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[POST-BROADCAST NOTE: Reuters issued an advisory indicating that the column written by David Cay Johnson, on which this interview with Johnson was based, was wrong. We will provide further clarification as information becomes available.]

STEVE INSKEEP, host:

As British investigators dig for details in the News Corp. scandal, a columnist for Reuters looked at some financial figures that were already public. News Corp. is a publicly traded American company, meaning it must disclose financial information. So columnist David Cay Johnston ran the numbers on how much News Corp. made in the last four years and the taxes it paid on those earnings.

Mr. DAVID CAY JOHNSTON (Columnist): Murdoch's company News Corporation made over $10 billion in profits over the last four years, and their tax came to $4.8 billion negative. That is they made $4.8 billion from tax refunds.

INSKEEP: Wait, wait, wait, wait, wait. I've heard of people eliminating their tax burden down to zero. General Electric was criticized for getting its tax burden down to zero. But you're saying that News Corporation was actually paid by the United States government?

Mr. JOHNSTON: Almost $5 billion, which would increase their profits, if you looked at it that way, by almost 50 percent.

INSKEEP: And I have to clarify this again, because many of us Americans receive tax refunds, but usually that just reduces our total tax bill. How do you get a tax refund that causes you to have a negative tax burden, as a corporation?

Mr. JOHNSTON: Well, America has two tax systems, separate and unequal. One is for you and me and the listeners, and we pay each year. But if you're a corporation, you're allowed to reach back - in some cases 20 years - and to carry forward for many years tax losses and tax benefits that smooth out your tax bill.

Now, the second thing that Mr. Rupert Murdoch does that's very important is among the hundred largest companies in America, News Corporation ranks third in the number of tax haven subsidiaries. And when you have a tax haven subsidiary - the Cayman Islands, Bermuda, Panama - what you do is you take expenses in the United States, and then you take the profit in the tax haven where they don't pay a tax on them.

INSKEEP: So even though your company is making a profit, you show the IRS that you made a theoretical loss in the United States.

Mr. JOHNSTON: That's right. And what you do is you look to investors like a gold-plated company and you look to the IRS like you're a moth-eaten failure.

INSKEEP: Is it unusual for a company to drive its tax burden so low that it actually makes money from the government?

Mr. JOHNSTON: It's not uncommon, but it's not the norm. For all but the 12,000 largest companies in America - those are ones that are worth billions of dollars, they're the household name companies - the corporate tax every year runs about 32 percent of their profits and the rate's 35. So they're paying their full bill. For the very biggest companies, the average is less than 20 percent. And we have, of course, famous examples like GE and the News Corp., which year after year after year pay little tax. And at the other end we have The New York Times Company, whose average tax rate over the last 10 years has been 71 percent of its profits - double the statutory rate.

INSKEEP: Wow. So then New York Times accountants really ought to get with it.

Mr. JOHNSTON: They made a purchase that they were not allowed to deduct under the tax system called the Boston Globe, and they have been paying dearly for it ever since.

INSKEEP: Is there anything illegal, as far as you can tell, in what News Corporation did in order to get billions of dollars from the U.S. and other governments?

Mr. JOHNSTON: Steve, there's absolutely no indication that in the tax area, the News Corporation has done anything that is illegal. And that's the scandal, is that it's legal to do many of these things. Hacking into people's cell phones, interfering in murder investigations, paying off Scotland Yard cops, that's a crime - now a whole bunch of crimes. But the tax material, the scandal is the law that they simply exploit brilliantly by hiring really smart people to do it.

INSKEEP: David Cay Johnston, it's a pleasure speaking with you.

Mr. JOHNSTON: Thank you, Steve.

INSKEEP: David Cay Johnston is the author of the book "Free Lunch."

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