FedEx is fighting back against the New York Times after the paper of record published an expose titled “How FedEx Cut Its Tax Bill To $0.”
The article, which largely aims to be an indictment of the Trump tax cuts, centered on FedEx as a primary beneficiary of them. ” In the 2017 fiscal year, FedEx owed more than $1.5 billion in taxes,” the piece begins. “The next year, it owed nothing.”
FedEx didn’t take to kindly to the news, and in response, their CEO issued the New York Times reporter responsible for the article to a debate.
As CNBC reported:
The CEO of FedEx challenged the publisher of The New York Times to a public debate on tax policy after an article in the paper detailed how the shipping giant effectively owed no taxes in fiscal 2018. The windfall came as a result of the Trump Administration’s tax overhaul.
In a statement posted on the FedEx website, Smith fumed that the Times article was a “factually incorrect story,” and an “outrageous distortion of the truth” without pointing to specific inaccuracies.
Smith also took the Times to task for its own federal income tax payments, saying that 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.”
It is true that FedEx saw a massive reduction in their income tax rate in 2018, from 34.6% in 2017 to negative 5% in 2018. Put numerically, FedEx paid $1.582 billion in taxes in 2017 compared to receiving a $219 million credit in 2018, but most of that swing had to miscellaneous expenses that had nothing to do with the Trump tax cuts.
As FedEx notes in their 2018 annual report, “we recognized a benefit of approximately $265 million related to a lower statutory income tax rate on 2018 earnings and a one-time benefit of $204 million from a $1.5 billion contribution to our U.S. Pension Plans.” Furthermore, “Our 2018 tax rate also included a net benefit of $255 million from corporate structuring transactions as part of the ongoing integration of FedEx Express and TNT Express and a benefit of $225 million from foreign tax credits generated by distributions to the U.S. from our foreign operations.”
FedEx paid a 17.5% income tax rate in 2019, which is close to the corporate tax rate of 21% – and a far cry from zero.