How FedEx Cut Its Tax Bill to $0
By Jim Tankersley, Peter Eavis and Ben CasselmanPublished Nov. 17, 2019
WASHINGTON — In the 2017 fiscal year, FedEx owed more than $1.5 billion in taxes. The next year, it owed nothing. What changed was the Trump administration’s tax cut — for which the company had lobbied hard.
The public face of its lobbying effort, which included a tax proposal of its own, was FedEx’s founder and chief executive, Frederick Smith, who repeatedly took to the airwaves to champion the power of tax cuts. “If you make the United States a better place to invest, there is no question in my mind that we would see a renaissance of capital investment,” he said on an August 2017 radio show hosted by Larry Kudlow, who is now chairman of the National Economic Council.
Four months later, President Trump signed into law the $1.5 trillion tax cut that became his signature legislative achievement. FedEx reaped big savings, bringing its effective tax rate from 34 percent in fiscal year 2017 to less than zero in fiscal year 2018, meaning that, overall, the government technically owed it money. But it did not increase investment in new equipment and other assets in the fiscal year that followed, as Mr. Smith said businesses like his would.
Nearly two years after the tax law passed, the windfall to corporations like FedEx is becoming clear. A New York Times analysis of data compiled by Capital IQ shows no statistically meaningful relationship between the size of the tax cut that companies and industries received and the investments they made. If anything, the companies that received the biggest tax cuts increased their capital investment by less, on average, than companies that got smaller cuts...
Now, they are challenging a company founded by a legendary businessman, Fred Smith. It says enough of the man that both Bill Clinton and George W Bush wanted him as Secretary of Defense. And a Yale professor did not agree with the concept of flying time sensitive packages overnight would be a good business model (As an aside, people wonder why I despise confusing education and intelligence). But Mr. Smith, not a man to back down from being lied about, responded to this slander:
The New York Times published a distorted and factually incorrect story on the front page of the Sunday, November 17 edition concerning FedEx and our billions of dollars of tax payments and billions of dollars of investments in the U.S. economy. Pertinent to this outrageous distortion of the truth is the fact that unlike FedEx, the New York Times paid zero federal income tax in 2017 on earnings of $111 million, and only $30 million in 2018 – 18% of their pretax book income. Also in 2018 the New York Times cut their capital investments nearly in half to $57 million, which equates to a rounding error when compared to the $6 billion of capital that FedEx invested in the U.S. economy during that same year.
I hereby challenge A.G. Sulzberger, publisher of the New York Times and the business section editor to a public debate in Washington, DC with me and the FedEx corporate vice president of tax. The focus of the debate should be federal tax policy and the relative societal benefits of business investments and the enormous intended benefits to the United States economy, especially lower and middle class wage earners.
I look forward to promptly hearing from Mr. Sulzberger and scheduling this open event to bring further public awareness of the facts related to these important issues.
Something to remember about the New York Times, they say something, especially on political issues, the planning assumption is it is a bold faced lie. Hyperbold? This is the rag that pushed "Russian collusion," Ukrianin quid pro quo, etc for years. But for some reason the multiple scandals of the Obama years are not covered (IRS, Fast and Furious, etc) It's a leftist propaganda source, but unlike the Nation or MSNBC, they won't admit what they are. Every time I read it (full disclosure, I do subscribe to the digital edition, and get it often from the other sources I read) I recall the wisdom of a cartoon from the 1980s. First block shows a Moscow factory worker reading this morning's edition of Pravda. The second block shows a Harvard professor reading the same edition of the paper. "The difference? The guy in Moscow knows he getting lied to."
But another point, and I don't know if Mr. Smith is a registered Democrat or Republican, it shows what you must do in today's propaganda filled media. You get hit, you strike back, three times as hard. Too many Republicans (especially the Never Trumpers/RINOs) would just stand their and take it. Mr. Smith is not, thank God. Rags like the New York Times need to be called out, challenged, and held to account.
Mr. Smith, I really doubt you will get your debate, Pinch is a coward. But thank you for showing people how it's done.