Wednesday, May 13, 2009

Washington papers paid dearly for tax cut

Newspapers sacrificed their moral authority and compromised their credibility in exchange for the gift of a token tax break from the governor and legislature in Washington State.

While the 40% tax reduction in the state’s main business signed into law on Tuesday sounds impressive, it will save the jobs of perhaps 15 reporters across all of the state’s ailing newspapers.

This calculation is based on the statement by legislators during hearings on the bill that the measure would save newspapers $8.1 million between now and when the tax cut expires in 2015. Assuming an average annual cost of $75,000 for a fully loaded reporter and that savings are reaped equally over seven years, then approximately 15 jobs could be saved if the publishers applied all the savings to payroll.

There is no obligation, of course, that the savings be used to preserve jobs. They could be used for anything from press equipment to redecorating the lobby.

While every little bit admittedly helps embattled publishers, this special gift instantly made the publishers more beholden than they properly should be to Gov. Chris Gregoire and legislators who overwhelmingly backed the measure in spite of a budget deficit estimated at more than $8 billion – and climbing.

In lobbying aggressively for the tax break, the publishers sacrificed their moral authority to challenge favoritism, fiscal imprudence and self-dealing on the part of the state government and the dozens of political figures who supported the measure.

Further, this dangerous bargain compromises the credibility of the newspapers by leaving readers to wonder:

:: Will the political leaders who supported the tax break be accorded favorable treatment – or outright immunity – in the coverage of any real or alleged transgressions in the future?

:: Will the paper fairly cover upcoming political campaigns involving the politicians who supported the tax break?

:: Will future political endorsements be tilted in favor of the politicians who helped the newspapers?

Publishers and editors undoubtedly will promise to be as vigilant and impartial as ever. And that may be true.

But thoughtful readers will be left wondering. And that can’t be good for business.


Anonymous Anonymous said...

At least there's some good news for papers today.

"A month after the killing of a masseuse who advertised on Craigslist, the classified ad site announced plans Wednesday to eliminate its "erotic services" category ..."This creates a potential income stream for newspapers, in which Craigslist won't compete.

4:10 PM  
Anonymous Anonymous said...

The minor tax break that Washington papers will be getting is not unlike tax breaks that has been given to other businesses in the state. Probably a mistake to lobby for this, but in the overall scheme of things, not a big deal.

A much more severe violation of integrity was the statement provided by all of the Massachusetts congressional delegation except one AND released by the Newspaper Guild urging the NYT Company to make sure that the Globe not be closed down. By soliciting that statement and then releasing it, the Newspaper Guild has effectively let everyone know that the politicians are in their control. Does anyone doubt that an obligation has been assumed by the reporters of the Boston Globe?

As to the previous comment about Craigslist shutting down their erotics services ads, this could be a really big item for alternative weeklies. Notwithstanding their almost uniformly left wing political slant, these publications were and still are heavily dependent upon prostitution ads. With Craigslist out of the way, their ability to survive and prosper is dramatically improved

5:35 PM  
Anonymous Gerry Storch said...

It's an embarrassment. Or let me say it should be an embarrassment ... and probably isn't. Though these same journalists would be the first to scream about a Republican payoff to a Republican industry, a Democratic payoff to a Democratic industry results only in silence and looking the other way until most people forget about it.

P.S. A tax break would be OK in my view if it were applied across the line, say to all companies in a given financial situation, not just newspapers ...

5:46 PM  
Anonymous Matt Mason said...

This shouldn't surprise even you. Just look at the revolving door that the Washington Press corps went through to jump into Obama's govt. As Ann Coulter said, the press left their objectivity at the door when they compared Obama to Christ.

6:00 PM  
Anonymous Joanna James said...

We share one of the same heroes who says one of my most favorite quotes that may be appropriate for this time in our newspaper history, "Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety."
Your class sounds awesome! Would love to hear what you think about my blog:

6:25 PM  
Anonymous Anonymous said...

You are quite right to highlight this huge special interest tax break coming at a time when the state has to cut services. I have relatives in Washington state who have given me an earful about this, and the hypocrisy of the press lobbying for special interest legislation as the same time they are editorializing about earmarks and other special interest bills. From what they say, there is a huge backlash about this which I am sure newspapers will feel.

8:33 PM  
Blogger Radio Ann said...

I think print folks are going to have to re-evaluate their interpretation of the 1st Amendment, or at least read good journalism history. The press has always gotten subsidies in some form or another from the government, whether through the postal service or free broadcast licenses. Also, since when have newspapers NOT abdicated moral authority in the interest of advertising? I'll agree it paid for some good reporting, but it also paid for laziness and a false sense of independence.

5:44 AM  
Anonymous Anonymous said...

We have been fed a line about who will play watchdog when newspapers disappear. So take a look at Washington State's newspapers, and see who paid watchdog as this 40 percent bailout for newspapers slipped through the legislature and was signed into law. Hey, no fair guessing. That's right. You can look through columns of trend stories and features and find nothing on this measure. The Seattle Times celebrated Gregoire signing it into law with a four paragraph story back in the metro section. So much for watchdog journalism and protecting the public from special interest legislation. Give light and people will find their own way, but keep them in the dark and you can do anything you want with monopoly newspapers that have no competition.

6:41 AM  
Anonymous T Heller said...

Commentators should first pause a moment before opining on this story, due to Washington state's rather unique business tax.

Let me explain briefly. (I know the state's tax code pretty well.)

Washington state imposes a gross receipts tax on businesses; businesses do not pay an income tax. Thus, the *total* receipts of any company (incl. newspapers) are taxed at a set percentage rate, (The set tax rates vary from one industry grouping to another.)

Thus, a business' state tax liability doesn't change if they're making a profit -- or losing their shirts.

I believe the Washington legislature simply reduced the tax rate applicable to newspapers.

That a former state legislator from the 1980's is/was a prominent leader in the state's newspaper association may or may not have influenced this decision.

7:52 AM  
Blogger Reg Chua said...

I'm sure there are good arguments on both sides of the divide about whether journalists' integrity is compromised by this tax break, but isn't the broader issue that money is fungible?

In other words, if the state is willing to forgo $8.1 million over seven years in tax revenue to help journalism, it means it's just as willing to actively fund journalism with tax revenues equal to that amount.

So a bigger debate should be about how that money is spent - should it go to the local NPR stations, as grants to journalism training programs, to fund more transparency in government records, to help non-profit startups, or whatever, instead of to newspapers?

The upheaval in the news business isn't only about a collapse of revenues or the upending of business models or the proliferation of new alternatives to traditional news outlets; it's just as much about the re-imagining of the newsroom, the news process and the news "product," for want of a better word.

Just because we've run newsrooms a certain way all these years doesn't mean we should continue to do so - there may be better ways.

And if there's money to be had to help journalism, we should be looking for ways to explore the new paths.

3:13 PM  
Blogger Dr Lemming said...

I agree with Reg that the tax break should have instead actively funded journalism. However, I don't think that direct funding for the likes of NPR is the ideal (too little firewall between the state and the media). Nor do I think that j-schools need a whole lot of help when they are already pumping out too many grads.

One idea would be to set up a state-run revolving loan fund that buys newspapers and places them in not-for-profit trusts dedicated to providing quality journalism (as opposed to, say, 20+ percent profit margins). Let's create a bunch of little Poynter Institutes and see if that improves the quality of journalism -- and protects low-margin outlets from closure or consolidation.

10:24 PM  

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