In August 2010, Austan Goolsbee, serving at the time as economic adviser to President Obama, told reporters during an anonymous background briefing that Koch Industries doesn't pay corporate income taxes. That statement was made at the same time that top Democrats, including President Obama himself, were demonizing Charles and David Koch, the owners of Koch Industries, for giving money to Tea Party groups. Goolsbee's remark led to a federal investigation, the results of which have never been released.
In a September 2010 WEEKLY STANDARD interview, Mark Holden, a lawyer for Koch Industries, disputed Goolsbee's claim and asked how Goolsbee came up with the idea that Koch Industries doesn't pay corporate taxes. Holden raised the question of whether someone in the Obama administration might have looked at Koch Industries' tax returns--which would be a violation of a federal law that was enacted in 1976 in response to Watergate.
The White House never formally explained how it came up with the claim, but an anonymous White House official told Ben Smith, then a reporter at Politico, that the claim was based on testimony to President's Economic Recovery Advisory Board and publicly available sources, such as Forbes magazine and Koch Industries' website. Koch lawyer Mark Holden said the White House's explanation didn't make sense: "[C]ontrary to the administration official's statement on what sources were used by the administration, neither the Koch website nor Forbes' list of private companies has information regarding Koch's tax filing status. This is confidential information."
A letter from Republican senators led to an investigation by Treasury inspector general J. Russell George. But after the investigation was completed, George wrote in an October 2011 letter to Senator Charles Grassley that, due to confidentiality provisions of the law, he could not tell Grassley if anyone had illegally accessed Koch Industries tax returns or if the inspector general had taken any actions following his investigation. The inspector general wrote that the only members of Congress who can access confidential tax information are the chairman of the Senate Finance Committee and chairman of the House Ways and Means Committee. Spokesmen for the Senate Finance Committee did not reply to a WEEKLY STANDARD inquiry about whether Chairman Max Baucus has the authority to release the report.
Without the inspector general's report, we don't know where the White House came up with the claim that Koch Industries doesn't pay corporate income taxes. But earlier this month, Austan Goolsbee offered a new explanation in light of the unfolding IRS scandal. Goolsbee wrote on Twitter:
— Austan Goolsbee (@Austan_Goolsbee) May 14, 2013
If true, that's an embarrassing explanation of Goolsbee's 2010 remarks. The article Goolsbee cited as the basis for his false* claim that Charles and David Koch don't pay federal corporate income taxes was a 2003 St. Petersburg Times report that a different Koch brother did not pay corporate taxes to the state of Florida. Imagine if a senior Bush administration official made a false claim about George Soros's taxes during an election because he read an old article written about some guy named Jimmy Soros.
Sometime since Slate reporter Dave Weigel quoted the Goolsbee tweet on Friday, Goolsbee deleted it. Why? Did Goolsbee delete it simply because it was embarrassing? Or was it not true?
Koch Industries lawyer Mark Holden says the explanation is implausible. "It is hard for me to believe what Mr. Goolsbee is saying now on Twitter, after not raising it 3 years ago when this came up, and he and the White House stated his comments about Koch not paying taxes and how it structured itself for tax purposes were based on Forbes article, our website, and PERAB testimony," Holden wrote in an email to THE WEEKLY STANDARD. "As you recall, when we challenged those assertions the White House said Goolsbee was 'mistaken' and 'we (White House and Goolsbee) won’t' say this again. Now after the TIGTA investigation is closed, he offers yet another reason – a 2003 newspaper article that doesn’t deal with Koch Industries or federal tax issues. Very hard to believe this and makes me wonder what he really relied upon and what is in the TIGTA report."
On Tuesday, I asked Goolsbee why he is now citing the St. Petersburg Times article when the White House pointed to different sources in 2010. He didn't reply. Nor did Goolsbee respond when asked if he met with IRS officials at the White House.
As the saying goes, never assume malice when stupidity will suffice. But in light of the recent IRS scandals--involving not just the targeting of conservative groups for extra scrutiny but also the sharing of confidential tax information--the administration doesn't exactly deserve the benefit of the doubt. Without the inspector general's report, we can't know for sure if the Obama administration was merely guilty of stupidity and demagoguery regarding the Koch brothers--or something worse.
*Both Koch Industries and the White House now agree the claim that Koch Industries doesn't pay corporate income taxes is false, but we don't know the claim is false without seeing Koch Industries' tax returns.