Over his 45-year career in journalism, David Cay Johnston has many impressive achivements. Tax reporter for the The New York Times from 1995 to 2006, he was a Pulitzer Prize finalist in 2000 and 2003, and won the Pulitzer Prize for Beat Reporting in 2001 “for his penetrating and enterprising reporting that exposed loopholes and inequities in the U.S. tax code, which was instrumental in bringing about reforms.” He won the Investigative Reporters and Editors 2003 Book of the Year award for his bestseller Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich—and Cheat Everybody Else.
His 2007 follow-up, Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill), was another bestseller.
So, when someone on Facebook posted a recent Reuters article by David Cay Johnston about the richest family in Wisconsin, whose companies are headquartered here in Racine, it caught my attention.
The column, from last Friday, August 26, was titled “Wiping out Wisconsin taxes.” It concerns the heirs of the S.C. Johnson fortune, with four multi-billionaires among them, and the companies they control, such as S.C. Johnson & Son, Inc., Diversey Inc., Johnson Outdoors Inc., and Johnson Bank.
[Update: My original link was to a TD Waterhouse Canada website. After reading this post, Johnston phoned me to explain that he writes two columns per week, and that his Friday columns run behind a pay wall, which is why this one was not widely disseminated. The piece has now been made freely available.]
Johnston’s column was preceded by the August 2011 newsletter of the Institute for Wisconsin’s Future, titled “Who Does Not Pay Taxes?” and headlined “SC Johnson and sister firms pay no state income tax.”
Back in December, when he was writing mostly at Tax.com, Johnston’s piece “Can Loopholes Blow the Whistle on Whistleblowers?” looked at a court case involving SC Johnson and Michael DeGuelle, the “whistleblower,” a tax compliance accountant who “detailed what he described as years of calculated tax cheating by S.C. Johnson & Son Inc., the maker of Drano, Raid bug spray, and Ziploc bags.”
In view of all the current news about state and federal deficits, austerity and budget cuts, the decay of our public education system and infrastructure, and the gutting of America’s middle class, my interest in Johnston’s Reuters article can be summed up by one sentence from it:
“Why must ordinary Wisconsin businesses and individuals bear the burden of state government while the richest family in the state runs tax-free enterprises?”
So yesterday I tweeted a link to the story, including the Twitter address (@DavidCayJ) of David Cay Johnston, who has apparently just begun tweeting himself this month, with 61 followers to date and a total of 11 tweets, and no mention of SC Johnson among them.
About seven hours later, I received a reply from an even newer Twitter account, that of SCJ Public Affairs (@SCJPublicAffrs), which just began tweeting yesterday — and so far has devoted all 10 of its tweets to refuting Johnston’s column via a link to an SC Johnson press release, “Statement by Kelly M. Semrau, Senior Vice President – Global Corporate Affairs, Communication & Sustainability.”
SCJ Public Affairs calls Johnston’s piece “misleading and sensationalist” and says it “got the facts wrong.” It reminds us that SC Johnson is a “law-abiding corporate citizen” and a “proud WI employer.”
Semrau’s statement begins:
Late last week, Reuters editorial writer David Cay Johnston released a sensationalist piece about SC Johnson’s tax practices. Using questionable sources and twisting facts, he delivered a completely misleading article designed to persuade readers that SC Johnson is acting unethically and illegally.
Semrau’s language is harshly indignant thoughout the release, which continues:
The company reached out to Reuters immediately, and Reuters indicated that they “cannot and will not offer a retraction or any corrections.” And of course, as all stories on the Internet do, this unfounded and irresponsible piece is spreading widely and causing further unwarranted damage to SC Johnson.
However, Reuters and David Cay Johnston have very recently offered retractions, corrections, and apologies following Johnston’s reporting on another company. An Atlantic Wire story headlined “Reuters Columnist David Cay Johnston’s No Good, Very Bad Day,” summarizes that snafu:
The veteran business reporter (he covered tax policy for The New York Times until he took a buy-out in 2008, and won a Pulitzer in 2001 for documenting corporate tax loopholes there) filed his very first column as a Reuters columnist today about Rupert Murdoch’s News Corp. making money on income taxes. It turned out to be incorrect. Not just an embarrassing typo or a little bit off, but totally, absolutely wrong.
Reuters withdrew that column, and revised its policy on retractions following that piece. Johnston wrote a follow-up column apologizing and explaining his error. He went on NPR’s Morning Edition the next day to do the same.
So far, I have not seen any follow-up by Johnston to his SC Johnson story — and I am still wondering whether SC Johnson & Sons, Inc. has paid one penny of corporate income tax to Wisconsin in the past decade or so.
[Update: In a voicemail left for me after I posted this entry, Johnston stood by his column, saying “They have not asserted a single factual error in my piece, and if you read carefully the lede of my column, you will see that it says public records show those companies didn’t pay taxes — those three companies — from 2000 to 2008.”]