NYT piece today points out that FedEx capital spending has lagged in the wake of the 2017 tax cut, pushed hard by FedEx founder Frederick Smith, that was supposed to boost capital spending. Smith gets mad. (1/4)
about.van.fedex.com/newsroom/state…
about.van.fedex.com/newsroom/state…
Smith says NYT story is "factually incorrect." Implied is that NYT headline-- "FedEx Cut Its Tax Bill to $0" is wrong. Smith's money quote: "unlike FedEx, the New York Times paid zero federal income tax in 2017 on earnings of $111 million, and only $30 million in 2018."
Except FedEx tells us quite clearly its federal income tax was less than zero in both years. It's in the 10-K. Negative $540 million in 2017, minus $107M in '18. There is nothing "factually incorrect" about this. So what does "unlike FedEx" in his money quote mean?
It means Smith is blowing smoke. If FedEx actually did pay fed inc tax in 2017 or 2018 instead of paying nothing, as its annual report says, Smith would have said so directly, and explained why his own annual report is wrong. Notably, he did not do that. So NYT is not wrong.
Smith is doing what CEO's do in response to a finding that they paid no fed inc tax in year X. They say "but we paid other taxes," or "but we'll pay fed inc tax someday." They change the subject.
He is, entertainingly, right about one thing: NYT's current fed inc tax in 2017 was basically zero. But even at zero, NYT's tax was still $540 million more than FedEx paid in the same year. And the $30M NYT paid in '18 was $148 million more than FedEx paid the same year.
The broader point illustrated, unintentionally, by FedEx CEO Smith's tantrum is that the TCJA zeroed out taxes for big profitable firms all over the economic spectrum-- including many that didn't need a cut and some that didn't lobby for one. FedEx is *not* an anomaly.
