Paul L. Caron

Tuesday, September 13, 2011

PolitiFact: The David Cay Johnston v. SC Johnson Corporate Tax Dispute

Johnson Following up on my prior post, Johnston: SC Johnson Cleans Up by Dodging Wisconsin Taxes: PolitiFact Wisconsin, Inside the SC Johnson vs. David Cay Johnston Dispute on Corporate Taxes:

When a Pulitzer Prize-winning journalist bumped heads with S.C. Johnson, one of the nation’s largest private companies, the collision renewed a tax-fairness debate that flared with reports that General Electic had no U.S. tax bill despite billions in profits last year.

Reuters columnist David Cay Johnston questioned the  corporate tax strategies he said allowed the company to avoid paying even one dollar of Wisconsin corporate income tax -- not just for one year, but nine years running.

One focus: A huge annual write-off of interest on a loan the Wisconsin-based company made to itself -- from its small Puerto Rico subsidiary, and later a Delaware subsidiary, to the parent company.

Punching back, S.C. Johnson -- a manufacturing giant in consumer products such as Windex and Ziploc and other popular brands -- denied any illegal or unethical actions. It accused the former New York Times tax reporter of sensational and inaccurate "gotcha" reporting.

In other words, it was Johnston vs. Johnson.

Here at PolitiFact Wisconsin, we can’t fully settle all the scores. But we thought it was worth sorting out fact and fiction in a dust-up that probably couldn’t have happened anywhere but Wisconsin.

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Even the lay press is coming to see that Johnston is something of an ideologue. But I disagree that this tax scenario could only have happened in Wisconsin.

Posted by: TexEcon | Sep 13, 2011 2:24:20 PM

S.C. Johnson pays all of its taxes due based upon laws. David Cay Johnston wants the company to pay some vague amount based upon his opinion as to what is "fair." Why does Johnston think that he knows more about what is best for and fair to Wisconsin than the elected legislature that writes its state tax laws? If Johnston doesn't like the results, his beef should be with the voters and the elected officials who pass the tax laws rather than the companies that follow them.

Although he doesn't even live within the state and has no equity interest in the private company, DCJ gets on his high horse and wants to tell every company that they should pay more, just because he thinks so.

Will his next article condemn companies moving from high tax states to low tax states as an "unfair" tax scheme?

Posted by: Woody | Sep 13, 2011 7:23:02 AM

I'd like to see David Cay Johnston's tax returns.

Posted by: Chance | Sep 13, 2011 7:11:06 AM