Peter Thiel’s taxes are not the real story
ProPublica’s latest tax filing extravaganza reminds me of Steve Martin’s routine that started out: “You too can have a million dollars and never pay taxes.” . . . First, get a million dollars.
Why does Peter Thiel, subject of the latest installment, have $ 5 billion in his Roth IRA? Because of the assets he deposited years ago, the shares received for helping start PayPal and other successful businesses have exploded in 20 years to an unlikely degree. When Congress set the annual contribution limit at $ 2,000 in 1999, I doubt it imagined that a taxpayer would see such an appreciation in assets. But the rules set by Congress are the rules set by Congress. And Mr. Thiel’s use of Roth is not news. Gawker reported the simple fact in 2009. Forbes, digging through public records, showed in 2012 how he and other Silicon Valley entrepreneurs were using tax-deferred vehicles for their startup stakes. Congress held hearings. The Government Accountability Office released a report.
Indeed, in the article it published Thursday, ProPublica essentially acknowledges that when a thief laid in his lap more than 15 years of tax return data on thousands of wealthy Americans, he went to researching the use of the Thiel tax that he already knew.
Which raises a question. When is the “media” justification for trafficking in illegally obtained information so strained that it cannot be used as a defense when other important public values are at stake?
ProPublica says it doesn’t know who stole the tax records. He doesn’t know who else might have them. It is unclear whether the social security numbers and bank account data of thousands of Americans have been put up for sale on the dark web over the months as ProPublica kept knowledge of the theft secret so it could research the statements of a few. renowned taxpayers. .
Did the theft, which appears to have been a huge undertaking, even occur when ProPublica was approached to publish its results? What assurance did that give the thief that he wouldn’t go straight to the cops? The hijacking of a crime, the cover-up of a serious crime, is in itself a crime.
Either way, Mr Thiel’s $ 5 billion Roth IRA would be news, but no court would justify a journalist breaking into Mr Thiel’s house or into a computer there. ‘IRS to get them.
Read the 5,800 word article and notice how much ProPublica’s effort has gone into demagogic framing, exploring the history of the Roth IRA and the history of Mr. Thiel’s colorful statements. , and the little handling of new information that the stolen tax data has revealed. “One day in early 1999, a Thiel assistant at the company that would become PayPal walked into the Pensco Pension Services office in San Francisco,” ProPublica reports.
It was Forbes, in 2012, that appointed Pensco as Mr. Thiel’s retirement advisor.
The retrospective fallacy gets its usual practice. If Mr Thiel had really known what his shares would be worth, he could very well have avoided the Roth and preferred to be subject to the 20% capital gains tax in exchange for full liquidity of his holdings. As ProPublica slips, once his shares were in a Roth, the government treats any attempt to release them before Mr Thiel reaches the age of 59.5 as an anti-social act, inflicting him the highest tax rate plus a 10% penalty. .
The irony is that almost all thoughtful people – as ProPublica acknowledges, including Mr Thiel himself – thinks our tax code is crazy.
But more to today’s point, ProPublica’s ritualized recap of standard journalistic tax contempt could have continued, and 99.9% do, had it not been for Mr. Thiel’s stolen tax returns. The new things ProPublica is adding to the public record, aside from the bulk of the verbiage, are barely a step away from an employee browsing his company’s data files for famous clients whose details it can be fun to post on social networks.
When the New York Times published the Trump family’s tax returns three years ago, it obtained them from Donald Trump’s niece, who legally owned them. When the National Enquirer obtained proof of Jeff Bezos’ extramarital affair, he received it from his lover’s brother, who legally possessed her.
In both cases, the breach of privacy was limited to newsworthy personalities and concerned matters of immediate current interest. They didn’t involve sweeping and blind criminaI violation of the privacy of thousands of taxpayers, through which journalists then searched for information on the names in bold most likely to attract clicks.
Therefore, one suspicion is hard to dispel: the enormous padding with which ProPublica surrounds a single startling fact – the dollar value, as of tax year 2018, of Mr. Thiel’s otherwise widely reported Roth account. – feels more than journalists watching their scoop. This smacks of ProPublica scrambling to justify its decision to accept the stolen files in the first place, thereby protecting the thief and hiding from the public for its own purposes urgent and critical information that such theft had taken place.
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Published in the print edition of June 26, 2021.