tax bill

22 Dec 2019

How did FedEx get to cut its tax bills?

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If you are a business owner, it may seem impossible paying zero taxes. However, when it comes to FedEx, things are different. Everyone wants to know how they got to cut the tax bills to $0! In this article, you will find out that this has more to do with politics than you would ever imagine.

There is something strange about this, mostly when you notice that FedEx owed more than $1.5 billion in taxes in its 2017 fiscal year before the tax cut. Besides, the company owned nothing in the following year following the tax cut, according to the New York Times. How does someone go from owning so much to owning nothing?

tax bills
How does a company get to cut its tax bills to nothing? Learn some lessons with FedEx! (Source: Pixabay)

From billions to zero in the tax bills

When it comes to FedEx, President Trump’s tax reform has helped out in a major way. However, a small business can not count on the same type of benefit. For the wealthy, banks and other big corporations, Trump’s tax reform package can be considered a lopsided victory because it cuts significantly tax cuts to corporate profits, investment income, and estate tax.

As we previously mentioned, FedEx itself owed more than $1.5 billion in taxes. Thus it is no surprise that FedEx’s founder and chief executive, Frederick Smith, lobbied big time for the tax plan. When Trump signed into law, the $1.5 trillion tax cut became his signature legislative achievement. This is how FedEx’s tax rate decreased from 34 percent to less than zero.

Considering all this, you might be thinking of what motivates the president to forgive tax bills that expressive. In theory, this corporate tax cut would mean more money for companies to invest in equipment and other assets. The irony is that, despite the original intent of forgiving the taxes, companies are investing less. That being the case, FedEx’s financial filings show that the law just served to save it at least $1.6 billion.

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The criticism here should come with a caveat: FedEx did increase its workforce. Besides, it pays increases for hourly employees. According to them, the company invested billions in capital items eligible for accelerated depreciation and made large contributions to our employee pension plans.

If you appreciate or not the tax plan, it is your responsibility as a citizen to investigate if promises are being maintained. It is not fair to see rich companies getting even richer because of any administration if it is not good for all the population. Research, read the news and keep analyzing things. There are elections coming and it is time to reason about political proposals. Even those concerning only to tax bills.

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