“It’s not because of high taxes that we’re not getting new products or new development,” Pulitzer Prize-winning journalist David Cay Johnston said Thursday evening. “It’s because of government policies that the news media have not explained and I’ve spent the past 20 years digging out and explaining.”
Johnston had come to the Buffalo Niagara Convention Center to speak to the annual awards banquet of the Coalition for Economic Justice on one his favorite topics – unproductive loopholes and corporate subsidies.
To cite an example, he described how corporations can borrow billions of dollars interest-free from the federal government and pay half of it back after 34 years, when it’s earned more than the original loan in interest.
“Guess what?” he said. “You’re paying for that interest with your taxes.”
Johnston began lifting the lid on tax breaks with a front-page story in the New York Times in 1996 that exposed a special loophole that let executives salt away unlimited sums tax-free through a practice called deferred compensation.
“We’ve had executives who have built billion-dollar fortunes without paying taxes and it’s legal, it’s absolutely legal,” he said.
“It’s one of the reasons we’re having trouble raising funds for the government,” he added. “People are saying it’s wonderful that we’re shutting down the IRS for five days because of the sequester, but we have two systems of taxation in America. One is for wage-earners. Congress doesn’t trust them, so they take their tax money out of their paychecks.
“The other is for business owners, landlords and investors. There’s little or no verification of their income except for the occasional audits, which are being cut back. These are the people who benefit from the shutdown of the IRS,” he said.
Johnston, who began his newspaper career at the age of 19 in his native California with the San Jose Mercury News, won the Pulitzer for Beat Reporting in 2001 for his articles on tax loopholes and inequities.
He has published three best-selling books since then with subtitles that hammer home his concerns – “Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich – and Cheat Everybody Else,” in 2003; “Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense and Stick You With the Bill,” in 2007; and “The Fine Print: How Big Companies Use ‘Plain English’ to Rob You Blind,” in 2012.
“All three tackle the myths that unions are ruining this country and that we are heavily taxed,” he said. “My books show that this isn’t true.”