As Congress debates a very significant change to American tax policy, activists and media outlets are unfairly attacking a long list of companies for the crime of complying with federal tax laws that incentivize job creation, investment, and economic growth. Left-wing organizations that are more interested in stoking outrage for fundraising purposes than economic recovery are using cherry-picked, misleading “data” to attack the very companies that are investing to pull our country out of the pandemic-induced recession.
Regardless of what some of these organizations might claim, the fact is that major corporations pay billions of dollars in local, state, and payroll taxes. Profits are reinvested in job creation, building or purchasing buildings, machinery, or other necessary inputs for their businesses (creating further jobs), and creating value for the millions of Americans whose retirement accounts are invested in the market.
Those fundamental facts about how businesses work haven’t stopped liberals from pushing false claims in hopes of stoking populist ire to support their ideologically driven quest to raise taxes, regardless of consequence.
Just last week, Sen. Bernie Sanders tweeted the objectively incorrect claim that “If you paid $20 to mail a Federal Express package overnight, you paid more to Federal Express than it paid in federal income taxes over the past 3 years.”
A quick glance at the company’s annual report filed with the Securities and Exchange Commission shows that FedEx had an effective tax rate of 23% in fiscal 2020 and 21.6% for fiscal 2021. Nike, another company targeted in this disinformation campaign, had a somewhat lower, but still double-digit, effective tax rate.
One can have a debate over what the precise federal tax rate ought to be. But the fact of the matter is that none of the companies that are being attacked in this campaign dodged their tax burden or otherwise escaped the taxman.
We are in the midst of a long legislative slog in which many in Congress will fight to raise the corporate income tax rate out of the simplistic belief that corporations somehow do not pay enough in taxes. But, given what our economy has been through over the last year, we should tread very carefully.
Once again, let’s look at FedEx as an example. Besides paying billions of dollars in taxes, FedEx significantly contributes to the U.S. economy by employing almost half a million individuals in America. In addition to those facts, consider where we collectively would have been over the last year if not for the Amazons, UPS’s, and FedExes that allowed us to quarantine in our homes while frontline workers delivered the goods we needed. And that is to say nothing of the incredible efficiency with which vaccines have been distributed from manufacturing plants to all 50 states.
It’s no secret that tax increases are incredibly harmful to growth. Capital investment gives corporations the ability to plan a long-term strategy to expand their businesses, which is more beneficial to the U.S. economy than handing over millions of dollars to the government in taxes.
When businesses have the funds to reinvest in their operations, that money is used to invest in long-term assets, like the 35 factories that Nike runs in the United States, or the American-made airplanes that FedEx purchases. These investments lead to critical job creation around the country and will be diminished if companies have less money to spend because of higher taxes.
Finally, we should consider the source of these attacks. The propaganda that made its way into Sen. Sanders and his allies’ Twitter feeds are being pushed by a liberal “dark money group,” of the kind that does not disclose their donors’ names but, according to federal filings, received 90% of its more than $140 million income in 2018 from less than 20 donors. The types of donors who contribute tens of millions of dollars to pet political causes tend to have axes of their own to grind, and their contributions tend to give them a significant say in how that money is spent.
These attacks come as no surprise in the middle of a debate over changes to the federal tax code. But, given the factual basis (or lack thereof) as well as the source, these types of campaigns are designed only to stoke outrage by painting an inaccurate and incomplete picture. There are plenty of problems for Congress to address as we work towards economic recovery, but if this most recent campaign is setting the tone for where Congress is headed, then it is likely to create more problems than it solves.