Tuesday, February 22, 2005

NY Times & tax shelters

Here's Allan Sloan in today's WaPo:

The New York Times editorial page is unsparing when it comes to flogging tax-dodging corporations. Corporate tax avoidance, it intoned in a typical piece last April, is "both a straightforward fiscal problem" and "a broader threat to our civic culture." Indeed. Last week, the New York Times Co. didn't exactly practice what the New York Times editorial page preaches.
Cool......Who knew that the New York Times actually owned its own country somewhere? I wonder if it has its own navy, like the Scientologists, or if they're just content with lax corporate tax policies and practices. Cuz that's what the passage above implies. The NY Times preaches against government provision of "corporate welfare"; if they don't practice what they preach, then it's clear they must be a government that doles out "corporate welfare" (scare quotes indicating that your humble author doesn't necessarily share the negative characterization of corporate tax incentives).

Of course, the Times isn't a government, and the only way it could be seen as hypocritical is if it had been criticizing other companies for taking advantage of loopholes and/or the government's lax enforcement. This point is recognized by The Captain o'er at Captain's Quarters:

That's the problem with newspapers and businessmen in general who rail against tax cuts and investment protections in the tax code. Most of them operate or contribute to corporations that exploit these legal structures without hesitation -- as they should, if legal -- to benefit themselves and their shareholders. And yet they castigate others who do so, accusing them of threatening our "civic culture" and other hyperbolic rants about the evils of corporations. It's hypocrisy at its most base and ludicrous level. (emphasis mine)

Let's turn to the editorial in which the Times talks about corporate practices threatening the civic culture. If that editorial is calling for greater ethical responsibility on the part of corporations to forego tax shelters, then the Captain is absolutely right that the Times is being ludicrously hypocritical.

From the 4/13/04 Times:

Despite one of the highest ostensible corporate tax rates in the industrialized world, American companies are in fact among the least taxed. This oddity undermines the integrity of the system and makes a mockery of those who actually pay their fair share. It would be far healthier to reduce the corporate tax rates modestly while simplifying the system to ensure compliance as John Kerry is proposing.

Far from casting the issue as an ethical duty that accrues to corporations, the Times is looking at it as a systemic and political problem. The paper isn't shaking its fist righteously at corporations that are making use of perfectly legal measures to reduce their tax burden - which, as The Captain correctly observes, they should do - but rather claiming that the tax system itself is broken and shouldn't allow corporations to do some of the things they're currently allowed to do.

As the Times points out earlier in the editorial, the problem with making a "mockery of those who actually pay their fair share" isn't an ethical one, either; it's a political one. A system that allows for wild fluctuations between taxonomically equal entities undermines civic culture and leads to social unrest, as has happened in Latin America. Again, the point is political and pointedly not ethical.

[Quick and hopefully-not-too-fawning update: I'm consistently impressed with the calibre of comments on most blogs, the occasional blogswarm notwithstanding. The CQ comments are no exception. This is why I don't understand some bloggers' decision to disable commenting; often enough, the comments are really keen and include angles and ideas that add greatly to the overall value of the blog]