Fox News hosts falsely claimed that a federal program that helps low-income Americans obtain phone access is paid for by individual taxpayers, when in fact the program is funded by fees levied on telecommunications companies. Fox fabricated this falsehood in support of a new smear campaign against low-income phone programs from conservative activist James O'Keefe.
A Fox Business correspondent claimed that it was better to forgo nearly $3 million in additional prize money than to pay the roughly $400,000 in taxes due on it, representing a continuation of the baseless Fox News narrative that the rich have unduly high tax burdens.
Professional golfer Phil Mickelson placed second at June's U.S. Open golf tournament. Fox Business correspondent Lauren Simonetti argued on June 19's edition of Fox & Friends First that it may have been better for Mickelson to have lost the tournament and place second, for he would avoid paying nearly $400,000 in additional taxes.
She explained that had Mickelson won the tournament -- and won the $1.44 million first prize -- he would have had to pay an additional $76,000 more in taxes than he paid by placing second and receiving $700,000. Mickelson would have also had to pay an additional $300,000 in taxes on $2.5 million in bonuses paid to him by his sponsors, had he won. She concluded it's better to avoid paying roughly $400,000 in taxes than to win nearly $3 million in after-tax income. Simonetti said this made Mickelson "$400,000 richer."
This conclusion may stem from Fox's zealotry against additional taxes for the rich: the rich, because of their supposed onerous tax burden, need lower taxes in order to continue amassing wealth, or else they may stop working.
The idea that the wealthiest Americans have a disproportionately high tax burden is a fabrication Fox has pushed for years. However, a February 15 New York Times article reported that incomes for top earners rose more than 11 percent during the recovery from the most recent recession, while the rest saw their incomes decline slightly. As Nobel Prize-winning economist Joseph Stiglitz noted in an April 14 New York Times Opinionator blog post, "as the top 1 percent has grown extremely rich, the effective tax rates they pay have markedly decreased." The Center for Tax Justice (CTJ) found that the effective tax rate -- a rate including all federal, state and local taxes paid -- for the wealthiest Americans is not much higher than the effective tax rate for middle class Americans:
In the same report the CTJ found that the precentage of all taxes paid by the wealthy is near the amount of all national income captured by the wealthy.
From this fabrication, Fox has argued that the supposedly high tax burden will make the rich not work or might seek lower taxes in different states. In September 2011, Fox News host Bill O'Reilly equated earnings to achievement and claimed that "if you tax achievement, some of the achievers are going to pack it in." And in September 2010, Fox & Friends co-host Brian Kilmeade argued that high levels of taxation, to the wealthy, "robs you of your ambition and your push and your drive."
However, the rich have not been doing this. As Reuters reported, millionaires in high tax states, such as Mickelson's home state of California, have not left the state for low-tax alternatives. Mickelson himself suggested in January he may quit golf due to California's income taxes, walking back the statement a day later. If the 2013 U.S. Open results are any indication, Mickelson is still playing golf, presumably because after taxes he still earns millions and because he doesn't take financial advice from Fox.
From the June 19 edition of Fox News' Fox & Friends:
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Fox Business host Stuart Varney dismissed the benefits of the Earned Income Tax Credit (EITC), a highly effective anti-poverty program, as "corrupt," falsely claiming that it offers excessive benefits to people "who have never paid a dime in their lives," while admitting, "I am being mean to poor people. Frankly, I am."
On the June 5 edition of Fox & Friends, Varney continued his campaign against the EITC, demonizing the program as a "corrupt" effort to redistribute income to "people who have never paid a dime in their lives" [emphasis added]:
VARNEY: Okay, if you work, on the books, you've got a job but you earn very, very little money, you get a check from the government. It is to make up. It's essentially it's a tax credit in the form of a check from the government. We hand out $79 billion every January to these so-called poor people who get a direct check from the taxpayer. That's not complicated. It is corrupt. Because you've got a lot of people who are not reporting off-the-books income but still getting the check.
GRETCHEN CARLSON (co-host): Well why you say so, so the so-called poor people. You're not being mean to poor people today.
VARNEY: I am. I am being mean to poor people. Frankly, I am.
VARNEY: Because this is a direct transfer payment from this group of people who pay taxes--
STEVE DOOCY (co-host): Right.
VARNEY: To this group of people who have never paid a dime in their lives but they get a check from the government.
VARNEY: Let's get to the basics here. This is, in my opinion, a corrupt program administered by the IRS. They're giving out money which they should not be giving out--
BRIAN KILMEADE (co-host): And why is this?
VARNEY: That budget, the IRS budget is $11 billion. They've given out $13 billion by mistake in this one program.
Why put these people -- why put the IRS in charge of policing Obamacare?
Why do that?
The EITC is set up as a tax credit, not a stipend or a subsidy as Varney implied, and the value is based on the earnings of an individual or family and the number of children supported, increasing in value as workers earn more, until a maximum limit is reached. When earnings reach that certain threshold, payments stabilize and then phase out. The credit is "designed to encourage and reward work" for low-income Americans.
Research has shown that the EITC has been successful at promoting employment. As the Federal Reserve Bank of San Francisco stated in a March 2012 letter, "[t]he EITC unambiguously encourages some people not working to enter the labor market." The National Bureau of Economic Research similarly found that the EITC has a "substantial, positive effect on the employment of families who have used or will use welfare." And the Congressional Budget Office asserted that the EITC has had particular success in improving employment and reducing poverty for low-income single mothers.
Additionally, the program has helped reduce poverty. A February 1 Center on Budget and Policy Priorities (CBPP) report noted that in 2011, the EITC "lifted an estimated 500,000 people out of poverty and reduced the severity of poverty for approximately 10 million poor people." And an April 9 CBPP report found that the EITC's benefits are far-reaching, including potentially improving infant health and helping to improve child academic performance such that the children of recipients are "likelier to attend college, and earn more as adults" than if their parents had not received the tax credit.
Varney has a long history of promoting tax cuts that benefit the rich while pushing to end policies that assist the poor, and has smeared the nation's low-income individuals, going so far as to claim that what low-income people really "lack is the richness of spirit."
Fox News is helping American Center for Law and Justice's chief counsel Jay Sekulow baselessly accuse the Obama administration of continuing to use inappropriate screening to scrutinize nonprofit groups even after Obama condemned that practice. Sekulow's Fox-fueled campaign comes as legal experts say the IRS must continue assessing whether groups are eligible for nonprofit status.
A recent Inspector General report found that one of the IRS offices responsible for approving nonprofit status was targeting conservative groups. Following the report, President Obama condemned the actions of the office as "intolerable and inexcusable" and called for those responsible to be held accountable. Acting IRS commissioner Steven Miller was fired as a result of the improper scrutiny, and Attorney General Eric Holder ordered a criminal investigation.
Fox hosted Sekulow to discuss the controversy. During the segment, Sekulow complained that, despite the investigation, the IRS was continuing to apply heavy scrutiny to conservative groups that he represents in court. Sekulow cited an eight-page compliance letter that an unnamed nonprofit received that contained "intrusive questions," calling the IRS' actions "harassment":
But although one office of the IRS improperly delayed the nonprofit status of some groups, Sekulow provided no evidence that the groups he represents were targets of the same tactics. While the Inspector General's report criticized the actions of that office, it did not call for an end to scrutiny on groups applying for nonprofit status, and legal experts have pointed out that the investigation should be used as a reason to draw down the review process on those groups.
Fox News continued its scandal-mongering campaign with an attempt to connect a Department of the Interior (DOI) investigation of the Gibson Guitar Corporation to recent reports that the IRS paid undue scrutiny to conservative groups seeking tax-exempt status, misrepresenting Gibson Guitar CEO Henry Juszkiewicz's political donations to Republicans and Democrats to claim that the Gibson Guitar investigation was politically motivated.
In 2009 and 2011, agents from the DOI's Fish and Wildlife Bureau investigated Gibson Guitar premises on suspicion that the company had violated environmental protections by illegally importing certain types of wood. Gibson Guitar admitted that it "may have violated" Madagascan laws and agreed to pay a $300,000 fine. The 2011 investigation was widely reported on by the media, but at the time, only Fox baselessly speculated that the political leanings of Juszkiewicz were to blame for the investigation into Gibson Guitar.
On May 28, Fox & Friends co-hosts again focused on the Gibson Guitar DOI investigation, reaching to connect it to reports that the IRS inappropriately targeted conservative groups, reports which Fox have relentlessly pushed to frame as part of a larger government scandal. Co-host Brian Kilmeade suggested that the existence of the IRS investigation report raised the possibility that Gibson Guitar may have been mistaken in thinking that its alleged improper use of "this eccentric, very rare wood was the reason why they were being investigated" by the DOI, and co-host Gretchen Carlson noted:
CARLSON: At the time there were whispers: oh, you know, the guy who runs the company is a conservative, he's given to Republicans in the past. Maybe that could have had something to do with it, because it turns out that they had done absolutely nothing wrong at the company. Well now some people are trying to put together the dots and draw the lines based on this IRS investigation. Could it be that some of these other things that were going on were also concerted targeted things?
But in 2011, Juszkiewicz himself directly pushed back against speculation that Gibson Guitar was targeted for political reasons. As The Wall Street Journal reported (emphasis added):
The fact that Gibson was singled out when other guitar makers use the same woods has fed speculation that the company was targeted--because it is not unionized, perhaps, or didn't donate enough to the Democratic Party.
"I don't think it's a political issue," Mr. Juszkiewicz says, shaking his head. "But I will say this: I wrote a letter to President Obama. I spelled out what happened. I said: You know, we got raided and here are the facts, I think it's unfair. What do you think we should do? No response."
Furthermore, in attempting to frame Juszkiewicz as a victim of political targeting, Carlson highlighted the fact that he had "given to Republicans in the past." However, Juszkiewicz's own campaign donations reveal that he donated to both Republican and Democratic campaigns in the 2012 cycle. An OpenSecrets.org search of political donation listed under the name Henry Juszkiewicz from "Gibson Guitar" from the 2008, 2010, and 2012 cycles yielded this list:
The vast majority Juszkiewicz's contributions went to the Consumer Electronics Association, which donated $163,300 to Republicans and $69,900 to Democrats in the 2012 cycle.
As Media Matters previously reported, there were legal reasons why Gibson Guitar was singled out for investigation. Quinnipiac University School of Law professor John Thomas noted that while other companies also import unfinished wood from India, irregularities on Gibson Guitar's paperwork raised red flags, and court documents have suggested that Gibson Guitar "knew that it was buying illegal woods" from Madagascar:
My take is that the 2009 and 2011 seizures are related in that Gibson's conduct has given USFW [US Fish and Wildlife Service] officials probable cause to be suspicious of Gibson's wood-buying activities. In 2008, Gibson, Martin, and Taylor officials [Guitar companies] toured Madagascar and observed the illegal logging operations. Martin and Taylor promptly stopped using Madagascar woods; Gibson did not. Internal Gibson emails, as quoted by the US Attorney's office appear to indicate that Gibson knew that it was buying illegal woods. Federal officials seized that wood and as per the 2008 Lacey Act amendments, need not charge Gibson with a crime. Gibson must prove the legality of the wood to secure its return. Gibson has been unable to do that. [After the November 2009 raid, Gibson stopped buying wood from Madagascar.]
The 2011 seizure concerned Indian woods that would be legal but for the thickness. I believe that USFW is investigating because of suspicions due to 1) Gibson using the same wood supplier as it did for the Madagascar woods, 2) irregularities in the wood designations on the paperwork that could be due to innocent error or intentional attempt to deceive officials as to the thickness of the wood and 3) though Gibson is the ultimate purchaser, the paperwork lists an intermediary, LMI, which delivers the wood to a warehouse near the Nashville airport. Gibson retrieves a bit of the wood at a time when it needs it.
In the face of repeated infrastructure related disasters, Fox News host Neil Cavuto has continued to dismiss calls for an increase in infrastructure spending, claiming that spending on infrastructure is high enough. In reality, infrastructure spending has plummeted in recent years.
Fox News contributor and National Review columnist John Fund fabricated a link between voter suppression and IRS employees inappropriately singling out tea party and conservative groups' applications for tax-exempt status, claiming that such scrutiny by the IRS is the "real" form of voter suppression.
Fund still claims that voter suppression as commonly understood - attempts to prevent certain members of the public from voting - did not take place during the 2012 elections, despite widespread reports of such efforts fueled by restrictive voter ID laws.
On the May 21 edition of Lou Dobbs Tonight, Fund stated that "there was a lot of ridiculous charges about voter suppression in the last election even though black turnout was higher than white turnout." Fund again denied the existence of voter suppression in a May 23 editorial in the National Review Online, stating that allegations of voter suppression"proved to be twaddle."
In fact, research shows that there were widespread attempts to suppress the vote in the 2012 elections. Supporters of voter ID laws, the most common voter suppression measures, claimed that they would combat "voter fraud." However, such fraud is virtually non-existent.
Acknowledging that concern for voter fraud is a pretext, some state officials admitted that voting restrictions were enacted to influence the outcome of the election. For example, Florida officials acknowledged that efforts to curb access to early voting were intended to decrease Democratic votes:
Wayne Bertsch, who handles local and legislative races for Republicans, said he knew targeting Democrats was the goal.
"In the races I was involved in in 2008, when we started seeing the increase of turnout and the turnout operations that the Democrats were doing in early voting, it certainly sent a chill down our spines. And in 2008, it didn't have the impact that we were afraid of. It got close, but it wasn't the impact that they had this election cycle," Bertsch said, referring to the fact that Democrats picked up seven legislative seats in Florida in 2012 despite the early voting limitations.
Another GOP consultant, who did not want to be named, also confirmed that influential consultants to the Republican Party of Florida were intent on beating back Democratic turnout in early voting after 2008.
In 2008 Democrats, especially African-Americans, turned out in unprecedented numbers for President Barack Obama, many of them casting ballots during 14 early voting days. In Palm Beach County, 61.2 percent of all early voting ballots were cast by Democrats that year, compared with 18.7 percent by Republicans.
The Wall Street Journal called for reform that would lighten the tax burden on corporations without noting that corporate tax revenue has reached historic lows in a time of historically high profits.
Following the May 21 Senate hearing into Apple's strategies to lighten its corporate tax burden, a Wall Street Journal editorial argued that the real issue was not the company's ability to dodge taxes, but the fact that U.S. corporate taxes are "the developed world's highest." The editorial concluded that the U.S. should lower its corporate tax rate to "ideally zero, but 12.5% also works."
The editorial's main argument that U.S. corporate taxes are too high hinges upon pointing to statutory corporate tax rates. In defending Apple's practices, it explains:
The genuine outrage is that Apple's profits in the U.S. are subject to a combined state and federal statutory tax rate of 39.1% that is the developed world's highest. Corporate taxation is so heavy in the U.S. relative to other countries that even while enjoying its near-zero rate in Ireland, Apple ends up with roughly the same overall effective tax rate, 14%, as South Korea's Samsung, its main global competitor.
The editorial cites statutory instead of effective tax rates for a reason. While the U.S. may rank among the world's highest in statutory corporate tax rates, what corporations typically pay is substantially lower. According to Goldman Sachs' David Kostin, in the last 45 years, the median S&P 500 firm has paid a tax rate that is substantially lower than the statutory rate due to special tax preferences, subsidies, and loopholes. Furthermore, most recent data suggest that the median firm pays an effective tax rate of 30 percent -- a full 9 percentage points below the statutory rate:
And according to the Wall Street Journal's own reporting, in FY2011, corporate tax receipts as a share of profits fell to their lowest level in 40 years. Indeed, as ThinkProgress notes, even as corporate profits have hit a 60-year high, the tax burden on U.S. corporations has hit a historic low. Furthermore, in recent years, corporate tax receipts as a percentage of total government revenue have significantly declined:
The Journal's claim that corporate taxation in the U.S. is high because of its statutory rate relative to the rest of the world also doesn't stand up to scrutiny. According to Citizens for Tax Justice, citing U.S. statutory rates in comparison to other countries is inherently misleading:
Many corporate leaders have noted that other OECD countries have lowered their corporate tax rates in recent years, but fail to mention that these countries have also closed corporate tax loopholes while the U.S. has expanded them. As a result, the U.S. collects less corporate taxes as a share of GDP than all but one of the 26 OECD countries for which data are available.
While there is broad bipartisan support for reforming the corporate tax code, The Wall Street Journal's misleading portrayal of corporate taxes stacks the deck in favor of corporations lowering their historically low tax burden.
Fox continued its effort to target the Obama administration with manufactured scandals, fearmongering that IRS commissioner Sarah Hall Ingram will use the IRS' authority under the Affordable Care Act to discriminate against conservatives by denying or postponing approval for medical procedures.
As of this writing, there is no indication that the IRS's inappropriate targeting of conservative political groups has any connection whatsoever to the White House. And some conservative talking heads are even acknowledging as much. But they're not letting that stop them from naming Barack Obama as the culpable party, arguing that the president is responsible due to his preternatural ability to bend the average bureaucrat to his maleficent will from afar.
It all started with RedState founder Erick Erickson, who wrote on May 15 that "Barack Obama never specifically asked that tea party groups and conservatives be targeted." But...
But by both his language and the "always campaigning" attitude of his White House, he certainly sent clear signals to Democrats with the power and ability to fight conservatives to engage as they could. Given his rhetoric against his political opponents, it is no wonder sympathetic Democrats in the Internal Revenue Service harassed and stymied conservative groups and, though little mentioned, pro-Israel Jewish groups and evangelical groups.
"President Obama did not have to tell the IRS specifically to harass conservative, evangelical, and Jewish groups who might oppose him," Erickson observed. "His rhetoric on the campaign trail and in the permanent campaign of the White House operations made clear what he wanted."
Fox News is apparently desperate for a scandal over President Obama's handling of news that the Internal Revenue Service applied extra scrutiny to conservative groups, especially now that the network's campaign to embroil the president in scandal over his response to the Benghazi attacks is falling apart. Fox has gone from ignoring Obama's swift responses to the IRS's actions to downplaying the significance of his firing the IRS's acting commissioner, each time distorting reality in order to call for a special prosecutor.
The release of over 100 pages of inter-agency emails obtained by CNN have threatened to derail months of right-wing scandal-mongering over the administration's response to the 2012 attacks on a U.S. consulate in Benghazi. The emails appear to counter the conservative narrative that the State Department altered Benghazi-related talking points for political reasons. As Fox News' desperate attempts to resurrect the waning scandal fall flat, Fox pundits have resorted to criticizing the president's handling of the IRS controversy instead.
Fox kicked off its criticism by deciding Obama's initial condemnation of the IRS's actions as "outrageous" was too weak. When the president first addressed concerns over this story at a press conference on Monday, May 13, he asserted, "If, in fact, IRS personnel engaged in the kind of practices that had been reported," then "that's outrageous and there's no place for it. And they have to be held fully accountable." America Live host Megyn Kelly covered his remarks by wondering, "Does the president understate it when he calls this, 'outrageous'?"
After the Inspector General published its report on the IRS's actions, concluding the agency applied "inappropriate criteria" to conservative applicants, Obama released a statement on May 14 definitively calling the IRS's actions "intolerable and inexcusable" and directing action to be taken to hold those responsible accountable. This time, Fox simply pretended Obama made no such statement and continued to attack his remarks from two days prior, all while arguing that a special prosecutor was needed given Obama's supposed inaction.
By Thursday, Fox was fumbling over how to handle the fact that Obama had fired Steven Miller, the IRS acting commissioner, over the agency's actions. In the morning, America's Newsroom chose the route of merely ignoring that anyone had been fired so that host Martha MacCallum could declare, "[Obama] could be the big person. He could say, 'This stinks. You're all fired. This doesn't happen in America.' He has every ability in his position right now to take the high road. Why not? Why not do it?"
When the network finally acknowledged that Miller had been forced to resign, it did so by attempting to downplay the decision. Anchor Bret Baier questioned the action on Happening Now, claiming, "He was ready to leave, despite the fact -- I mean, before any of this already happened. He was acting commissioner and was set to leave the IRS. So that's a question for the White House; that's a question for the president. You know, was this guy fired when he was going to leave anyway?"
Fox News ignored President Obama's explicit demand for accountability in the wake of news that the Internal Revenue Service applied extra scrutiny to conservative groups. The network's omission gave it cover to accuse Obama of not taking the IRS's actions seriously and to call for a special prosecutor.
Obama first addressed the IRS controversy during a May 13 joint press conference with British Prime Minister David Cameron, where he condemned the IRS's behavior with the caveat, "If, in fact, IRS personnel engaged in the kind of practices that had been reported," then "that's outrageous and there's no place for it. And they have to be held fully accountable."
After the Inspector General published its report on the IRS's actions, concluding the agency applied "inappropriate criteria" to conservative applicants, Obama granted the IRS no such caveat. He released a statement definitively naming the IRS's actions "intolerable and inexcusable" and directing action to be taken to hold those responsible accountable:
I have now had the opportunity to review the Treasury Department watchdog's report on its investigation of IRS personnel who improperly targeted conservative groups applying for tax-exempt status. And the report's findings are intolerable and inexcusable. The federal government must conduct itself in a way that's worthy of the public's trust, and that's especially true for the IRS. The IRS must apply the law in a fair and impartial way, and its employees must act with utmost integrity. This report shows that some of its employees failed that test.
I've directed Secretary Lew to hold those responsible for these failures accountable, and to make sure that each of the Inspector General's recommendations are implemented quickly, so that such conduct never happens again.
Yet the next day, America Live host Megyn Kelly and Fox's digital political editor Chris Stirewalt pretended Obama issued no such condemnation.
Instead, Kelly claimed that even after the IG's report was released, "we still have the president saying, 'Well, if they did it, if they did it, if they did it." She ranted, "I don't understand, more so today than the other day, why the president used that word 'if.' 'If these people did this, if these people did that.' Now that I've seen the Inspector General report -- and you're telling me -- now Fox News just got it last night. But other news organizations had it leaked to them early. You're telling me President Obama couldn't have got it when it was complete on Monday?"
Kelly and Stirewalt used their mischaracterization of Obama's response to call for a special prosecutor into the IRS's actions. Stirewalt told Kelly that if he were the president, he would "find a Republican of good standing" to appoint as an independent investigator. Kelly responded with the charge, "Where is the harm to this administration, if as these IRS employees state, no one outside of the IRS had anything to do with this, this was just IRS employees deciding to target conservatives. So if the White House and no one else had anything to do with it, where is the harm? Why doesn't the president just say 'absolutely'?"
Evening news coverage throughout April touched upon several economic issues, including income inequality, deficit reduction, and entitlement cuts. A Media Matters analysis of this coverage reveals that many of these segments lacked proper context or necessary input from economists, while some networks ignored certain issues entirely.
From the May 13 edition of Premiere Radio Networks' The Rush Limbaugh Show:
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