This past week angry Republican senators demanded to know whether a senior official in the Obama administration had gone through the tax filings of an entity Politico characterized as a "privately held corporation run by some of the country’s biggest conservative political benefactors." The firm was identified as Koch Industries. You may recognize them as significant contributors to Republicans and conservative issues, including the Tea Party’s organization.
The focus of the senators’ anger is Austan Goolsbee, who’d recently been appointed as chairman of the Council of Economic Advisers. During a conference call with reporters Goolsbee referred to Koch Industries as an example of a corporation which doesn’t pay corporate taxes.
At no point in either of the articles in the New York Times or Politico does it say that Goolsbee admitted to accessing IRS records, yet Senator Chuck Grassley (R-IA) and six other unnamed Republican senators are in a dither about this assumed invasion of Koch’s privacy.
What a crock.
Koch Industries is quite obviously a conglomerate of smaller firms, and the smaller firms are structured in a number of different ways, including limited liability companies (LLCs) and partnerships. And the structure of each of Koch Industries’ subsidiary entities is public information, filed with the states in which each entity organized. Oh, and this information is right there on their damned web site, if you care to poke around at Koch’s businesses’ home pages.
LLCs and partnerships in particular don’t pay corporate taxes. There’s no rocket science here, no digging through IRS filings required to determine this.
Any wet-behind-the-ears second-year business school student could tell you that LLCs and partnerships don’t pay corporate income tax. Income is instead passed through to the owners of these entities, and the owners pay personal income tax.
At least they pay personal income tax when there’s a profit — and any third-year business student will tell you how to ensure there’s no profit.
(And they’d certainly be able to tell you why an LLC is preferable to a partnership; liability is limited to the assets held by the corporation, unlike partnerships, and corporations can live forever if set up properly.)
What’s disturbing about these two articles is a lack of pushback by the journalist; why didn’t they question the complaints of the senators? why didn’t they push Koch Industries a little harder, when they replied indignantly that they paid their taxes; did they not think to ask what kind and how much tax Koch paid?
And why didn’t the senators — the men responsible for making laws related to the establishment and regulation of corporations — know that Koch Industries is no different than an overwhelming number of businesses here in the U.S. with regards to their tax payments?
Or was this really just an opportunity to do several things at once: reject and punish the Obama administration and Austan Goolsbee as a proxy while providing cover for one of their biggest donors?
Or were they anxious that the Tea Party’s largest and best-known benefactor might take issue with them should these Republican senators not come to their defense?
Or do these Republican senators not want anybody to look too closely at Koch Industries?
One might wonder why they are so upset about Koch Industries’ tax filings, when the largest companies in America share their financials as required of publicly-held entities. General Electric also paid -$1.1 billion in corporate taxes in 2009 — yes, a negative number! — as highlighted in Forbes Magazine.
And yet you don’t see these same Republican senators getting their shirts in a knot over this information.