Federal Income Tax: Authorities are investigating the release of a vast cache of IRS data. Here’s what both sides are saying. To have stories like this and more delivered directly to your inbox, be sure to sign up for our newsletter. (Photo Credit: Jeff Bezos, Daniel Oberhaus, 2019. Mark Zuckerberg, Alessio Jacona, Elon Musk, Steve Jurvetson.)
Top Story: Federal Income Tax
“In 2007, Jeff Bezos, then a multibillionaire and now the world’s richest man, did not pay a penny in federal income taxes. He achieved the feat again in 2011. In 2018, Tesla founder Elon Musk, the second-richest person in the world, also paid no federal income taxes. Michael Bloomberg managed to do the same in recent years. Billionaire investor Carl Icahn did it twice. George Soros paid no federal income tax three years in a row.” That’s how ProPublica, a nonprofit news organization, started their article that shed light on “the tax records of the .001%.” Now, federal authorities are investigating the release of a vast cache of IRS data because taxpayer information is confidential. Here’s how both sides reacted to “The Secret IRS Files,” as ProPublica titled their piece:
On The Left
Left-leaning outlets and commentators believe ProPublica’s latest story is just another example of how America’s wealthiest citizens live by a different set of rules. Many reference the “Panama Papers” and the September 2020 New York Times report about Donald Trump’s finances. They believe change is urgently needed.
Serves Public Interest: Let’s begin with ProPublica, which published a follow-up article to the original story titled, “Why We Are Publishing the Tax Secrets of the .001%.” In defense of their decision to include names in their reporting, the outlet said they are doing so “because [they] believe it serves the public interest in fundamental ways, allowing readers to see patterns that were until now hidden.” Additionally, they “believe that disclosing the identities of billionaires who paid little to no taxes in years their fortunes grew by billions of dollars will help readers understand the magnitude of the tax advantages the ultrarich enjoy.” More to the point, they “also believe that disclosure of specific figures about the tax returns of people like Jeff Bezos, Michael Bloomberg, Warren Buffett, and Elon Musk will deepen readers’ interest and understanding of this complex and arcane subject.” ProPublica says they “do not know the identity of [their] source” and note “that information [they] have received could have come from a state actor hostile to American interests.” Ultimately, the outlet “believes the public interest in an informed debate outweighs privacy considerations.”
More Effective Taxation Necessary: Writing for The New Yorker, John Cassidy says, “The ProPublica revelations show why we need to tax wealth more effectively.” For starters, the story “reminds us of the enormous variety of tax-minimization options available to the extremely wealthy,” he says. This includes “holding onto stocks and other assets for as long as possible; using investment losses to offset income; investing in real estate, which the tax code treats very favorably; [and] setting up charitable foundations.” While “a skeptic might object that the ultra-rich, with their armies of accountants, will find a way to get around any tax system,” Cassidy believes “That is a counsel of despair.” He argues that “With clear tax rules in place and a well-financed IRS there to enforce them, it is perfectly possible to shift the tax burden toward the ultra-wealthy even if there is still some avoidance. The revelations from ProPublica have provided another demonstration of why this change is so badly needed.”
This is All Legal. That’s What’s Scary: Finally, Binyamin Appelbaum, a member of the New York Times Editorial Board, writes, “The Real Tax Scandal Is What’s Legal.” For example, “Many wealthy Americans live lavishly by borrowing against the value of their assets.” Additionally, “It is easy to accumulate wealth that is never taxed. Assets can be siloed in nonprofit foundations whose main beneficiaries may be the people who run them. Assets can also be passed on to children and grandchildren.” Appelbaum notes that the ProPublica story does not say the rich broke any laws. “For all we know, they all followed the law punctiliously.” Regardless, this story highlights “that the wealthy are living by a different set of rules, lavishly spending money that isn’t taxed as income.” Appelbaum hopes ProPublica’s reporting is “enough to convince people that change is necessary.”
On The Right
Right-leaning outlets and commentators think ProPublica’s piece is a politically driven release that shows how the IRS and mainstream media work in concert with the Democratic party. They’re also deeply upset about privacy concerns.
Convenient Timing: The Wall Street Journal Editorial Board thinks it’s interesting how “The story arrives amid the Biden Administration’s effort to pass the largest tax increase as a share of the economy since 1968.” They note, “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.” The “real scandal,” the Editors write, “is that someone leaked confidential IRS information about individuals to serve a political agenda.” In regards to the IRS, “This is the same tax agency that pursued a vendetta against conservative nonprofit groups during the Obama Administration.” Zooming out, they say, “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 editors ask, but why? “So the information can be leaked to ProPublica?”
Politically Driven: In a similar piece from the New York Post Editorial Board, the authors characterize the leak as “yet another example of government bureaucrats working in concert with Democratic politicians.” They think it’s comical that “the press defense of ‘civil liberties’ conveniently flies out the window when these things happen,” adding that “something tells us that your tax return, your FBI file, your private records would easily be posted online if it served some progressive agenda.” In regards to the current tax scheme, “Congress knows what tax loopholes exist because Republicans and Democrats have passed them,” the editors write. Nevertheless, “It’s become abundantly clear that career government employees think there are different rules when there’s a Republican in the Oval Office or a Democratic agenda to promote.” They ultimately believe “These tax documents are a scandal, and not the way ProPublica thinks. They are a chilling reminder that, increasingly, we have no right to a private life.”
Lack of Faith: Echoing some of the sentiments above, Charles Cooke of National Review says, “The real lesson to be learned from ProPublica’s exposé” is that Americans simply “can’t trust the IRS.” Cooke’s colleague Jim Geraghty elaborates, saying, “The relevant question is not whether you like Jeff Bezos, Michael Bloomberg, Warren Buffett, and Elon Musk. The question is whether the IRS declaration that tax returns are confidential applies to everyone or not. This morning it’s pretty clear that your tax return is confidential, as long as no one at the IRS thinks it is newsworthy. But if they do, you’re screwed.” Addressing ProPublica’s argument above, Geraghty writes that “The fairness of the tax code doesn’t outrank somebody else’s right to keep their tax return confidential.” Geraghty ends by sarcastically saying, let’s “see if the IRS holds anyone accountable for this breach…It’s probably those darned low-level employees in Cincinnati again.”
Flag This: Federal Income Tax
According to a Pew Research Center survey conducted April 5-11, 2021, “Majorities of Americans say they are ‘bothered a lot’ by the feeling that some corporations and wealthy people don’t pay their fair share in taxes (59% each).” Moreover, “Nearly half (47%) say they are bothered a lot by the complexity of the federal tax system, while a third say the same about the amount they pay in taxes.”
With that said, “Americans like having a rich class and don’t want it abolished,” Frank Newport reports for Gallup, a nonpartisan analytics and advisory company. In fact, “The majority of Americans themselves would like to be rich someday,” and they “believe that having rich people in society is good for that society.” Zooming out, “It appears that while Americans think the rich should pay more into the tax system, Americans don’t broadly view them as evil or as of no benefit to our society. Demonizing the rich thus may not be the most advisable course of action for politicians.”
Flag Poll: Federal Income Tax
There’s a lot to unpack here. What do you think about the ProPublica story? Do you think these private details should have been released? What about taxation in America? Do wealthy individuals pay their fair share? Comment below to share your thoughts.