
FedEx Delivers Billions to the Taxman - frockington1
https://www.wsj.com/articles/fedex-delivers-billions-to-the-taxman-11574294109?mod=rsswn
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woofcat
The First Amendment to the U.S. Constitution makes clear “the right of the
people . . . to petition the government for a redress of grievances,” and the
FedEx board of directors and senior management takes this very seriously. As a
corporate citizen, we decided many years ago to engage openly in four areas of
public policy that have strategic implications for our company and the more
than half a million people who work for us: energy, the environment, trade and
taxes.

Although FedEx is an American company focused mostly on governmental issues in
the U.S., we serve 220 countries and territories around the world, and
appropriately make our views known on these topics internationally as well. We
would never advocate policies that we did not feel benefit society overall.

During the Obama administration, and more recently the Trump administration,
we worked consistently to change U.S. corporate tax policies. As one country
after another lowered corporate tax rates, the U.S. stood by and allowed wide
swaths of this country to be deindustrialized due in large measure to its
globally uncompetitive business tax rates. At the same time, the country lost
focus on vital trade policies following the financial crisis of 2008-09.

The primary victims of this governmental disregard were blue-collar, high-
school-educated wage earners, particularly outside metropolitan areas.
President Obama belatedly came to embrace the need for a change in both policy
areas and supported lower corporate tax rates, increased infrastructure
spending, and new trade agreements such as the Trans-Pacific Partnership and
the Transatlantic Trade and Investment Partnership. I met with Mr. Obama
several times on these issues, and I hope our views were in part responsible
for his positions during his second term.

When President Trump took over along with a Republican Congress, we worked
very hard through various open communication channels, coalitions, and
meetings with members of Congress and the administration to effect passage of
the Tax Cuts and Jobs Act.

While I met with Mr. Trump on a couple of occasions, I never discussed tax
reform with him, although we did talk about other public-policy matters. We at
FedEx were very pleased when he signed the Tax Cuts and Jobs Act into law on
Dec. 22, 2017. In response, we increased capital expenditures. We placed a
major order for 24 Boeing wide-body freighters, funded major facilities
modernizations and expansions, put additional funds in our pension plan, and
increased wages by more than $200 million.

Had the tax cuts not passed, we would have significantly lowered capital
expenditures in 2018. Instead, the expensing provision of the legislation
encouraged FedEx to buy new 777F and 767F aircraft. During the debate on tax
reform, the chief executive of UPS, David Abney, and I jointly penned an op-ed
in these pages urging passage of corporate tax reform.

I know the FedEx aircraft orders created thousands of incremental new jobs for
Boeing, General Electric (the engine supplier on freighters), and a multitude
of smaller suppliers. In fact, each order of a 777F injects about $540 million
into the U.S. economy, supports 1,850 jobs, and generates roughly $45 million
in federal, state and local taxes.

While major capital expenditures under the tax-cut legislation can be
expensed, thereby initially deferring U.S. corporate tax receipts, these
assets should produce significant revenues for the U.S. Treasury in the years
to come while also providing great jobs for the thousands of people who will
operate, maintain and provision FedEx and UPS aircraft.

There is little doubt the significant increase in U.S. employment and wages
since the tax cuts were passed is due to the decrease of corporate tax rates
from 35% (which we used to pay) to 21%, which is competitive with the rest of
the industrialized world. Over the past five years, we have paid more than $10
billion in U.S. taxes. After the temporary effect of capital expensing wears
off, I expect FedEx will pay billions more into the U.S. Treasury from the
earnings produced by our investments.

The recent slowdown in U.S. companies’ capital expenditures is, in my opinion,
due to trade disputes and the attendant global slowdown. We believe re-
embracing TPP and TTIP and passing the new U.S.-Mexico-Canada trade agreement
would reverse these trends in short order.

With the above background in mind, I urge readers to review the New York
Times’s disparaging story from Nov. 17 about FedEx’s involvement in corporate
tax reform and see a great example of polemics: printing selected facts,
connecting unrelated events, and implying nefarious activities when there were
none whatever. FedEx takes great pride in being a good corporate citizen—here
and abroad—at all times.

The Tax Cuts and Jobs Act was a great achievement for the American people, and
we are proud to have played a small role in passing this important
legislation.

Mr. Smith is chairman and CEO of FedEx Corp.

~~~
gist
> Mr. Smith is chairman and CEO of FedEx Corp.

You should have that at the start or somehow make it obvious what you have
done in quoting the article.

~~~
woofcat
>You should have that at the start or somehow make it obvious what you have
done in quoting the article.

I figured most people would be able to figure it out.

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Dylan16807
I was really thinking before I clicked that the title was making fun of FedEx.
Such a disappointment.

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belltaco
Can't read because of the paywall, but their previous response amounted to
"No, you."

>The Times article is “distorted and factually incorrect,” Smith said in a
statement in response to the article. The CEO lobbied for the tax cuts in
2017.

>“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,”
he said.

>Smith didn’t dispute any specific details of the article in his statement,
but challenged Times publisher A.G. Sulzberger to a public tax debate.

Edit: Source for the above is [https://finance.yahoo.com/news/nyt-fexex-case-
study-shortcom...](https://finance.yahoo.com/news/nyt-fexex-case-study-
shortcomings-154005651.html)

~~~
mcrocop
"Smith didn’t dispute any specific details of the article in his statement"

This is factually incorrect.

Here are some direct rebuttals:

NY times allegation: "In the 2017 fiscal year, FedEx owed more than $1.5
billion in taxes. The next year, it owed nothing. "

FedEx rebuttal: "FedEx has paid federal income tax every year, including
fiscal year 2018."

NY Times allegation:" 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."

FedEx rebuttal: "Following passage of the Tax Cuts and Jobs Act (TCJA), FedEx
invested billions in capital items eligible for accelerated depreciation and
made large contributions to our employee pension plans"

Etc, etc, etc... These are literally the first few sentences from BOTH the
article and the response. Either you're being intellectually dishonest by
claiming that they didn't dispute and specific details or you're incompetent.

~~~
Dylan16807
> FedEx rebuttal: "Following passage of the Tax Cuts and Jobs Act (TCJA),
> FedEx invested billions in capital items eligible for accelerated
> depreciation and made large contributions to our employee pension plans"

That's not a rebuttal, because they were investing that before the tax cuts
too. They actually invested less in 2018 than they had been projecting before
the tax cut!

>NY times allegation: "In the 2017 fiscal year, FedEx owed more than $1.5
billion in taxes. The next year, it owed nothing. "

>FedEx rebuttal: "FedEx has paid federal income tax every year, including
fiscal year 2018."

[https://news.ycombinator.com/item?id=21565736](https://news.ycombinator.com/item?id=21565736)

> Page 60 of their 2019 annual report will show you (link below). The TCJA
> (Tax Cut/Job Act) removed $1.354 billion from what they were expected to
> pay. They had several other benefits against their overall tax rate, but
> that was by far the highest in 2018. It lead to them owing -5% in taxes or
> $219 million.
> [http://s1.q4cdn.com/714383399/files/doc_financials/annual/20...](http://s1.q4cdn.com/714383399/files/doc_financials/annual/2019/FedEx-
> Corporation-2019-Annual-
> Report.pdf?utm_source=InvestorRelations&utm_medium=Referral&utm_campaign=AnnualReport2018&utm_content=FinancialInformationAnnualReports)

How do these claims add up, exactly?

