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Comment by rahimnathwani | Hacker News Reader

Response to this: https://www.nytimes.com/2019/11/17/business/how-fedex-cut-it...

From the NYTimes article:

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

> Its financial filings show it owed no taxes in the 2018 fiscal year overall. Company officials said FedEx paid $2 billion in total federal income taxes over the past 10 years.

So in the last 10 years FedEx paid $2B in taxes, of which $1.5B was paid in 2017. That seems really weird. Does anyone know enough about their financials to explain how this happened?

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...

I didn't read all of this but "taxes" is a loaded question.

I'm assuming the $2B is about payroll taxes, their share of federal income tax for W2 employees. All companies with these type of employees pay some of these (along with SS and workman's comp, etc.)

There is another question of corporate taxes. Corporate taxes work different than individual taxes. For individuals we: EARN > PAY TAKES > SPEND. However, for corporations they: EARN > SPEND > PAY TAXES. This means that all companies can choose to pay no corporate taxes ever. This is purposeful and the intent of the tax code is to encourage reinvestment and expansion and capital expenditures like new equipment because this keeps more people employed long term. This is always why people don't understand when company X paid $0 in corporate taxes. It is a choice. It should be expected from someone like Amazon who re-invests so heavily.

Now if a company wants to have cash on hand or do stock buybacks, they they must realize this money and pay taxes on it. The new tax laws made this a much much more attractive proposition. The "promise" was that this would be spent on expansion however most was spent on stock buybacks which is a large driver of the stock market up in the last year despite interest rates around zero and rapidly slowing growth. It seems to me that this is the jist of the NYT article. The $0 is just to grab headlines. Lots of companies lobbied for these cuts for "expansion" but none of them did. They took the opportunity to leverage it against stock price which makes sense for the C suite since that is a major part of their compensation. This is another reason that board members, C suite and VPs of public companies should not be paid in stocks or options or RSUs.

Too bad it's impossible to read because of multiple overlays. I guess I'll take FedEx's word for it.

FedEx didn't even dispute any of the article. They're just doing some whataboutism.

Edit: Can someone downvoting point out where I'm wrong? They say the NYTimes distorted the truth, but give no indication of how.

The "whataboutism" is the crux of the issue though. Everyone does their best to minimize their tax burden every year - this is completely rational behavior. I don't know what point the NYT was trying to make, other than maybe showing that FedEx has some good accountants. The debate that we should be having, and the one that FedEx is perhaps crudely trying to edge us toward, is whether these tax policies actually "help". They are going to say it does, and that they invest that money in the broader economy. The NYT would probably say something similar with regard to the value of journalism.

Did you read the NYTimes article? The article is more about how FedEx didn't re-invest the money saved on taxes like they claimed they would. Instead they put used it for stock buybacks and dividends. The NYTimes article was about the very thing you said it should be about.

I mean... they did literally reinvest it in themselves by doing stock buybacks. If that is a good thing is up for debate.

Whataboutism is justifying one party's actions by pointing at another party and saying "they do it too."

This isn't that. Fedex is saying that they do a lot more for the national economy that the NYT. They pay more in taxes, they invest more in assets, etc.

Why is this even up for debate? Why would anyone think that the NYT is more useful to the economy than FedEx? Why do people continue to put ""journalism"" on such a high pedestal? Like, what actual value did the NYT article produce? At worst it could have potentially negatively affected the FedEx stock price and overall popular perception, for no good reason other than to generate clicks/ad views.

Why would anyone think that the NYT is more useful to the economy than FedEx?

Here's one point of view that doesn't come up as often as it should: the First Amendment doesn't say anything about churches that it doesn't also say about the press. Yet we don't tax churches on the grounds that "the power to tax is the power to destroy." [1]

If it weren't for this double standard, the Times would indeed be justified in paying zero tax.

[1]: http://www.catholic365.com/article/1992/faith-of-our-fathers...

I'd be fine with that as long as we get to start referring to "journalists" as priests or clergymen or whatever, at least then things would be a bit more honest.

Acknowledging that newspapers are just as biased as religious texts would be fine.

> the First Amendment doesn't say anything about churches that it doesn't also say about the press.

It assuredly does say different things:

>Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

If a newspaper didn't want to pay taxes they can form themselves as a non profit as churches largely do. It's been done before, e.g. ProPublica, Institute for Non-profit News, Crosscut, The Texas Tribune, and many more.

Either taxes "abridge freedom" or they don't. Which is it?

In reality, the language in the First Amendment is nowhere near sufficient to justify granting tax exemptions to an entire industry, be it religious or secular.

That's a rather bleak, mechanistic view of society.

Journalism provides information, without which voters are unable to make decisions any better than random chance. Democracy cannot function in the absence of information.

Here, specifically, the NYT is contributing to the public's knowledge of the effects of the tax cut: people were promised expanding businesses investments as an outcome of letting them keep all those billions. This not happening should inform peoples' willingness to try that strategy again.

30 years ago this article would have never been published in the paper, or it would be a tiny article tucked deep in the financial section or whatever. But nowadays they have to do anything to get clicks/ad views/subscriptions/attention, because that's the game now. They'll write a headline like the FedEx one because they naively think they can do so without repercussion because they're stuck in the old mindset of being the unassailable trusted authoritative arbiters of truth. No, as it turns out, when a company does a thing that can potentially harm another company financially, the other company can now publicly fight back for all to see online. "Journalists," as well as many in this thread, still struggle to acclimate to the reality of this relatively newly leveled playing field. You can't just publish whatever anymore from an ivory tower of "journalism" and expect someone, individual or corporation, to not fight back online.

Reader mode in Firefox gets around it.

Disable javascript and your time on the internet will improve substantially.

As someone who writes JavaScript for a living, :(

Good Javascript is like that quote in Futurama:

"When you do things right, people won't be sure you've done anything at all."

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