Hedge Fund Manager Ken Griffin Sues IRS Over “Unlawful Disclosure” of His Tax Info to ProPublica

LewisBraham

Nice work if you can get it: https://propublica.org/article/ken-griffin-citadel-irs-propublica-lawsuit-taxes?utm_source=sailthru&utm_medium=email&utm_campaign=dailynewsletter&utm_content=river

In an April story about the top earning Americans and what taxes they paid, ProPublica reported that Griffin had the fourth-highest income in the country between 2013 and 2018, according to the data. He reported an average annual income of nearly $1.7 billion. Griffin paid a tax rate of 29.2% during these years, a higher rate than many of his hedge fund manager peers but significantly lower than the top marginal income tax rate of around 40%.

That article explained that even though our system is designed to tax the rich at higher rates than everyone else, it doesn’t work that way for those at the apex of the income pyramid. On average, they pay far lower tax rates than the merely affluent do. And even among the top 400 earners, people from certain industries have it better than others: Tech billionaires pay rates well below hedge fund managers.

In response to that article, a spokesperson for Griffin said the tax rates in the IRS data “significantly understate” what Griffin pays, because the rates were lowered by charitable contributions and do not reflect local and state taxes. He also said Griffin pays foreign taxes, which aren’t included in IRS calculations of effective tax rate.

In a second story, ProPublica showed how much Griffin stood to gain from having bankrolled a fight against an income tax increase in his then-home state of Illinois. He spent $54 million fighting that tax. The effort was a success and the increase went down in defeat.

That campaign spending was worth it for Griffin. Based on his past income, the increase could have cost him as much as $80 million in a year. (Subsequently, Griffin moved from Illinois to Florida, which has no state income tax.)

In another series about the IRS, this one in 2018, ProPublica highlighted how the agency was gutted. Congress, driven by Republicans after the Tea Party wave election in 2010, repeatedly cut the IRS budget, resulting in a loss of billions of dollars of funding. Tens of thousands of IRS employees left. Audits, particularly of the wealthiest Americans and the largest corporations, plummeted. Criminal investigations of tax evasion fell dramatically.

davidrmoran

great work

ProPub is one of a half-dozen or more lower-level, deep-dive sites that are just indispensable if we are to get out of this current predicament

lawfareblog, abovethelaw, vice, rawstory, and many others

plus the usual numerous non-newspaper suspects (dailybeast, salon, slate, atlantic, newyorker, nybooks, vox, politico, nation, talkingpointsmemo, nymag, vf, etc. ...) --- we are in a golden age of analytic policy and investigative journalism

LewisBraham

I do wonder when someone is worth $32 billion like Griffin what the point is of spending $54 million to fight a state tax to save $80 million? It reminds me of a story John Bogle was fond of recounting:

At a party given by a billionaire on Shelter Island, the late Kurt Vonnegut informs his pal, author Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel, Catch-22, over its whole history. Heller responds, “Yes, but I have something he will never have – enough.”

The super-rich fighting taxation of every sort also seems shockingly ignorant of history. Eventually, such gross inequalities can lead to the pitchforks and torches scenarios outside their castles. So, it almost makes financial sense to accept a fair tax rate when you have so much. Pay for the bread and circuses to keep the plebeians like us happy. Moreover, how can the rich stay rich in industry if they don't believe in taxation for things like public education? Where's their educated workforce going to come from?

And if they make stuff, who will be their consumers? From NPR: "In January 1914, Henry Ford started paying his auto workers a remarkable $5 a day. Doubling the average wage helped ensure a stable workforce and likely boosted sales since the workers could now afford to buy the cars they were making." I guess, though, if you run a hedge fund, you don't need to worry about the average consumer buying your product. Maybe therein lies the problem, a complete mental disconnect from how ordinary people live their lives.

Old_Joe

If you ain't one of them, you ain't nobody noways nohow.
Or something...

sma3

I think this is just a publicity stunt from Griffin, because the federal tort claims act says you cannot sue the federal government unless a federal court agrees. It is not clear, either, how he was damaged by the release.

From Wikipedia:

Under the FTCA, "[t]he United States [is] liable ... in the same manner and to the same extent as a private individual under like circumstances, but [is not] liable for interest prior to judgment or for punitive damages." 28 U.S.C. § 2674. Federal courts have jurisdiction over such claims, but apply the law of the state "where the act or omission occurred". 28 U.S.C. § 1346(b). Thus, both federal and state law may impose limitations on liability. The FTCA exempts, among other things, claims based upon the performance of or failure to perform a "discretionary function or duty".[1]

The IRS argument here will simply be " If we had been given the resources that we asked for, ( but denied by GOP administrations and Congress) this would not have happened".

sma3

@davidmoran

Add Popular Information to your "must Read list"


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LewisBraham

@sma3

I think this is just a publicity stunt from Griffin,

Remember the good old days when billionaires didn't seek to be in the public eye, but just quietly ran everything behind the scenes?

yogibearbull

Billionaires do whatever they feel like (and think later) because they have an army of lawyers on retainer and have money to burn. Most of us just follow the law to stay out of trouble.

Unless Griffin can prove deliberate intent on the part of government, what will his lawsuit accomplish? If he sued another billionaire, he can at least hope for some settlement.

carew388

LewisBraham I think you pointed out the main issue. In Ford's time, the US was still a major manufacturing nation, so raising workers salaries created demand for manufactured products. Hedge fund managers don't produce anything-they just shuffle papers and maximize financial engineering to create profits that only benefit their small group. Todays too many greedy CEOs think they can extract all the profits and then just move to Switzerland, Liechtenstein or Singapore when the US society collapses !