Way over the line

Back in my reporter days, I probably would have called the ProPublica exposé on the tax maneuvers of the ultra-rich and famous an example of hard-hitting journalism. And I would have spoken that last word, as the poet once said, "as if a wedding vow."

Ah, but I am so much older now, a former tax professional, and a tax educator. And what I call it today is a felony.

It is a big, big no-no under federal law to reveal someone's tax return information. And so if someone at the IRS really did leak information to the media (like what the heavy hitters individually paid in taxes), the IRS leaker ought to be thrown in prison. The maximum penalty is five years, and of course termination of employment.

Maybe it was an outside hack, in which case the perpetrator probably isn't worried about committing the tax crime because he's already up to his ears in other felonies. But if it was somebody at the IRS, they're in deep kim chee.

And I have no doubt that there are some extremely capable people at the Treasury Department who are now out looking for them. You can bet the order came from Janet Yellen's desk.

Another possibility is that ProPublica is making stuff up. Just sayin'.

In any event, one weakness in their story is that it equates the growth in one's wealth with income. Rightly or wrongly, that's not how this works. If you buy something and its value goes up, that's not income for tax purposes unless you sell it or swap it. The alternative would be to have everybody appraise everything they own every year, like in a wealth tax, and that's neither the current law nor likely to become the rule any time soon.

It's not illegal to minimize your taxes. Tax avoidance is perfectly legal. If you want people not to avoid your tax, you need a tax that's unavoidable. Good luck finding one that's also fair.

Do the ultra-rich pay too little in federal income tax? Yes. But playing around with IRS files isn't necessary to make the point. Nor is it worth going to prison over.