Vindication

I love it when circumstances make it look like I know what I'm talking about.

Today Fortune and ProPublica jointly published a story on the misreporting of General Electric's tax situation.  It has been widely reported--including at the illustrious fact-check site PolitiFact--that GE paid no U.S. income taxes.

I had earlier developed the strong suspicion that journalists were misusing the term "tax benefit," and today's story serves as a strong confirmation:

Those headlines are based on the story's third paragraph, which discusses GE's 2010 financial results. "Its American tax bill? None. In fact, GE claimed a tax benefit of $3.2 billion." That seems to say that GE is getting a tax refund for 2010 -- but the words "tax benefit" are so ambiguous that it's not clear what they mean, and the article never explains them, or mentions them again.

By the time a revised (and accurate) headline got slapped on the later-edition print issues -- "At GE on Tax Day, Billions of Reasons to Smile" -- the idea that the Times was saying that GE paid no U.S. income taxes and was getting a big refund was firmly implanted.

There's no need for me to publish a correction or clarification:

CNN anchor Jack Cafferty offers no clue as to how he calculates a "tax benefit" or what the term actually means.  My investigation suggests that he is misinterpreting and/or misrepresenting its meaning.  It appears to mean that a past write-off was recovered and had to be reported as income for the current tax year--which would increase the income tax if the company had demonstrated a net income.

At least Cafferty was in good company.  Props to Fortune and ProPublica for blowing the whistle on the broad application of Cafferty's error.  And a hat tip to Hot Air for putting me onto this story before the day lapsed.