What caused GE's tax expense swings in Q2 2024?

The tax expense for GE Aerospace in Q2 2024 was $125 million. The fluctuations in tax expenses can be attributed to various factors:

1. Cost of Sales and Operating Expenses: GE Aerospace has experienced an increase in the cost of sales and operating expenses, which has impacted its tax expense. The cost of sales jumped 8.4% year-over-year to $11.6 billion, while selling, general, and administrative expenses increased by 5.9% to $2.3 billion. Research and development expenses also rose by 17.6% to $507 million. These increases in costs can lead to higher tax expenses, as tax liabilities are often tied to income and expenses recognized for tax purposes.
2. Foreign Exchange (Forex) Woes: GE Aerospace's international presence exposes the company to the risk of adverse currency fluctuations. A strengthening U.S. dollar may require the company to either raise prices or contract profit margins in locations outside the United States, which can impact tax expenses. Forex movements can affect the tax treatment of foreign earnings, leading to variations in tax expense recognition.
3. Dip in Consumer Confidence: A dip in consumer confidence, which is influenced by macroeconomic factors such as interest rate hikes and credit availability, can negatively impact GE Aerospace's customers, particularly those in the utilities and power sectors. This can result in reduced demand and potentially lower revenues, which in turn can affect tax expenses. Additionally, consumer confidence can influence spending patterns, which may impact GE's business and, consequently, its tax obligations.

In summary, the tax expense swings in Q2 2024 for GE Aerospace are likely due to a combination of rising costs, forex challenges, and consumer confidence dips. These factors, either directly or indirectly, influence the company's income and expenses, thereby affecting its tax obligations.