Yesterday, the conservative Weekly Standard leveled what Politico described as an “explosive” accusation against the White House, accusing its operatives of improperly snooping on the tax returns of Koch Industries, the giant oil and gas conglomerate owned by right-wing mega-donors Charles and David Koch.
Based solely on the account of the Koch’s general counsel, the Weekly Standard alleged that the White House had obtained, and subsequently revealed, private tax data about the company. According to the Standard, during a conference call with reporters last month, an unnamed administration official suggested Koch was one of a “series of entities that do not pay corporate income tax.” Indeed, many companies that are privately owned do not pay corporate taxes, but instead “pass through” their profits to the company’s owners, who then pay personal income tax on the profit.
A company’s tax status is confidential, so Koch’s lawyer and the Standard — noting that the White House and the Koch brothers have clashed publicly in the past over their funding of right-wing attack groups — are suggesting that the White House learned of Koch’s status by illegally obtaining information from the IRS. Other right-wing blogs piled on, and by this afternoon, Fox News dutifully chimed in to defend Koch. Almost entirely ignoring the actual details of the story, host Megyn Kelly and legal analyst Peter Johnson Jr. wondered if “this is a return to the Nixon’s enemy list,” and suggested that the White House is trying to “intimidate” its “political rivals”:
Koch’s lawyer is not denying the claim that the company doesn’t pay corporate taxes, but rather is concerned about how the White House knew. But as the White House noted in a statement to Politico, this assumption could be easily made by merely visiting the company’s website, which explains that most of its subsidiaries are the types of companies that are generally “pass-through entities,” and thus do not pay corporate taxes. Rather, they pass profits onto the owners who in turn pay personal income tax. The White House flatly denied any wrong doing, further explaining that several experts testified before a presidential economic board about Koch’s tax status. “If this information is incorrect, we are happy to revise statements,” the White House statement continued.
Of course, this kind of wild conspiracy theorizing is nothing new for Weekly Standard, which has implicated the Obama White House in nefarious (and entirely fabricated) schemes to blackmail Sen. Ben Nelson (D-NE) into voting for the Affordable Care Act, buy Rep. Jim Matheson’s (D-UT) vote on the bill, and bribe Rep. Joe Sestak (D-PA) to drop out of a Democratic primary. None of these false charges have prevented more mainstream outlets from repeatedly turning to the Weekly Standard as a reliable source. But the tax status of Koch Industries speaks to a much larger issue than the right-wing media’s attempt to baselessly implicate the White House in illegal activity.
In the ongoing debate about extending the Bush tax cuts for the wealthy, Republicans repeatedly insist that “small businesses” will be dangerously impacted by the tax rates resetting to a higher level. In reality, as House Minority Leader John Boehner (R-OH) himself has admitted, just three percent of small businesses would actually be affected. Moreover, many of the “small businesses” Republicans whine about are actually huge corporations, such as accounting giant PriceWaterHouseCooper, engineering juggernaught Bechtel Corp., and — if it is indeed a “pass-through” company — Koch Industries, the nation’s second-largest private company.