"Left Turn: How Liberal Media Bias Distorts the American Mind" comes out tomorrow. I've pre-ordered a copy of the book via Kindle after reading some of the excerpts being posted over at Powerline. Although my mainstream media career has been over for just over two years, I still care about journalism and really do wish it would try harder to live up to its self-professed ideals.
Of course, the first step is recognizing that there is a problem; something that the vast majority of the press absolutely refuses to acknowledge.
Take, for example, last week’s immense screw-up by Pulitzer Prize-winning reporter David Cay Johnston in his inaugural column for Reuters.
Readers, I apologize. The premise of my debut column for Reuters, on News Corp's taxes, was wrong, 100 percent dead wrong.
Rupert Murdoch's News Corp did not get a $4.8 billion tax refund for the past four years, as I reported. Instead, it paid that much in cash for corporate income taxes for the years 2007 through 2010 while earning pre-tax profits of $10.4 billion.
For the first time in my 45-year-old career I am writing a skinback. That is what journalists call a retraction of the premise of a piece, as in peeling back your skin and feeling the pain. I will do all I can to make sure everyone who has read or heard secondary reports based on my column also learns the facts and would appreciate the help of readers in that cause.
No excuses. But I will explain how I made such a bonehead error.
You can read his explanation for the basis for his error. But I want to also quote a comment apparently written by a tax attorney and CPA in Chicago on the comments tab.
The problem with his explanation is that, in my professional opinion, News Corp was completely consistent in reporting its tax expense for all years. I can say this after reviewing both the company’s annual reports and their 10-K’s. The only difference for all these years was that 2009 was shown as a positive number because they had incurred a loss.
Even if what he says is true about the tax expense being reported differently, the number is so significant and clearly laid out in the income statement as to be unambiguous.
I also want to point out Johnston’s statements about his other reporting in the article.
The other facts I reported remain:
* Among the 100 largest companies in the United States, News Corp has the third largest number of subsidiaries in tax havens, a Government Accountability Office study found in 2009.
* On an accounting basis, which measures taxes incurred but often not actually paid for years, News Corp had a tax rate of under 20 percent, little more than half the 35 percent statutory rate, its disclosures show.
* Murdoch has bought companies with tax losses and fought to be able to use them, which reduces his company's costs.
* News Corp lawyers and accountants are experts at making use of tax deferrals, though the company's net tax assets have shrunken from $5.7 billion in 2007 to $3.3 billion last year as the benefits were either used or expired.
Now, take all of those facts together and think about it for a minute.
Look at the correct numbers—$10.4 billion in pre-tax profit and $4.8 billion in taxes paid over the same period—that’s a 46 percent effective tax rate. News Corp has apparently taken advantage of some laws to defer some of those payments, but the numbers are what they are.
Now ask yourself this question: Why News Corp? Why did Johnston choose to look deeply into their finances? Media bias isn’t just in how stories are covered, but in which stories are covered and which aren’t. I don’t think it’s too much of a stretch to suggest that some small part of Johnston’s mistake was that his desire to find outrage or wrongdoing overrode that part of his journalistic skepticism of a too-good-to-be-true story.
Johnston’s skills might be better put into really digging into how General Electric managed to pay no taxes in 2010 and how its relationship with the Obama administration might have contributed to this feat.