FedEx CEO Fred Smith lashed out at The New York Times after it reported that the corporation slashed its more than $1.5 billion tax bill to zero, challenging publisher A.G. Sulzberger to a policy debate.
On Sunday, the Times evaluated the impact of President Donald Trump’s 2017 tax code overhaul ― the largest in the past three decades ― on FedEx, and found it enabled the delivery company to wipe out its federal taxes in the 2018 fiscal year. Smith lobbied extensively for the passage of the controversial measure that, in total, cut taxes by $1.5 trillion.
In a 2017 radio interview with then-commentator Larry Kudlow, who now chairs Trump’s National Economic Council, Smith asserted that the tax bill would spur “a renaissance of capital investment” in the U.S. But, according to the Times, FedEx “did not increase investment in new equipment and other assets in the fiscal year that followed” the bill becoming law.
In a statement following publication of the Times’ article, Smith accused the newspaper of pushing “a distorted and factually incorrect story.” He did not detail a specific inaccuracy, however.
Smith did say that FedEx “invested billions in capital items eligible for accelerated depreciation and made large contributions to our employee pension plans,” which he said were factors in the company’s “temporarily lowered” tax bill.
Smith also said that the Times’ parent company “paid zero federal income tax in 2017 on earnings of $111 million, and only $30 million in 2018 ― 18% of their pretax book income.”
The executive then offered to debate Sulzberger and the Times’ business section editor.
“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,” he said.
Danielle Rhoades Ha, the Times’ vice president of communications, dismissed Smith’s remarks in an email to HuffPost.
“FedEx’s colorful response does not challenge a single fact in our story,” she said. “We’re confident in the accuracy of our reporting. FedEx’s invitation is clearly a stunt and an effort to distract from the findings of our story.”
Rhoades Ha added that The Times Company regularly pays “a substantial amount of our profits in income tax, one of the highest rates in the country, due to our base of operations in [New York City].”
In 2017, The Times Company did not pay any federal income tax primarily because it gave about $120 million in cash to its pension plans and was able to write off the amount as a deductible, the Times said. The decision allowed the company to pay off in advance several years’ worth of its required contributions to the plans.
An analysis of Trump’s tax reform measure by the Institute on Taxation and Economic Policy, a Washington-based think tank, found that in 2018, at least 60 companies reported owing no taxes. That’s roughly double the figure for previous years, according to the Washington-based Center for Public Integrity. The list includes Amazon, Netflix, General Motors and Delta Air Lines.