What Fresh Hell Is This?

September 22, 2010

Another Dissipating "Scandal" At The Trib

From today's Tribune-Review, there's an editorial that begins with this breathless question:
In its zeal to smear its critics, has the Obama administration committed a crime?
As with much on Scaife's editorial page, once you look at the facts you immediately see the skewed frame his braintrust doesn't want you to see. The editorial is about Charles and David Koch "libertarian billionaires" and the vast right-wing network they fund. The kernel of the issue:
But as The Weekly Standard magazine reports, lawyer Mark Holden says the administration might have crossed the line by revealing what's supposed to be private tax information about Koch Industries. He cites an Aug. 27 on-the-record background briefing by an unnamed senior Obama administration official that cited particulars of Koch's taxes.
Here is the Weekly Standard article for y'inz to peruse. And according to that article, this is what Koch attorney Holden said that senior Administration official said in that on-the-record briefing::
So in this country we have partnerships, we have S corps, we have LLCs, we have a series of entities that do not pay corporate income tax. Some of which are really giant firms, you know Koch Industries is a multibillion dollar businesses. So that creates a narrower base because we've literally got something like 50 percent of the business income in the U.S. is going to businesses that don't pay any corporate income tax. They point out [in the report] you could review the boundary between corporate and non-corporate taxation as a way to broaden the base. [emphasis in original]
Look again at the braintrust's first rhetorical question: Has the Obama Administration committed a crime?Curious thing about that because in the same Weekly Standard piece, Koch Industries attorney Holden is also quoted with this:
I’m not accusing any one of any illegal conduct. But it’s my understanding that under federal law, tax information, is confidential and it’s not to be disclosed or obtained by individuals except under limited circumstances. ... I don’t know what [the senior administration official] was referring to. I'm not sure what he's saying. I'm not sure what information he has. But if he got this information--confidential tax information--under the internal revenue code ... if he obtained it in a way that was inappropriate, that would be unlawful. But I don't know that that's the case.
Holden isn't accusing anyone of any illegal conduct, but the Trib certainly is. You do know that that's what they're doing, right? They're just hiding behind a series of leading questions. Questions like:
If so, who's behind what would clearly be an illegal act? Who in the Obama administration ordered the information? Who at the IRS provided it? And if the Obama White House crossed the line with Koch Industries, has it done the same with others? How many others?

Well? [emphasis in original]
Only there's no there there.

Ben Smith at the Politico reports that another administration official said that:
..the White House got the information from testimony before the the President's Economic Recovery Advisory Board (PERAB) and from Koch's own website
This official is then quoted as saying:
No senior administration officials have any access to anyone's tax returns--individual or business. The administration official was discussing the section of the PERAB's tax report that argued we should look at the rising importance of pass through entities that do not pay corporate income tax.

This issue was raised repeatedly by outside experts that testified before the PERAB and Koch was cited to the PERAB as an example by outside commenters to the group. We assume it came up from publicly available information such as the Forbes magazine annual report listing Koch as one of the largest private companies in the nation or the fact that a high fraction of the largest companies within Koch Industries are listed on the Koch website as LLCs, LPs or other frequent pass-through entities. If this information is incorrect, we are happy to revise statements.

But the administration still believes it is worth reading the PERAB's independent tax report which raised the issue of the large amount of business activity being done by sometimes very large businesses which is not paying corporate income tax but competes against other companies that do.
You can find the PERAB report here.

But let's get back to the issue at hand. Koch Industries tax information is listed on its own website?? Yes, it is. If you go to this page, you'll see a list of Koch Industries industries. At the end of each there's an "LLC" or an "LP" or something like it. LLC means "Limited Liability Company" and it's a "pass-through" organization that doesn't pay taxes. The profits or losses are "passed through" to the owners of the company to be listed on their individual tax returns.

So look again at the Trib's fervent rhetorical questions. How silly do they look now?

There is no there there. Again.


EdHeath said...

This is a little tricky in that I suspect the Koch Industries lawyer is correct, revealing specific information about Koch Industries taxes would be illegal. I am not sure about the limits of the law concerning whether administration officials can view Koch business or personal tax information or more specifically under what circumstances they could view that information.

But nobody is citing specific numbers, or even saying such numbers are out there. So far all I am seeing is general statements (the Kochs make a lot of money and don't pay much tax). I can where the Kochs are really secretive, and don't like even the hint that their tax information is out there. But it will be harder for the Koch Lawyer to prove anything if no specific numbers have been revealed by the government (and it sounded like, in the Weekly Standard, that the lawyer was already backtracking a little bit, covering himself).

The Weekly Standard was fairly slimy in their story, the Trib even more so. You would think grownups would understand the difference news (or reporting the lack of detail) and opinion.

Anonymous said...

I agree that "there is no there, there."

As I read it, the "senior administration official" said, basically, that lots of large business entities avoid corporate taxes by making use of LLP's, LLC's, and other organizational forms that pass-through their income to owners who then pay taxes. The issue was how the tax code might be broadened to make some of that income taxable to the business, as corporate income is taxable to the corporation.

No access to confidential IRS data was needed, to make that statement.

The Kochs were used as an example, based on their use of LLC's to avoid corporate taxes. The facts offered were based on publicly available information, and did not require access to IRS records. (Koch Industries contains LLC's, and they make a bunch of money.)