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Allen Sloan notes in today's Washington Post that the New York Times, which regularly inveighs against inordinate tax breaks for corporations, doesn't practice what it preaches. Sloan explains that the recent, odd purchase of Primedia's About.com subsidiary at somewhere around $800,000 per blog holds a large tax benefit for Pinch Sulzberger & Co, one that his editorial board would screech at if any other corporation took advantage of it:
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. The Times Co.'s $410 million cash purchase of Primedia's About.com subsidiary, announced on Thursday, is set up to maximize tax benefits. For those of you who adore complicated details, the Times Co. is using the portion of Section 338 of the tax code that lets the buyer of the stock of a second company's subsidiary act as if it had bought the subsidiary's assets. It can then put a value on the assets for tax purposes and take depreciation deductions on some or all of them.
This has become conventional tax-avoidance strategy -- but it's giggle-making, considering the newspaper's editorial stance about corporate taxes.
No, what induces the giggles is the response Sloan got from the Times when he asked about the apparent contradiction:
"The editorial policy of the paper is not dictated by the business side and business-side policy is not dictated by the editorial side," says spokesman Catherine Mathis.
Doesn't Pinch Sulzberger and his family own a controlling interest, and doesn't Sulzberger direct the editorial content of the newspaper as publisher? News organizations claim that unbreachable walls exist between news and editorial departments at papers like the Times, but Sulzberger both owns and publishes the Times, which makes the notion of a wall between editorial and business operations rather suspect.
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.
Sulzberger owes his readers an explanation, even if the Times thinks it can justify the absurd price of About.com to its shareholders. Explanations that contain silly statements about how its editors somehow have nothing to do with its business should be met with the contempt they deserve and considered a confirmation of the hypocrisy and cluelessness we have come to expect from the ownership of the Paper of Record.Sphere It View blog reactions
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» NY Times & tax shelters from L'esprit D'escalier
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 t... [Read More]
Tracked on February 22, 2005 12:01 PM
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