Fedex targeted in TV ad supportive of Biden plan
Fedex Chairman and CEO Fred Smith voiced his opposition to a corporate tax hike as the way to pay for U.S. infrastructure improvements proposed by President Joe Biden.
“Fedex fully supports the rebuilding of American infrastructure,” Smith said in a letter Monday to the company’s U.S. employees. “However, the current corporate tax proposals in the Administration’s plan will reduce capital investment and significantly degrade U.S. competitiveness.”
Biden’s American Jobs Plan would invest $2 trillion in U.S. infrastructure and other areas if passed by Congress.
Biden wants to raise taxes on corporations to pay for the eight-year spending package. He proposed increasing the corporate tax rate to 28% – raising the level set in President Donald Trump’s tax cuts in 2017 – and overhauling how the United States taxes multinational corporations by increasing the minimum tax on U.S. corporations to 21%.
In his letter, Smith opposed that approach. He said Fedex believes infrastructure investments “should be financed by users like Fedex,” but not through a tax hike. The company told CNBC in March it was for gas and diesel tax raises and, eventually, user fee payments.
The letter came a day before the airing of a new ad campaign targeting Fedex from a progressive group pushing for higher corporate taxes to help pay for the plan.
The 60-second television ad from Tax March will begin running in Memphis, home of Fedex, and in Washington, D.C., on Tuesday, according to a
news release from the organization.
The ad highlights a report that said Fedex was among 26 companies that ended up paying no federal income tax the past three years. It asks viewers to “tell Congress it’s time to … make corporations like Fedex pay their fair share.”
“During the pandemic, Fedex shipped more packages than ever before, raking in $1.2 billion in profits,” the narrator says in the ad. “So how much did Fedex pay in federal taxes? Nothing.”
The Institute on Taxation and Economic Policy published the report earlier this month, saying Fedex had an effective tax rate of minus-12.8% from 2018 to 2020. The report cited a provision in the CARES Act bill passed in the COVID-19 pandemic’s early stages, along with the 2017 Tax Cuts and Jobs Act passed under Trump’s administration, as helping Fedex achieve this result.
In the letter, Smith continued to back the tax provisions in the bills that benefited Fedex, adding that the company has paid nearly $9 billion in federal, state and local taxes the past five fiscal years.
Smith said the corporate tax provisions in the CARES Act and the Tax Cuts and Jobs Act “are laws, not loopholes, and these provisions allow us to better serve our customers, grow our business with them, and invest in our team members’ work environment, facilities, and software especially during times of uncertainty like the COVID-19 pandemic.”
Business Roundtable, an association of CEOS of which Smith is a member, voiced opposition to raising the corporate tax rate to fund the infrastructure plan.
Conversely, Amazon CEO Jeff Bezos said the company is “supportive of a rise in the corporate tax rate” in a statement last week.
A March 31 Morning Consult/politico poll found Americans, by 2-to-1 (54%27%), support raising corporate taxes to support improvements to infrastructure.
Tax March is a left-of-center policy group pushing for wealthy Americans to pay more in taxes and is a vocal critic of the Tax Cuts and Jobs Act, which Fedex supported. The New York Times reported in 2019 that Smith and Fedex lobbied for a corporate tax reduction from Trump’s administration.
USA TODAY contributed reporting. Max Garland covers Fedex, logistics and health care for The Commercial Appeal. Reach him at max.garland@ commercialappeal.com or 901-529-2651 and on Twitter @Maxgarlandtypes.