Murphy’s Latest Ad Makes Questionable Claims About WWE
(Updated 9:42 p.m.) U.S. Rep. Chris Murphy is swinging back against Republican Linda McMahon in his latest television commercial, but the claims he makes against for the former CEO of the WWE are questionable.
The ad opens with this statement: “As CEO of World Wrestling Entertainment, Linda McMahon had a plan. Shift profits overseas to avoid U.S. taxes.”
The citation flashed at the bottom of the page is the WWE’s 2009 10-K form, which is required by the Securities and Exchange Commission. It gives a comprehensive summary of a public company’s performance.
The Murphy campaign said the reference is to $4.1 million in unremitted earnings to the United States. According to the 2009 10-K, those unremitted earnings were reinvested overseas. The WWE is a worldwide company and its operations overseas grew by 27 percent in 2009.
“In 2009, we held 74 live events internationally, reaching approximately 600,000 fans at an average ticket price of $66.08. These events were spread over several successful international tours throughout Europe, Latin America and Australia,” the report says. “Any additional U.S. taxes payable on the remaining foreign earnings, if remitted, would be substantially offset by credits for foreign taxes already paid.”
Murphy’s campaign maintains that that means it shifted profits overseas in order to avoid paying taxes.
“Like any global company, WWE has working capital outside the United States for standard business operations such as payroll and marketing expenses,” Brian Flynn, senior vice president of marketing and communications for the WWE, said. “In 2009, WWE allocated only 3.5 percent of its $127 million in international revenue to accounts to cover such expenditures. Further, in 2009 WWE paid an effective U.S. tax rate of 37 percent, which was in line with the U.S. statutory rate, and almost 30 percent higher than the average effective tax rate for U.S. companies, which was 29 percent.”
The McMahons’ 2010 and 2011 taxes show that she and her husband, Vince, who is now in charge of the company, kept no money in what would be considered a “tax haven” country such as the Cayman Islands.
“Perhaps Congressman Murphy should take a few courses in international business where he would learn all about how international companies earn profits internationally and pay their taxes to the countries in which they are doing business,” Corry Bliss, McMahon’s campaign manager, said. “I suppose we shouldn’t expect Chris Murphy to understand these issues though, since he has never really had a job in the private sector.”
The next claim in the ad says McMahon denies “employees healthcare and disability . . . to increase her profit.”
The Murphy campaign said Friday that the statement refers to wrestlers who perform in the ring. But the ad neglects to mention that the wrestlers are independent contractors, rather than employees of the WWE.
“All 700 full-time WWE corporate employees have health insurance. All WWE performers also have health insurance,” Flynn said Monday.
“As part of their contract with WWE, talent are required to have health insurance. That said, WWE pays for all medical treatment related to any in-ring related injuries and associated rehabilitation costs required to assist a performer with his or her recovery,” Flynn explained.
The average salary for a full-time “superstar” is $250,000 a year, and none of the performers make less than $100,000, “enabling them to afford standard health insurance, especially since WWE covers costs for any in-ring related injuries,” Flynn added.
The Murphy campaign cites the number of wrestlers who have prematurely died while they were working for the WWE. The campaign also cites a deceased wrestler’s contract that shows that the talent is contractually required to purchase health insurance and must work for the WWE exclusively during the length of their contract.
“If they’re only allowed to draw a paycheck from one source, how are they not employees?” a Murphy campaign spokesman inquired.
A confidential audit concluded in 2011, long after the first U.S. Senate match-up between McMahon and then Attorney General Richard Blumenthal, found that the company owed about $7,000 in unemployment benefits to some of its employees. The WWE disputed the findings, but paid the fine under protest.
The audit was confidential so it’s unclear if any of the wrestling talent fell under that category.
The WWE’s wellness fact sheet says since 1982, five wrestlers have died while under contract with the WWE.
“According to coroner reports, one individual died by accident, one by suicide and three by heart disease. Other deceased wrestlers referred to in various reports were either not affiliated with WWE at all or performed for other wrestling organizations after their contract with WWE expired,” the statement on the WWE’s website says.
The next claim in the Murphy ad is that McMahon’s plan cuts taxes for the wealthy. McMahon’s published plan says she would lobby in Washington to cut taxes on earned income for the middle class. Her plan does nothing to the upper income brackets regarding earned income, but it assumes the Bush tax cuts will remain in place. It taxes capital gains and dividends tax at 15 percent, which is the current rate.
If the Bush-era tax cuts are permitted to expire, the tax rate on capital gains and dividends would more than double, reverting to 39.6 percent. Using the McMahon’s 2010 tax filings, this would cost her an extra $7 million in taxes, according to the Murphy campaign. Most of the McMahons’ income in 2010 and 2011 came from capital gains and dividends. But her plan would not change her current tax rate. The claim in the ad is dependent upon the Bush tax cuts and whether a person believes they will remain in place or expire.
McMahon has said she doesn’t believe the Bush-era tax cuts should end for anyone, including the middle class or the wealthiest individuals.
The ad goes onto say McMahon’s plan makes “cuts to Medicare and education.”
This does not appear to be true, but it depends on whom you believe. Based on McMahon’s website. McMahon would pay for her middle class tax cuts with a 1 percent reduction in spending. The reduction would not include any cuts to Medicare or defense spending.
The ad’s statement about McMahon’s plan cutting Medicare and education also appears to ignore statements to the contrary by Bliss, McMahon’s campaign manager. According to the Murphy campaign, the accuracy of the ad on McMahon supporting cuts to Medicare depends upon whether you believe McMahon herself, or Bliss.
Ben Marter, Murphy’s spokesman, points out that McMahon has said repeatedly she’s considering cuts to Medicare. After U.S. Rep. Paul Ryan became the vice presidential nominee, Bliss said McMahon will not support cuts to Medicare.
Todd Abrajano, McMahon’s spokesman, said that whether McMahon said it or the campaign said it, she’s not going to cut Medicare and that’s the bottom line.
But McMahon told the New Haven Register two days after Mitt Romney chose Ryan as his running mate that she wouldn’t rule out Ryan’s approach to Medicare, which contradicts what her campaign said. Making it a claim that could go either way.
As for the rest of the spending reductions in McMahon‘s plan, she has never said she would cut education funding. She also refuses to say exactly where she would cut the budget, even though she has said she wouldn’t touch defense spending and Bliss has said she wouldn’t touch Medicare.
Murphy’s latest ad was released following several from McMahon criticizing his attendance record. Records show that Murphy has attended 97 percent of his votes as a member of Congress, but the McMahon ads cite poor attendance at hearings during which no votes take place.
Former Republican Congressman Rob Simmons suggested last week that McMahon’s lack of experience in public office may be coloring her rhetoric. He said that lawmakers who sit on multiple committees and subcommittees often have scheduling conflicts, forcing them to either choose one and skip the other, or to try to split time between the groups.
Further, lawmakers often send staff to cover meetings that they can’t attend, and it’s worth noting that Congress was not in session during the October 2008 meetings on the financial crisis referenced in McMahon’s attack ads.
Nevertheless, the message in McMahon’s ads seems to be resonating, with the latest Rasmussen poll showing McMahon with a slight lead over Murphy. Tomorrow Quinnipiac University will release its poll on the U.S. Senate race in Connecticut. Stay tuned…