Washington Corruption Exposed, In the Post

By Tom Gilson Published on December 3, 2016

A tale of Washington corruption, told in simplified form with two characters.

The Trump Appointee

A businessman gets a phone call from the President-elect, asking him to serve on the Cabinet in the coming administration. He’s the kind of person who knows who to get things done; that’s why the President-elect requests his service. It’s also the reason he’s interested in the position. He feels a responsibility to use his skills to help lead the change the country needs. He’s probably attracted to the thought of sharing in the power of Washington, too.

But it isn’t as though he’s lacking influence now. Not only does he run a large corporation, he’s become extremely wealthy in the process, with heavy investments in his own company as well as other funds diversified across a variety of other industries — which leads him to ask, “What do I do with my business and my investments? What about the conflict of interest there?”

He knows he could transfer his investments into other holdings where there would be no conflict of interest, but he also knows that isn’t just a simple “transfer.” It’s a two-step process of selling his current holdings and buying others, and that first step is a doozy: he would have to pay millions of dollars in capital gains tax on it.

But then he is informed of a federal law exempting government appointees from capital gains taxes on investments sold to be re-invested elsewhere without conflicts of interest. With that assurance he accepts the President-elect’s offer.

The Reporter

A Washington Post reporter, eager to expose corruption in the nation’s capital, sits down and types out his headline:

WaPo

“How Trump’s Ultra-Rich Cabinet Could Avoid Millions in Taxes.”

He begins his story:

“President-elect Donald Trump’s ultra-wealthy Cabinet nominees will be able to avoid paying millions of dollars in taxes in the coming weeks when they sell some of their holdings to avoid conflicts of interest in their new position.

“The tax advantage will allow Trump officials, forced by ethics laws to sell certain assets, to defer the weighty tax bills they would otherwise owe on the profits from selling stocks and other holdings.

“The benefit is one of the more subtle ways that the multimillionares and billionaires of Trump’s White House, which already will be the wealthiest administration in modern American history, could benefit financially from their transition to the nation’s halls of power.”

He breathes a satisfied sigh. He has met his purpose; he has displayed these rich power brokers as money-hungry tax cheats. Or potential tax cheats; for he has carefully avoided mentioning that he knows of no one who has actually done this in this administration.

Still he knows he’ll get in trouble if he doesn’t include the following:

“People who sell company stocks typically have to pay taxes on any profits, known as capital gains. But the divestiture benefit allows officials to skip that tax bill, as long as they reinvest the gains into assets where conflicts are less likely, shuch as U.S. Treasury bonds or diversified mutual funds.”

Now he’s in good shape. There. I said it, he tells himself. But at least I was able to hide it in the thirteenth paragraph. The damage will have been done by then! Just to make sure, though, I’ll add this in the paragraph right after:

“The tax savings on sold-off holdings could be monumental.”

That ought to do it!

The Moral of the Story

The divestiture rule is not a tax dodge. It’s not a way for new appointees to “benefit financially from their transition into the nation’s halls of power.” Its purpose is thoroughly honorable: to reduce the shock for new appointees of being forced out of their desired holdings into other — and potentially less valuable — securities.

There are more characters than these involved in the story. There is more than one Trump appointee, of course, and their political and civic motivations are bound to be quite different.

If they succeeded in exposing corruption in Washington, it was their own.

The reporter, Drew Harwell, probably didn’t write the story’s headline; that’s usually an editor’s job (I was simplifying it for the tale), so there are probably at least two characters involved on the Post’s side of the story.

Again, I don’t know what motivated them. What I wrote above is obviously conjecture. If you can think of another explanation for why they wrote what they did, you’re welcome to your own view on it.

For my part, though, if they succeeded in exposing any corruption, it was their own.

The Post article is published here, under the current headline, “Trump, Cabinet could avoid millions in taxes thanks to this little-known law.” The headline quoted above is from the version of the story presented via Apple News on iPad.

Print Friendly, PDF & Email

Like the article? Share it with your friends! And use our social media pages to join or start the conversation! Find us on Facebook, Twitter, Instagram, MeWe and Gab.

Inspiration
In the End, We Get What We Want
Jim Tonkowich
More from The Stream
Connect with Us