Commentary

Proposed Debate Between FedEx CEO And 'NYT' Publisher Will Never Happen

FedEx founder-CEO Fred Smith was so angered by a New York Times report about the company's $0 tax bill that he challenged the newspaper's publisher to a public debate. The discussion would be stimulating, but I doubt it will ever happen.
The dust-up started after the newspaper singled out the shipping company in a story on Sunday that was intended to attack the Trump administration's signature legislative achievement. As part of a broad-based tax reform, the corporate tax rate was cut from 35% to 21% and companies were allowed to deduct the full cost of new equipment investments in the year they made them.
FedEx's effective tax rate plunged from 34% in fiscal 2017 to "less than zero" during the first year of tax cuts, and the company didn't boost investment in new equipment and other assets in the following year, the NYT reported.
The newspaper also recounted Smith's longtime push for corporate tax reform, a demand the Obama administration had rebuffed. Donald Trump's victory and a Republican-controlled Congress practically ensured the easy passage of tax cuts.
Smith swiftly responded to the report, saying in a blog post the NYT published a "distorted and factually incorrect story" about the company and its history of paying taxes and investing in the U.S. economy.
He also challenged A.G. Sulzberger, the NYT's publisher and the "Business" section editor to a debate in Washington with him and FedEx's corporate vice president of tax.
The NYT responded to the challenge with a statement saying that Smith hadn't refuted the facts in the story — and that the newspaper stood by its reporting.
That's fine, but it still appears the NYT singled out FedEx among the zillions of companies that saw their tax bills lowered because of tax reform. It's as if the NYT sought to embarrass a major proponent of tax reform for benefiting from those very reforms.

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Smith is taking a big step down in challenging the NYT to a debate. His company is more vital to the world economy than any newspaper. There are plenty of other places for news, but getting a package across the country overnight is a specialized undertaking.  

The NYT is merely looking for more ways to attack Trump, whose re-election depends on fulfilling a key promise to grow the economy and to put more people to work. The biggest problem with Trump's claim is that no president has ever beat the business cycle, and a recession is overdue as consumer debt outpaces income growth. He's so desperate to win re-election that he's begging the Federal Reserve for rate cuts -- even as unemployment is at 50-year lows and the stock market is at record highs.

Trump's tax cuts helped to prolong growth, but he shot himself in the foot by trying to fulfill another key campaign promise: renegotiating free-trade agreements to protect a handful of U.S. factory workers. Reshaping the global trade system to help America's blue-collar labor force can't be done in a few years. China entered the World Trade Organization a generation ago, binged on debt to modernize its economy and can't escape a major demographic time bomb that will become more pronounced in the next decade.
Cutting corporate tax rates was a good idea to make the U.S. more hospitable to business. Restoring them to former levels would give the U.S. Treasury a short-term boost, but would trigger a market collapse and recession. Perhaps Smith and Sulzberger could add that to their talking points in a debate.
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