UTC's Chief Financial Officer Calls for Corporate Tax Reform
May 16, 2011 (The Hartford Courant, Connecticut) United Technologies Corp. Chief Financial Officer Greg Hayes testified Thursday about the need for corporate tax reform at a hearing before the House of Representative's tax-writing committee in Washington.
He said he agrees with President Barack Obama's assessment that the tax code is overly complex.
"Because of its size, UTC is under continuous IRS audit," Hayes said, according to a copy of his written testimony. "At any given time there are 10 to 12 IRS agents on site at our headquarters, full time, year-round. Our federal tax return is almost 19,000 pages. And that's just federal income taxes."
Hayes said that UTC complies with tax laws. "But doing so comes at a price in terms of the time and productive resources that could otherwise be more efficiently employed."
He said UTC agrees with the business community at large that tax reform should not lower the revenue to the U.S. government. And he said, "We know we have to give up some current benefits in order for tax reform to succeed."
He noted that analysts recently asked him about a rumor that UTC might buy Tyco International, the remnant of an industrial conglomerate once based in the United States, which first moved its paper headquarters to Bermuda in 1997, which has no corporate income tax, and later moved its headquarters to Switzerland in 2009. The company is most famous for the conviction of its former CEO on fraud, conspiracy and larceny charges because he took so much compensation and didn't disclose the payments and loans to the company's shareholders.
Hayes told members of Congress that it would make no sense to buy Tyco because it would erase the division's tax advantages because of its Switzerland headquarters.
After his testimony on tax reform, Rep. John Larson, D-1st District, asked Hayes what would happen if Congress failed to raise the debt ceiling, as some tea party Republicans are threatening.
"I think it would be devastating to the world economy, not just to the U.S. economy and not just to UTC, if Congress failed to raise the debt limit," Hayes said, according to Larson's office. "If we think that the problems back in 2008, with the Lehman crisis, were devastating, a default by the U.S. government would have repercussions beyond anything we saw in 2008 and 2009. So we would encourage Congress to raise the debt ceiling."