, a Democrat, began to court the company about a possible move to Westchester, according to Connecticut State Sen. Toni Boucher, a Republican.

“The package that the state is working on is extremely under-wraps because they want to avoid a bidding war,” Boucher said in a phone interview with TheStreet.

A pitch from New York might prove particularly alluring given GE’s storied history there: Founder Thomas Edison installed New York City’s first central power station in 1882 and Schenectady houses a major research laboratory, established in 1900, according to GE’s website. The company was also the exclusive provider of switches and switchboards for Manhattan’s Empire State Building.

GE is noncommittal about the status of talks on its headquarters. “The team is currently engaged in the process and is taking many factors into consideration,” the company said in an e-mailed statement. “When there is a final decision on relocation, we will communicate it publicly.”