Verizon Just Torpedoed the Right's Favorite Talking Point About the Trump Tax Cuts
Remember how FCC chair Ajit Pai told everyone that repealing net neutrality protections would boost investment by big telecoms? Remember how the Republican Party told you corporations like big telecoms would invest their big tax breaks? Yeah, about that.
Verizon reported $17.2 billion of capital expenditures in calendar year 2017, with the net neutrality rules in place the entire year. In 2018, with the net neutrality rules about to come off the books, Verizon says its spending will come in slightly below or above that. Even at the high end of Verizon's forecast, the spending would not exceed its total of $17.8 billion in 2015, another year in which net neutrality rules were in place.
"Capital spending for 2018 will be in the range of $17.0 billion to $17.8 billion, including the commercial launch of 5G," Verizon said today in an announcement of its year-end financial results.
And getting that free tax money is good for one thing—profit.
"Tax-reform legislation will have a positive impact to cash flow from operations in 2018 of approximately $3.5 billion to $4 billion," Verizon said.
Verizon promised that workers will "share in the company's success" with stock shares totaling around $400 million for 155,000 employees. But the tax savings "will be used primarily to strengthen Verizon's balance sheet."
FCC chairman Pai’s former bosses have always acted this way, so it wasn’t a surprise to any of us, and to be very honest I doubt it is a surprise to people like Ajit Pai. He knows he isn’t selling the American public what he’s actually selling the American public.
Verizon has historically caught flack for its tax bill, which has consistently been far less than the nominal 35% corporate tax rate. When including public subsidies and excluding deferred taxes that have not been disbursed, Verizon actually took in $732 million from the IRS between 2007 and 2013. Verizon took issue with those numbers in a blog post published in 2016, in which it also complained that the US corporate tax rate was too high.
The biggest irony from Vestberg’s comments, however, isn’t just tied to taxation. 2017 was the best possible year for Verizon in terms of government: Taxes were slashed, net neutrality provisions were rolled back, and the new FCC demonstrated its commitment to light-touch regulation. Verizon has long said that oppressive taxes and stifling net neutrality regulations were the only thing stifling investment in its network, so if it’s not going to increase investment at all after what’s happened this year, what could possibly be left to change?
Just profit. That’s all.