Apparently it never occurred to some of Colorado’s excitable journalists that the income tax taxes…wait for it…income. Shocker, I know. This apparently profound insight became the basis for thousands of words of news reports about Jared Polis’s taxes.
Here is the key paragraph from ProPublica’s recent report, which then became the basis for various derivative local stories: “Despite a net worth estimated to be in the hundreds of millions, Polis paid nothing in federal income taxes in 2013, 2014 and 2015. From 2010 to 2018, his overall rate was just 8.2%—less than half of the 19% paid by a worker making $45,000 in 2018.”
The “despite” in the first sentence tries to suggest a logical relationship between the first fact and the second. There isn’t one. It’s rather like reporting, “Despite dill pickles tasting sour, three times two is six.” But, I guess, who expects news journalists to make any sense—especially when banging their keyboards with righteous fury.
Despite ProPublica’s dubious presumptions, it reported some really interesting facts about Polis’s taxes. And did you notice how I used the term “despite” appropriately there?
The real issue, as ProPublica (eventually) reveals, is that of tax deductions: “In many years, the deductions [Polis] claimed for his charitable giving were large enough to wipe out half the income he would have owed taxes on. His giving allowed him, in essence, to take some of the money he would have paid into the public coffers and donate it instead to causes of his choosing.”
Oh my god did you, like, know people can make charitable donations to reduce their income tax burden?! Of course you did, because, unlike the audience the journalists at ProPublica seem to imagine they are writing for, you are not an idiot.
The issue is not charitable contributions per se, though, but a particular sort of contribution that doesn’t actually seem to have anything to do with bona fide charity. And that is why the ProPublica report, “despite” its condescension and breathless insinuations, rightly created a stir.
Here is the main bit about that: “According to the tax filings of [Polis’s] charity, the Jared Polis Foundation, the organization spent more than $2 million from 2001 to 2008 on a semiannual mailer sent to ‘hundreds of thousands of households throughout Colorado’ that was intended to build ‘on a foundation of familiarity with Jared Polis’ name and his support of public education.'”
So…Polis spent millions to “charitably” advance his political career in a way that reduced his income tax burden. That odor you’re smelling ain’t just the breeze from Greeley.
Assuming those sorts of donations are a problem, the obvious solution is to tighten up what counts as a charitable contribution. However, we should not be quick to assume that it’s easy or straightforward to figure out what should count as a charitable contribution for tax purposes.
Some things obviously are charitable, such as donating to the Food Bank of the Rockies to help put food on people’s tables.
Or consider GiveWell, which tries hard to direct charitable dollars to their most-useful ends. As of a few years ago, GiveWell roughly estimated that a donation of between $900 and $7,000 can save a life or achieve some comparably good outcome. That suggests that a well-targeted $2 million donation maybe could save somewhere between 280 and 2,200 lives.
Speaking of charitable causes, if you’ve done well this past year—some have, many haven’t during this challenging pandemic—this might be a good time to give some money to help improve the lives of people who are having a rougher time. In my estimation GiveWell and Food Bank of the Rockies are excellent choices.
Yet we have to recognize that many official charities exist to advance some ideology or political program. For example, you could donate money to Black Lives Matter via ActBlue Charities, which (per its website) “is a qualified 501(c)(3) tax-exempt organization” for which “donations are tax-deductible to the full extent allowed under the law.” Or you could donate to the Ayn Rand Institute, where “your contribution is fully tax-deductible in the USA.”
It might be hard to rule out contributions to the Jared Polis Foundation for tax purposes without ruling out other sorts of nonprofit contributions. It’s not as straightforward a problem as a person might at first think.
There’s another angle to the ProPublica report: Polis “has also been able to keep his total taxable income relatively small by using another strategy common among the wealthy: investing in businesses that grow in value but produce minimal income.” Oh no! Rich people might develop businesses! Scandalous!
The authors of the ProPublica piece claim it “sounds counterintuitive” that the income tax taxes income rather than “an investment’s growth in value” left invested. I guess maybe it does if you’re a partisan pushing a leftist agenda disguised as a news story. Otherwise it sounds pretty intuitive that the income tax taxes income.
The underlying issue is whether, as a nation, we want to eat our seed corn. If you think economic growth is a good idea, then we should praise people for investing in productive businesses and encourage them to keep doing so. If you’d rather indulge in envious hatred of the productive rich, then I guess maybe you’d rather loot the rich and let power-lusting dolts such as Nancy Pelosi and Mitch McConnell consume those resources instead. For some people, destruction feels oh so satisfying, and damn the long-term consequences.
As for the issue of charitable donations, I have no problem with piling on Polis for the self-promoting flyers. But maybe someone also could write a report about all the worthwhile things Polis has done with his money. But that, of course, would require that journalists avoid the temptation to produce hyperventilating click-bait and instead treat their subjects…charitably.
Ari Armstrong writes regularly for Complete Colorado and is the author of books about Ayn Rand, Harry Potter, and classical liberalism. He can be reached at ari at ariarmstrong dot com.
