PA-12: More on Critz' highly elastic claims

Continuing on this post, discussing the latest ad from the Critz campaign, and the very, very indirect attacks on Tim Burns. The claim:

Tim Burns laid off his own workers in PA, and got tax breaks for outsourcing

Critz’s camp cites this article from the Pittsburgh Business Times to show Burns’s “indifference” to the prospect of layoffs at the company he founded. The “incriminating” quote:

Tim Burns, TechRx co-founder and vice president of product innovation, said the transaction is good news for the company and its investors. He said there may be a few layoffs in Pittsburgh because of consolidation of like business units, but he doesn’t expect a major staff reduction.

“NDC acquired the business because they like what we’re doing, not to completely disrupt it,” Mr. Burns said.

It’s worth noting also that any layoffs would have been done by the buyer NDC, and not by Tim Burns himself.

This article in the Post-Gazette, also cited by the Critz campaign as “proof” of Tim Burns-related job losses in western PA, reads as follows:

According to 2003 filings with the Securities and Exchange Commission — first researched by the DCCC — by NDC Health, the company that bought TechRx, the merger resulted in the elimination of 58 management jobs companywide. It’s unclear how many of these jobs were in Western Pennsylvania, as the company had operations in Atlanta; Dallas; Birmingham, Ala.; Rockville, Md.; and Vancouver as well, Burns campaign spokesman Kent Gates said. But Gates, though he didn’t have specific figures, said the operations in Moon near the Pittsburgh International Airport actually grew after the merger.(Emphasis added.)

The last claim, that Burns personally benefitted from outsourcing jobs, is supposedly shown by this article from The Hill:

Burns was an executive at NDCHealth Corp. from January to June 2003 after the company bought his start-up business, TechRx.

NDCHealth coordinates the flow of information between pharmacies, insurance companies, doctors and hospitals, according to a company release. It does business internationally and during the time Burns worked there the profit it made overseas was classifies as a “deferred tax liability.”

In 2003, the company took in close to $407 million in revenue in the United States and $21 million abroad, according to its Securities and Exchange Commission filing. It paid a total of $1.55 million in taxes — 40 percent of which was at the foreign tax rate of 1.2 percent as opposed to the 35 percent federal statutory rate.

Democrats argue that this means Burns was condoning the use of a tax “loophole.”

This accusation is more plausible than the others at first glance, but like the claim that Tim Burns himself laid people off, it’s faulty unless Tim Burns can be blamed for absolutely anything that NDC did. Two details worth noting here:

  • There’s no hint that what NDC did was illegal. Tax mitigation strategies do not constitute tax evasion, and in my opinion it’s foolish to blame a corporation (or an individual, for that matter) for minimizing their tax burden. If it’s in fact too easy to classify income as “foreign”, then the burden is on Congress to fix that, as they’ve done before with other “loopholes”.
  • The Pittsburgh Business Times article linked above mentions this fact: “NDCHealth plans to acquire the remaining interest in TechRx in May 2003 if certain business objectives are met.” Given that and the fact that Tim Burns left the company in June 2003, it seems far more likely that he was overseeing details related to the merger than planning tax mitigation.

The substance of these claims is further refuted by this letter from a former employee of TechRx, the company that Burns founded:

I don’t know where Mark Critz is getting his information about Tim Burns, but people need to know that a lot of it is just plain WRONG.

I worked for the company that Tim Burns started, and I never saw any form of outsourcing to foreign companies. In fact, when I started at TechRx, there were fewer than 30 employees; by the time I left in 2002, the company had grown to more than 400 employees. Tim sold the company to the larger corporation that helped fund that growth. And that “growth” meant jobs for Pittsburghers!

Eight years have passed since I left Tim’s company and I am still working on and supporting “his” software at another company (a mail service pharmacy that is a former client of Tim’s pharmacy software company). In fact, Tim’s statement that he created 400 jobs is actually an understatement because many more jobs resulted, both from the sale of the company and the sale of the source code to former clients.

Tim is a person of high integrity and knows what it takes to build businesses and create jobs. He is the kind of intelligent, non-career politician that we need in Washington to begin to change the irresponsible overspending and redistribution of wealth mentality that exists there now. If I lived in his district, I would, without a doubt, vote for him.

Dr. Diana L. Repack (and Dr. William F. Repack)

Former TechRx employee (1998-2002)

Moon Township, PA

Cross-posted to PAWatercooler and Renner’s Here.