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The IRS “Scandal” Turned Out to Be a Non-Scandal, But It Might Not Matter: Why It Is Not Just the Right-Wing Echo Chamber That Will Perpetuate the Myth of Political Manipulation of the IRS

IRS Conspiracy ConceptEarlier this year, Republicans could barely contain their glee, as they attempted to claim that the Obama Administration was being engulfed in three “scandals”: (1) claims that the deaths of four diplomats in Benghazi, Libya were caused by the Administration’s incompetence (or worse), (2) the revelations of widespread surveillance of Americans’ phone records by the National Security Administration, and (3) the admission by the IRS that it had used some popular conservative labels as keywords in searches to assess whether nonprofit status should be denied to purported “social welfare organizations.”

When those supposed scandals were making headlines, John Dean wrote a column here on Verdict, finding all three to be “all smoke and no fire,” and predicting that they would come to nothing.  He was right—sort of.  Benghazi is already long forgotten.  The surveillance issue might be a big deal as a matter of substance, but any partisan political advantage is now dead, because congressional Republicans recently voted in large numbers to allow the surveillance program to continue.  And the IRS’s foolish error, which had already been corrected even before it was reported, has turned out to be the low-level bungling that it looked like all along, not an attempt by the President to punish his political enemies, as right-wingers immediately imagined.

After the IRS’s error was reported, I wrote Verdict columns on May 23 and June 20, describing why the situation was a non-scandal, and lamenting the political overreaction.  The Democrats had quickly run for political cover, with President Obama demanding the resignation of the acting IRS commissioner.  Surely, reductions in the IRS’s already low funding levels are in the works.  We will all pay the price for the Republicans’ opportunism, and the Democrats’ weakness.

Almost two months later, has anything changed regarding the IRS’s non-scandal?  The only significant new information that has emerged has undermined even the original notion that the IRS was systematically scrutinizing right-wing groups (though not for political reasons).  It turned out that the original Inspector General’s report was issued in response to a request to determine whether the IRS had scrutinized any applications from nonprofit groups on the basis of right-wing labels.  The answer was yes.  What we learned in late June, however, was that the IRS had also used left-wing labels (and some apolitical labels) in its searches.  This was not originally reported by the IG’s report, apparently because no one had asked that specific question.

There Is Nothing More to the IRS Story, but the Right Wing Will Not Let It Go: Birtherism and the Vince Foster Murder Conspiracy Theory Now Have a New Cousin

Even so, some Republicans in Congress have continued to send fishing-expedition requests to the IRS, hoping finally to find something—anything—to justify the hyperventilation that accompanied the initial reporting of the non-scandal.  Similarly, a low-level Republican functionary tried to claim that there are “no innocent explanations” for a meeting between the President and an IRS lawyer, when in fact that meeting was a photo-op with mostly non-IRS attorneys.  The fizzle on this non-scandal has been something to behold.

What is happening now?  One useful place to look is the TaxProf blog, an essential source of news and links to tax research that is respected across the political spectrum.  That blog made a fateful early decision to label the situation a scandal, and then to collect each day’s commentary and news about the manufactured scandal in posts indicating the number of days since the news first broke in May: “The IRS Scandal: Day __.”  Once that meme was set, the blog was stuck with it, because dropping the daily posts could appear to be “partisan,” since the right wing is still screaming about the story.

I recently chose a random day (last Tuesday, August 6), and clicked on the post for “The IRS Scandal, Day 89.”  The post aggregated seven links, all of which were either news reports about Republicans’ attempts to keep the non-scandal alive, or editorials by right-wingers making claims that are unsupported by facts.

It is thus tempting to suggest that the IRS non-scandal will go down in history as much ado about very little, with everyone moving on to more important matters.  Of course, even when such overhyped news stories are exposed as non-news, certain groups tenaciously cling to them.  For example, no matter how ridiculous and absurd are the claims that President Obama was not born in the United States, there are still people showing up at town hall meetings exhorting Republicans not to give up on the story.  There are even still people who believe the long series of debunked stories about the Clintons from the 1990’s, including the claim that Vince Foster’s suicide was actually a “hit” ordered by one or both of Hillary and Bill Clinton.

Such “fever swamps” of conspiracy theories will always exist, feeding stories about the JFK assassination, Area 51 and UFO’s, Bigfoot, and so on.  Is the IRS non-scandal simply going to become another nonissue about which the denizens of right-wing fever swamps trade conspiracy theories, while the rest of the world smiles in bemused amazement?  I hope so, but I fear that the outcome will not be so benign.

The Acceptance of a False Narrative: The People Who Are Only Marginally Interested in Stories Can Easily Buy Into Lies

In the 1980’s, the great Boston Celtics basketball teams had a starting guard named Danny Ainge.  (Mr. Ainge is currently an executive for the Celtics.)  In a 1983 playoff game against the Atlanta Hawks, a fight broke out on the court, and in the ensuing pileup of brawling players, the Hawks’ center Tree Rollins bit Ainge’s finger to the bone.

Even though the clever headline the next day read “Tree Bites Man,” many people to this day believe that it was Ainge who was the biter, and Rollins the victim.  Why would people get this wrong?  Some part of it could be that people simply made a cognitive error, or heard the story from someone who reported it backwards.  That, however, could not explain how the Ainge-bit-Rollins falsehood really took off.

The much more likely reason is that Ainge was a much-hated player, and fans of other teams were ready to believe pretty much any bad thing that they heard about him.  Indeed, the level of antipathy against Ainge was so intense that people who actually heard the story correctly nevertheless reported it to others incorrectly.

What is most interesting is what happens after the “partisans” have had their say, and the mildly interested public digests the story.  I did not witness the event, and I did not see the initial reports about it.  By the time the story found me, it had already metastasized into a lie.  Even though I did not care much either way, I did not like Ainge as a player, so I simply did not bother to question the false version of the story.  Later, when I heard true versions of what happened, I even laughed about those news sources’ mistaken reporting.

Back in the political arena, a similar series of events led to the myth—still widely believed, and occasionally even still used to get laughs—that former Vice President Al Gore had claimed that he “invented the internet.”  In fact, Gore had merely noted that he was one of the Senators who was instrumental in getting seed money appropriated for the research and development that ultimately led to the creation of the internet: a claim that was completely true.

Despite careful debunking of this myth by many journalists many times over the last dozen or so years, however, the “Al Gore claims that he invented the Internet” lie lives on.  Importantly, it is not a claim that is uttered only in hushed, conspiratorial tones in the fever swamps.  People who surely view themselves as mainstream and level-headed believe that it is true.  Even if they do not hate Gore, they have somehow absorbed the notion that he was a self-promoting blowhard (as opposed to any other politician?), and so they are a ready audience for this particular lie.

The “Geithner TurboTax Defense”: A Tax-Related Lie That Has Also Gone Mainstream

As false as the “Gore claims to have invented the internet story is,” one could at least stretch the bounds of credulity by arguing that “I was instrumental in getting funding for internet research” was in the same direction as claiming to have invented the internet.  That is not true, but at least one could say that Gore actually did try to take credit for something related to the Internet’s origins.

Being willing to believe in such an ultimately dishonest stretching of the truth, however, cannot explain why people are so willing to believe anything negative that has to do with taxes, politicians, and the IRS—even when it is the diametric opposite of the truth.  The best example of this is a myth known as the “Geithner TurboTax Defense.”

After he won the 2008 election, Barack Obama nominated Timothy Geithner to be the Secretary of the Treasury.  During the vetting process, it turned out that he had several years earlier failed to pay self-employment taxes, while he had worked at the International Monetary Fund (IMF) in Washington, D.C.  This was unambiguously an underpayment of taxes, and he was allowed to pay the unpaid sum much later than most taxpayers, receiving what was surely special treatment.

During his confirmation hearings, news reports breathlessly announced that Geithner had tried to claim that he was not to blame, because he had used the tax preparation software TurboTax.  New-media sites ran headlines like: “Geither Sorry, Blames TurboTax.”  Once that story began to feed on itself, it became accepted fact.  The TaxProf blog—which is, as I noted above, a respected non-ideological aggregator of tax news—ran its own headline: “Geithner Blames Turbo Tax For His Tax Troubles.”

I encourage readers to go to the link for that post, and to click on the YouTube video of the relevant part of Geithner’s testimony before a Senate committee.  The video is less than three minutes long, and only the last 37 seconds are relevant to the “TurboTax defense” question.  Here is my transcript of those 37 seconds:

Senator Grassley: Did you use software to prepare your 2001 and 2002 tax returns?

Mr. Geithner: I did.

Grassley: You did not?

Geithner: I did.

Grassley: Oh, you did.  OK, uh, which brand did you use?

Geithner: Uh (hesitates and smiles uncomfortably), I’ll answer that question, sir, but I want to say, these are my responsibility, not the . . . not the tax software responsibility.  But I used TurboTax to prepare my returns.

Grassley: Uh, did the software prompt you to report income and pay self-employment taxes on your IMF income?

Geithner: Uh, not to my recollection, Senator.

What is notable is that Mr. Geithner—who was absolutely apologetic throughout the video, repeatedly blaming only himself for his error—is especially reluctant to say anything about the software.  Moreover, he explicitly and unambiguously says that he is not trying to shift the blame.  (Even the news story, linked above, that carried the “Blames TurboTax” headline accurately reproduced that testimony in the body of the story.)

Even so, many people simply came to believe the lie that Geithner had blamed his mistake on the software.  For example, a full three years later, two tax scholars wrote an op-ed for the Wall Street Journal, under the headline: “The TurboTax Crime Wave: Taxpayers deserve the same defense from IRS penalties as Tim Geithner.”  (The article was linked by TaxProf with the title: “Taxpayers Should be Able to Use Geithner/TurboTax Defense.”)  Their outrage was fed, in part, by the well-known fact that taxpayers are legally responsible for errors on their tax returns, even when those errors are the fault of computer programs.

The problem is that there is no evidence that Geithner’s special treatment—and it definitely does appear to be special treatment—was in any way connected to his supposed claim that it was a software error.  Again, anyone with a computer can watch the YouTube video, and see him go out of his way to tell Senator Grassley that he was at fault, not the computer program.

What I find instructive is how this false story has become part of the lore that many people in the public continue to believe to be true.  I am a tax professor, and I was aware in early 2009 of Geithner’s tax problem.  It was a real error, which he should not have made.  I also felt that the special treatment that he received made him an especially bad choice to head the Treasury Department, which includes the IRS.  Moreover, as an economist, I felt that Geithner’s policy views made him a bad choice to be a key White House player on fiscal policy.  (My views on that matter have not changed.)

When I started to read stories in January 2009 that Geithner had tried to blame TurboTax, I never questioned the veracity of those stories.  It just was not worth my time to think more about it.  It was only happenstance that, a few months ago, I decided to take a few minutes and actually watch the video that I described above.  I admit that I was stunned at how completely inaccurate is the notion that Geithner ever tried to deflect blame to TurboTax, or that doing so had been successful.

In short, it is all too common for people to simply believe what they hear, if it fits at all into a familiar narrative.  This goes beyond the notion of people only listening to news with which they agree, because no reasonable person would have any reason to agree or disagree with the factual question of what Geithner said under oath.  Once the false story became repeated, however, only those few people who were convinced that Geithner could not possibly be guilty of anything would bother to check the false news reports.

All of which brings us back to the recent non-scandal involving the IRS.  As soon as the news broke, some people started to claim that it went “all the way to the top.”  Within weeks, polling showed that half of all people in the country (that is, much more than the 28% of Americans who identify as Republicans) already believed that false story.

Given that this story is about partisan politics, and about the IRS, people are especially willing to believe the worst.  Even more than my gullibility in the Ainge and Geithner situations, many people are all too likely to buy into complete bunk, when it comes to taxes and the IRS.

In short, even though it would be comforting to imagine that the IRS non-scandal will soon be met with the same ridicule as the claim that fluoridation was a Communist plot, the more likely outcome is that this false series of claims about IRS and White House misconduct will become “known facts,” even for many well-meaning people, simply because they will not know better.

Neil H. BuchananNeil H. Buchanan, a Justia columnist, is an economist and legal scholar, a Professor of Law at The George Washington University, and a Senior Fellow at the Taxation Law and Policy Research Institute, Monash University (Melbourne, Australia). He blogs at DorfonLaw.org, and he is the author of The Debt Ceiling Disasters: How the Republicans Created an Unnecessary Constitutional Crisis and How the Democrats Can Fight Back.
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  • Chris Luper

    Great article. I am a tax professional also. Another area where conventional wisdom has taken the place of reality is in corporate tax. The oft-repeated stories about how the IRS is paying GE based on an “analysis” of financial statements (a favorite of the left) or how Warren Buffet is a hypocrite because one of Berkshire Hathaway’s subsidiaries is fighting an IRS audit assessment on a contentious issue (a favorite of the right) have no basis on reality.

 

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