FedEx: Allowing the Rich to Get Richer
https://www.nytimes.com/2019/11/17/business/how-fedex-cut-its-tax-bill-to-0.html
In the spirit of the rich-get-richer principle, I only thought it was fitting to share the story of FedEx and Trump’s corporate tax cuts (as brought to my attention from today’s The Daily podcast episode). The rich-get-richer principle is essentially that the probability of a good or an idea’s increase in popularity is directly proportional to that good or idea’s current popularity. Those pushing for corporate tax cuts are mostly the large corporations who are already vastly powerful and monetarily rich. Their motives are founded in increasing their share of wealth. Thus, they push for reform that fits in this desire.
In the case of FedEx, a multi-billion dollar corporation, $10 million was spent on lobbying efforts to push this tax reform into motion. Their rationale behind it was, as all tax cut rationale is, about stimulating the economy and allowing the money that would otherwise be taxed to facilitate more opportunity. In FedEx’s case, they argued that the opportunity would come in the form of investments. The overall effect of Trump’s tax cuts did stimulate the economy within approximately the first two quarters, but fizzled out. FedEx did not use their $1.5 billion in savings from tax cuts towards new investments, but instead bought back stock and paid stakeholders dividends. The money they had promised in investments had seemingly disappeared. This year, they cut back employee bonuses.
Relating this back to the power law – the more power FedEx was able to yield, through its lobbying efforts which was backed by money, the more power it was able to gain by way of corporate tax cuts ($1.5 billion to be exact). Had FedEx not already been such a fiscally powerful company, they probably would not have been able to yield such power in the first place. Since they were able to because of their wealth status, they literally got richer. And thus, the rich do, in fact, get richer.