Charles Littlejohn, a former IRS contractor, leaked the tax returns of the rich to show the public how the uber-wealthy game our tax code. Now he’s facing potential prison time. They’ve nabbed the wrong criminal.
Billionaires Ken Griffin (L) and Jeff Bezos (R), whose tax information was leaked by IRS whistleblower Charles Littlejohn. (Alexander Tamargo / Getty Images for American Express Presents Carbone Beach)
In June 2021, the investigative reporting outlet ProPublica began publishing “The Secret IRS Files,” a series of articles analyzing a leaked cache of the wealthiest Americans’ tax documents.
The series was shocking. Over the course of more than a year, it laid out in detail the methods by which the uber-rich — with their armies of accountants, lawyers, and friendly politicians — rig the tax code to their benefit. In many cases, the documents revealed, billionaires pay a lower effective tax rate than their working-class employees, or pay no taxes at all.
In a functioning democracy, these revelations would spark meaningful changes in the tax code, and the person responsible for the leaks would be lauded as a hero for alerting the public to massive government dysfunction. Instead, President Joe Biden’s Department of Justice, badgered by congressional Republicans, elected to prosecute the whistleblower.
After his indictment last month, former Internal Revenue Service (IRS) contractor Charles Littlejohn pleaded guilty in federal court this Thursday to disclosing tax information to two news outlets without authorization. Though the outlets aren’t named, the indictment appears to hold Littlejohn responsible for the ProPublica leak and a separate leak of former president Donald Trump’s tax returns to the New York Times in 2020. Court documents show that he is likely to face between eight and fourteen months in prison, though his sentence could last as long as five years.
The decision to prosecute the leaker while our sieve of a tax code remains unaddressed is disgraceful, laying bare the way our government continues to prioritize the needs of the wealthy over those of the general public.
War on Whistleblowers
The prosecution of Littlejohn is shameful, but it isn’t surprising. For the past two decades, the US government has been waging a bipartisan war on whistleblowers.
For national security leaks, it has become commonplace to prosecute whistleblowers under the Espionage Act, a World War I–era law intended to target spies who provide intel to foreign governments. Daniel Ellsberg and Anthony Russo, whose leak of the Pentagon Papers provided a vital glimpse into decades of policy failure in Vietnam, were the first whistleblowers prosecuted under the law, facing the possibility of a 115-year prison sentence.
For the past two decades, the US government has been waging a bipartisan war on whistleblowers.
The prosecution of leakers ramped up under former president Barack Obama’s Department of Justice, which — despite coming into office promising to be the “most transparent” administration in history — used the Espionage Act against whistleblowers more than all its predecessors combined. Trump, never a fan of the free press, escalated further, prosecuting whistleblowers Reality Winner, Terry Albury, Daniel Hale, and journalist Julian Assange. (Ironically, Trump is now himself being prosecuted under the Espionage Act for his mishandling of classified documents.)
At Littlejohn’s plea hearing Thursday, US District Court Judge Ana Reyes admonished the defendant’s actions. “If there’s anyone out there telling you it’s acceptable because the ends justify the means and they think the end is appropriate, they are wrong,” she told the court.
While Littlejohn is not being prosecuted under the Espionage Act, Reyes’s statement echoes the logic used in Espionage Act cases. During Ellsberg’s trial, he was forbidden from using the defense that he leaked the Pentagon Papers in the public interest. In the court’s eyes, the argument was irrelevant — the ends didn’t justify the means.
It’s this same reasoning that forces whistleblowers to reach plea deals in Espionage Act cases today instead of making their case at trial. Chelsea Manning, whose leaks revealed the dark reality of US violence against civilians during the wars in Iraq and Afghanistan, was forced to plead guilty to Espionage Act charges. She ultimately spent more than seven years in prison without having a real chance to mount a defense. Edward Snowden, whose leaks showed the American public that its government was conducting an insidious and illegal surveillance program, remains exiled in Russia. Snowden has said that, if able to make the case that his leaks were in the public interest, he would return to the United States and stand trial. But, in the eyes of the law, the ends don’t justify the means.
Before his death this June, Ellsberg continued to advocate that whistleblowers should be allowed to defend themselves by arguing that they acted in the public interest. “We need more whistleblowers, not fewer,” he said.
Of course, there are times when the ends do justify the means. The actions of whistleblowers like Ellsberg, Snowden, Manning, and Littlejohn have created a more informed American public, better able to participate in the democratic process. Many of these leaks have led to positive policy changes. And many disastrous policies could have been prevented if more people had felt comfortable blowing the whistle without fear of draconian prison sentences.
Private Taxes, Public Consequences
We don’t know anything about the motivations of Charles Littlejohn. He hasn’t made a public statement since his indictment, and his attorney Lisa Manning declined to comment for this article. Considering how the establishment media raked Snowden, Manning, Assange, and even Ellsberg over the coals in the wake of their leaks, it makes sense that he would want to keep a low profile. Regardless of his intentions, it is indisputable that the leaks were in the public interest.
“The Secret IRS Files” featured many stunning and appalling revelations — among them that Kentucky Derby horse owners managed to take a combined $600 million in tax write-offs on their racing operations, that the billionaire responsible for the longest-running oil spill in history used compelled cleanup efforts to reduce her tax bill to nothing, and that an LA Clippers stadium worker making $45,000 a year paid taxes at a higher effective rate than team owner Steve Ballmer, to name a few.
Most importantly, the series exposed the way money operates in our political system. Of course, it’s no secret that money can buy politicians and favorable policies, but the leak pulled back the curtain to show how political spending can result in direct financial benefits for the superrich. It revealed how billionaires can essentially use our democracy as an investment vehicle — one that can be quite lucrative.
Take billionaire Ken Griffin’s campaign against a 2022 ballot proposal that would have increased taxes by 3 percent on the wealthiest Illinois residents. Griffin — yes, the one portrayed by Nick Offerman in Dumb Money who may have colluded with the Robinhood platform to screw over Reddit Gamestop investors — pumped $54 million into deceptive advertisements against the proposal. Those efforts were successful, and the measure was voted down at the ballot box. The leaked documents showed that Griffin may have saved as much as $80 million in a single year as a result of the tax being shut down, meaning that he almost immediately made back his investment with interest. (Griffin has now become a force pushing for a harsh response to the leak, filing a lawsuit against the IRS over the incident.)
Or take the case of Republican Senator Ron Johnson, who dramatically refused to vote on Donald Trump’s tax cut package in 2017 until the bill provided additional breaks for a class of businesses called “pass-through” companies, so named because profits pass through to the owners. The holdout was successful, and when the bill passed it included a juiced-up tax break for these businesses.
Among the biggest beneficiaries of the pass-through tax changes were, unsurprisingly, some of Johnson’s top financial backers. Dick and Liz Uihlein of the pass-through company Uline and roofing billionaire Diane Hendricks contributed about $20 million to groups that backed Johnson’s reelection campaign in 2016. The IRS documents show that the changes Johnson pushed for are expected to deliver the trio more than half a billion dollars over the span of the program.
While the information contained in Littlejohn’s leaks may be less visceral than some of the revelations from military whistleblowers, they reveal a harm that is no less relevant to the public.
Budgets are a zero-sum game, and any taxes that billionaires avoid must be made up for by cutting social services or hiking taxes on the working class. The defeat of the Illinois ballot proposal led to austerity measures, hurting already struggling public schools. According to the Center on Budget and Policy Priorities, the pass-through deduction costs the government $50 billion a year — benefits that go overwhelmingly to the wealthy — while providing “no discernible economic upside.” Meanwhile, Congress scrambles to save pennies by booting people off welfare rolls.
Some have argued that, in leaking the tax returns, Littlejohn violated the privacy rights of billionaires. But the tax machinations of the superrich have public consequences, and there is no legitimate reason to keep them private, let alone imprison those who reveal them.Original post