Warren Blasts FedEx and UPS as Evidence GOP Tax Bill Won’t Create Jobs

In TYT Investigates by TYT Investigates0 Comments

Sen. Elizabeth Warren (D-Mass.) speaks at a rally opposing the Republican tax plan on November 1, 2017, outside the U.S. Capitol. Photo by Chip Somodevilla/Getty Images.

By Steve Horn

Several congressional Democrats, including Sen. Elizabeth Warren (D-Mass.), are pointing to findings by TYT in a series of reports on the employment policies of FedEx and UPS as evidence that the Republican tax bill will not create jobs.

TYT reported that the two companies—among America’s largest employers—already have billions of dollars in cash on hand and are investing hundreds of millions in initiatives that stand to reduce their employment levels. TYT discovered patent applications, for instance, for package-handling automation, delivery drones, and driverless-trucking systems. The two companies are also investing in measures that would transform full-time driving jobs into Uber-style delivery work.

Both FedEx and UPS already receive millions in local tax subsidies in states including Illinois, Indiana, and Tennessee. But the track record of job growth resulting from those tax benefits has been mixed, as previously reported by TYT.

“Giant corporations like UPS and FedEx have billions of dollars in cash on hand that they could already be using to increase wages or hire more workers,” Warren said in a statement to TYT. “If they aren’t using this money to improve the lives of Americans now, there is no reason to believe they’ll do otherwise with the windfall they’ll get if Republicans pass this reckless tax bill.”

Neither FedEx nor UPS responded to Warren’s remarks. Both companies have lobbied and publicly advocated for tax cuts as an economic stimulus. Neither company has said it will expand its headcount as a result.

In her statement, Warren said, “The big lie Republicans have been telling for decades is that massive tax cuts for corporations will lead to higher wages and more jobs. The last time we handed out big tax breaks to corporations, they walked out with sacks of money while the American worker got kicked to the curb.”

Warren was apparently referring to the 2004 tax holiday on corporate repatriation of overseas profits. A 2011 report by the Institute for Policy Studies found that the companies repatriating the most money actually laid off workers in the years following because there was no mandate in the legislation to create jobs.

Other congressional Democrats, and one gubernatorial candidate, offered similar criticisms. Most of the Republicans TYT contacted for this story did not respond.

Republican Sens. Bob Corker and Lamar Alexander represent Tennessee, home state of FedEx. The company has helped finance their careers.

Corker sat on the conference committee that negotiated the version of the bill being voted on this week. International Business Times reporter and TYT Contributor David Sirota reported on Friday that Corker agreed to back the tax bill after the insertion of a provision which will benefit him and his chief of staff directly.

FedEx has been Corker’s top corporate donor throughout his political career. FedEx employees and its political action committee have donated $155,000 to Corker.

Alexander has taken $68,300 in campaign contributions from FedEx during his political career.

Matt Sonnesyn, Alexander’s former chief of staff—who also served as policy director of Corker’s 2006 Senate campaign—now works as a lobbyist for the Business Roundtable, to which FedEx CEO Fred Smith and UPS CEO David Abney both belong. Business Roundtable has actively advocated for and lobbied for the tax bill.

Alexander’s office referred TYT to the senator’s December 2 press statement in response to questions about FedEx, jobs, and corporate tax cuts.

The GOP tax bill takes “the handcuffs off job creators [to] grow the economy,” Alexander said in that statement. “Our corporate taxes rates have been among the highest in the world, driving 4,700 American companies overseas during the past ten years to take advantage of lower tax rates. This bill lowers corporate rates from 35 percent to 20 percent—about the worldwide average—and allows immediate expensing of capital investment, which will create jobs and raise wages.”

Not everyone who represents districts where the companies operate has sided with them, even when they have also benefited from the companies’ political donations.

U.S. Rep. Steve Cohen (D-Tenn.) represents the district housing FedEx’s corporate headquarters. He has taken $69,750 in campaign contributions from FedEx and also owns between $100,000 and $250,000 worth of FedEx stock, according to financial disclosure forms reviewed by TYT.

But Cohen told TYT he does not believe FedEx will use its tax windfall to hire more staff.

“There is a lot of cash on hand in many corporations and that indicates that investments won’t occur. Historically when these unexpected influxes occur they result in stock buybacks or dividend increases,” Cohen said. FedEx raised its quarterly cash dividend to 50 cents in the second quarter of 2017 and has maintained that rate through its declared payout for the final quarter of 2017.

“The massive corporate tax cut comes with no promise that companies will create jobs and no prohibition that it won’t be transferred to stockholders as dividends. FedEx is one of Memphis’s largest employers, a boon to the Memphis economy and makes a great effort to give back to the community, but the bill should at least have incentives for companies to create jobs. Otherwise, it is just what I’ve called it from the start: a massive gift to the 1 percent,” Rep. Cohen said.

A spokesperson for U.S. Rep. Danny Davis (D-Ill.), whose district is just north of the massive UPS Chicago Area Consolidation Hub (CACH), called UPS to task in response to TYT’s questions.

“Congressman Davis does not believe that tax breaks are the most effective or efficient method of job creation,” Davis spokesperson Ira Cohen told TYT. “When tax breaks are used they should be linked to specific, targeted investments.”

Cohen also pointed to potential remedies for what Davis considers pitfalls in the proposed tax bill.

“Should the GOP tax bill pass, there will remain options to influence the use of the tax cuts, from direct discussions with the company, to community and labor organizing, to seeking amendments to the tax bill should the make-up of the Congress change after the coming elections,” said Cohen. “Transportation is an industry in a constantly developing environment and rapidly developing technology offering an ongoing stream of opportunity for interaction between the industry and government.”

The campaign of Illinois Democratic gubernatorial candidate J.B. Pritzker also came out against the bill when asked to respond to TYT’s reporting on UPS, CACH, and jobs.

“J.B. strongly opposes Donald Trump’s devastating tax bill that is nothing short of an assault on working families. This bill hikes taxes on middle class families, strips healthcare from millions, and adds a trillion dollars to the deficit,” Prizker campaign spokesperson Galia Slayen told TYT. “Any corporate tax break should make job creation and retention a priority, but Trump’s tax cuts will do nothing to grow our economy while middle class families and those striving to get into the middle class are stuck footing Trump’s bill.”

TYT reached out to several Republicans who represent UPS’ home state of Kentucky—including Senate Majority Leader Mitch McConnell, Sen. Rand Paul, and Gov. Matt Bevin. None of them chose to comment on how the tax bill will or will not impact workers in Kentucky.

Rep. Andy Barr (R-Ky.) represents the district where UPS has its Worldport facility and in August helped promote the tax bill at an event there alongside UPS CEO David Abney. Barr, too, did not respond to requests for comment. Neither did Louisville Mayor Greg Fischer, a Democrat.

Like Corker, another member of the conference committee also benefited from FedEx donations: Rep. Diane Black (R-Tenn.) has received $37,500 in campaign contributions from the company throughout her congressional career. Black, a candidate in Tennessee’s 2018 gubernatorial race, also declined to comment.

Click here for TYT Investigates’ series on Fed Ex & UPS’ push for tax cuts as job-creation tools.
Click here for TYT Investigates’ series on Apple’s push for tax cuts.

Click here for TYT Investigates’ Series: Tax Cuts & Job Creation – Lockheed Martin.

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