Tax Analysts Blog

Should a News Company Accept Tax Credits?

Posted on Apr 13, 2016

An April 6 news article out of Sacramento caught the eye of an editor in my office. The story provides details about companies that are applying for tax credits in California. The first company mentioned was Faraday Futures, and the second was Snapchat, but it was the third company that made the story interesting to the editor. According to the story, the online news company, Politico, “would expand its California operation by adding 41 employees in Sacramento — if it received $205,000 in tax credits.”

A news organization applied for tax credits in a state where it will be regularly reporting. That is news in and of itself. Would the state expect preferential treatment from Politico in return? Or would Politico feel more inclined to be soft in its coverage of the state government’s activities because of the tax credits? Would Politico’s coverage of tax incentive deals in California change if it were a recipient of such a deal?

It is entirely possible, though it would be difficult to know unless Politico started writing positive articles about the California Competes tax credit program and either did not disclose or tried to hide the fact that it was a recipient of tax credits.

Still, journalists are taught to avoid conflicts of interest, whether real or perceived. They are instructed not to accept gifts, favors, free travel, or other types of special treatment and, according to the Society of Professional Journalists, they should “deny favored treatment to advertisers, donors or any other special interests, and resist internal and external pressure to influence coverage.”

And while my initial outrage over a news company seeking to take advantage of tax credits from a state might be overblown, if journalists are expected to refrain from accepting special treatment from possible sources, shouldn’t the management at a news company be expected to refrain from accepting special treatment from a state government? After all, news organizations and journalists fill an important role in America. They are to provide the public with accurate, unbiased, and fair information.

Thinking like a business leader, it is hard to fault Politico for wanting to take advantage of available tax credits. News organizations must be run like businesses, and businesses make financial decisions that best suit them. But for a news organization, the needs of the business must be carefully weighed with the perception that the deal will in some way affect how it collects and reports on the news.

Although it is impossible not to acknowledge that many news companies are struggling to compete in the Internet age, news companies must do everything they can to foster good, objective journalism. As noted in an excellent article from Pew Research Center, “time and again history has taught us the heavy price we pay when the independence, aggressive vigilance, accuracy and credibility of the press fails.”

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