FedEx Corp. navigates the sinews connecting every corner of the nation — roads, bridges, airfields and seaports.
The company has 85,000 trucks crisscrossing the nation’s interstates. Its fleet of 650 airplanes roll down runways from Atlanta to Anchorage, Alaska. Ports clogged with cargo ships feed its thriving freight-forwarding enterprise. Without all those federal investments in steel, concrete, stone and asphalt, the Atlanta-based shipper wouldn’t have a business.
When the time comes to pay for those public projects, however, FedEx does not deliver. Last year, the company paid nothing — zero — in federal income taxes.
A recent New York Times investigation found that President Donald Trump’s new tax law helped FedEx avoid income taxes in 2018 — a year after it paid $1.5 billion under the old law. Hiring, pension contributions and wages accelerated somewhat after FedEx eluded tax collectors. But the company’s top executive promised capital spending would rise. Instead, it fell. Far more money was showered on investors.
“Much of its savings have gone to reward shareholders: FedEx spent more than $2 billion on stock buybacks and dividend increases in the 2019 fiscal year, up from $1.6 billion in 2018, and more than double the amount the company spent on buybacks and dividends in fiscal year 2017,” the Times found.
FedEx joined a long list of giants, such as Amazon, Chevron, Deere and Eli Lilly erasing their federal tax bills and starving federal coffers of tens of billions of dollars. Meanwhile, the federal gas tax has gone unchanged in 26 years. Thanks to inflation, the gas tax buys 40% less than it did in 1993.
The great escape from taxation has obvious results: The rest of us pick up the cost of keeping the economy moving. Or new roads and bridges never get built. Or projects live in limbo, delayed year after year, decade after decade.
Federal spending on infrastructure has been going nowhere for years, with inflation-adjusted spending falling by nearly $10 billion from 2007 to 2017. The American Society of Civil Engineers gave the nation a “D+” for the overall condition of roads, bridges, transit, drinking water, wastewater, dams, ports, aviation and energy.
The nation has moved from build-and-expand on infrastructure to patch-and-prop-up, according to a 2019 report from the Brookings Institution, a Washington, D.C., think tank. Trump and Democratic congressional leaders agreed on a $2 trillion “infrastructure plan” in April.
Like so many times the topic was raised in recent years, the agreement went nowhere.
The stumbling block always is the same: how to pay for it.
Not coincidentally, Trump’s tax cut — chiefly targeted to corporations and high-income families — is expected to cost the U.S. Treasury $1 trillion to $2 trillion through 2025. More, if some of the temporary tax rollbacks become permanent. That means a bumpy road ahead for FedEx and any companies that deliver their goods to home, office and factory.
Unless FedEx and other companies pick up their fair share, the endless string of tax windfalls will slow the wheels of commerce — and “Infrastructure Week” will remain more of a punchline than a plan.
— Star Tribune (Minneapolis)
