Paul L. Caron
Dean




Monday, June 14, 2021

The ProPublica Tax Report: Return Of The IRS Scandal

Following up my previous post, ProPublica: America's Richest People Pay Little To Nothing In Federal Income Taxes:

Wall Street Journal editorial, Return of the IRS Scandal:

That didn’t take long. Less than half a year into the Biden Presidency, the Internal Revenue Service is already at the center of an abuse-of-power scandal. That news broke Tuesday when ProPublica, a website whose journalism promotes progressive causes, published information from what it said are 15 years of the tax returns of Jeff Bezos, Warren Buffett and other rich Americans.

Leaking such information is a crime, since under federal law tax returns are confidential. ProPublica says it received the files from “an anonymous source” and doesn’t know who provided them, how they were obtained, or what the source’s motives are.

Allow us to fill in that last blank. The story arrives amid the Biden Administration’s effort to pass the largest tax increase as a share of the economy since 1968. The main Democratic argument for a tax hike is that the rich should pay their “fair share.” The ProPublica story is a long argument that somehow the rich don’t pay enough. The timing here is no coincidence, comrade.

Someone at the IRS—or someone who hacked the IRS—leaked the documents to influence the debate in Congress. And right on time, Ron Wyden, the Senate’s chief tax writer, opened a Finance Committee hearing Tuesday by mentioning the ProPublica data dump.

“What this data reveals is that the country’s wealthiest—who profited immensely during the pandemic—have not been paying their fair share,” Mr. Wyden said. “I’ll have a proposal to change that.” You can bet he will.

Yet the striking fact of the initial ProPublica story—it says the disclosures will continue for months—is how undramatic the findings are. It turns out that billionaires are very good at reducing their taxable income. Who knew? ...

This still leaves the real scandal, which is that someone leaked confidential IRS information about individuals to serve a political agenda. This is the same tax agency that pursued a vendetta against conservative nonprofit groups during the Obama Administration. Remember Lois Lerner?

This is also the same IRS that Democrats now want to infuse with $80 billion more to chase a fanciful amount of uncollected taxes. ...

The IRS says it has begun an investigation into the tax-return disclosure, and by all means send the guilty to prison. But Congress should also not trust the IRS with any more power and money than it already has.

Kimberley A. Strassel (Wall Street Journal), The Partisan Bureaucracy:

The lesson of this week’s leak of billionaires’ tax returns isn’t that taxes are too low, the rich should pay more or any of the other claims the leak was designed to support. The lesson is that Republicans must realize that Democrats are no longer their only political foe. They face an equally potent and dangerous federal bureaucracy—committed to destroying GOP officials and propelling a liberal agenda.

ProPublica claims not to know who provided the confidential tax data of thousands of American citizens, including some of the nation’s wealthiest people. The left-leaning media outlet acknowledges it ran its piece even though its source could have been a “state actor hostile to American interests” that hacked the private data. Perhaps—though it’s unclear what value Russia or China might see in outing Warren Buffett’s tax returns.

The more likely scenario is that a federal employee with access to Internal Revenue Service records compiled the information, identified a media operation that could be relied on to disregard privacy rights and then dumped the data at a moment carefully timed to aid Joe Biden’s tax-hike agenda.

Mission accomplished. The ProPublica story was a moralizing snoozefest, thousands of words (and the threat of more installments) to explain that the U.S. tax code allows deductions for loan interest, charitable giving and business expenses, and that the nation’s elite actually use these deductions. Also, ProPublica informs us that people don’t pay tax on capital gains until they realize capital gains. The nation’s liberal and social media nonetheless spent the week dutifully pretending the story was a blockbuster exposé breaking the news that the wealthy don’t pay their “fair” share, while Democrats renewed calls for higher taxes. ...

The politicization of the federal bureaucracy is nothing new. ... [T]his cadre of civil servants are increasingly unsatisfied with merely causing trouble for department or agency heads under GOP administrations. They have realized they can also use their powers in ways that aid the political goals of Democrats. Think of Lois Lerner, the IRS functionary who for several years managed to deprive conservative nonprofits of their free-speech rights. ...

The career bureaucrat’s tool of choice has become the leak. ...The leaks are becoming bigger and bolder because the leakers know there are few if any consequences. Leak investigations are tough to begin with. But it’s even harder to take seriously the threat of an FBI leak investigation given that the man recently in charge of them— James Comey —was a leaker himself. 

Jonah Goldberg (The Dispatch), What ProPublica Gets Wrong About the Wealthy and Taxes:

ProPublica obtained the tax returns of the richest Americans and discovered what every informed person already knew: They don’t pay as much in income taxes as some people would like them to. This is being called a great scandal by many Democrats and liberal journalists.

Meanwhile, that these returns were almost surely leaked by someone at the IRS seems not to bother a lot of the same people. There’s no way ProPublica got this information from dozens of high-priced accountants and attorneys. Barring the possibility that this was a computer hack—which itself would be a monumental scandal—this is outrageous. Weaponizing the IRS for political purposes is not just a crime, it is a long-term political disaster.

https://taxprof.typepad.com/taxprof_blog/2021/06/the-propublica-tax-report-return-of-the-irs-scandal.html

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