Earlier this month, left-wing internet publication ProPublica revealed that it had obtained “a vast trove of Internal Revenue Service data on the tax returns of thousands of the nation’s wealthiest people, covering more than 15 years.” The data, the outlet explained, includes “not just their income and taxes, but also their investments, stock trades, gambling winnings and even the results of audits.”
The extraordinary violation raises a host of questions – including who exactly was willing to break the law to disclose the confidential financial records of thousands of private citizens, why they did so, and whether this breach indicates a larger problem of politicization at the IRS.
As many commentors noted, the timing of the unprecedented leak was highly suspicious, coming as it does as Joe Biden and Democrats in Congress push to raise taxes on Americans by making the case the “wealthy” do not pay their “fair share.”
ProPublica claims they intend to use the data to release a series of articles over the next several months revealing, in detail, the personal filings of many Americans. Presumably this will be in the service of the larger political point being made by the Biden administration.
Last week, Treasury Secretary Janet Yellen professed deep concern over the release of these confidential tax returns. She referred to the matter as “a very serious situation” and revealed that it was being investigated by the Treasury Department. Both sides of the political aisle have called for probes to be immediately launched.
During a radio appearance on the Hugh Hewitt show earlier this week, Senate Majority Leader Mitch McConnell directly accused the IRS of being involved in the leak. He stated, “My guess is the IRS, somebody at the IRS leaked this in order to affect the tax debate and remind people that there are some very wealthy Americans…. But it’s important to remember we don’t tax wealth.”
McConnell also made it clear that any involved individuals would be facing serious legal consequences if caught. While there is no evidence yet that a member of the IRS was responsible for the leak, the agency’s record of politicizing the tax code is unfortunately well established.
In 2013, the IRS apologized after being caught targeting conservative organizations with intense scrutiny that often denied them tax exempt status for years at the height of the Tea Party movement. The agency was identifying conservative-leaning groups seeking non-profit status, and forcing them to disclose “donor rolls,” Facebook posts, and even “asked what books people were reading.” Groups that refused risked losing their protected status while even those that complied faced long delays and excessive scrutiny.
In the first release of its series based on the new leaks of individual tax returns, ProPublica alleges that the wealthiest Americans pay almost nothing in income taxes to the federal government. They accuse the wealthiest 25 Americans of only paying 3.4% in taxes. They also provide specific details of individuals, including Warren Buffet, who, they state, pays a tax rate of .10% percent. If true, this is a far cry from the 37% top marginal tax rate. However, many have raised questions as to ProPublica’s methodology and how they define wealth.
Last week, the Wall Street Journal blasted the organization’s analysis, citing major flaws in the report’s conclusions. The Journal points out that ProPublica is skewing the data by comparing the taxes paid by an individual to their total estimated wealth. This is how they arrived at the “3.4%” number. Taxes are based on an individual’s annual income, not their total wealth. In effect, ProPublica is attacking wealthy Americans for not paying a “wealth tax” that does not exist. A wealth tax was introduced in March by Senators Elizabeth Warren and Bernie Sanders but has not advanced.
Treasury Secretary Yellen has assured lawmakers on Wednesday that they will be kept abreast of any developments. Yet, she clarified that little progress has been made: “We’re only one week out on this, and I really want to emphasize we do not know what happened…don’t have any facts at this point.”
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