The Great War On Koch Industries

Abuse Of Power: Is the White House now targeting a dissident company with the tax code? Sure looks that way, given a menacing reference to Koch Industries from an anonymous official to its trusted media allies.

The private Wichita, Kan.-based conglomerate, which operates ranches, drills oil, runs pulp and paper mills, and creates specialized textiles for athletes, among other activities, is owned by two brothers, David and Charles, who openly fund free-market causes. And that, apparently, was enough to draw White House attention to their company's tax structure.

On Aug. 27, a senior administration official singled out Koch for condemnation and implied it was cheating on its taxes. In an on-the-record background briefing to reporters, the anonymous aide said:

"So in this country we have partnerships, we have S corps, we have LLCs, we have a series of entities that do not pay corporate income tax. Some of which are really giant firms - you know Koch Industries is a multibillion-dollar business."

The Weekly Standard called attention to the matter this week, confirming the accuracy of the quote and reporting that Koch's lawyer wanted to know if the White House was looking into Koch's tax status in retaliation for the owners' political activities and in an attempt to intimidate other corporations.

The White House denied it had obtained secret information about Koch's taxes, and told Politico's Ben Smith that its information came from Koch's own Web site as well as from the President's Economic Recovery Advisory Board's report on tax reform.

The White House is right about the availability of information, but that doesn't excuse what went down Aug. 27. Three disturbing things stand out from that briefing.

First, it smacks of the smear tactics taught by community organizer and Barack Obama mentor Saul Alinsky. By singling out Koch, the White House appears to be making the company victim No. 1 of the "pick a target, freeze it, personalize it and polarize it" method that Alinsky used to silence an opponent.

Obama has practiced this before, with administration attacks on Fox News, Rush Limbaugh and Glenn Beck. So it's not surprising his administration is going after the Koch brothers.

As they were taking direct fire from the White House, the Koches were subjects of poorly sourced and innuendo-filled articles in pro-Obama publications such as the New Yorker and the New York Times, all making the brothers the new bogeymen.

This wouldn't be so noteworthy if it weren't for the fact that these same outlets had participants on a secretive listserv called JournoList, whose members have been caught conspiring to manipulate political "narratives" and which had connections to the White House. JournoList is now supposedly defunct, but the White House reply to Koch came to Politico's Smith, who was known to be a list member.

Second, even if all the information gathered about Koch was public, the White House is still signaling it will try to dig up dirt on any company or individual it sees as an adversary.

Obama supporters showed they're capable of such vindictiveness in 2008, when some conducted illegal record searches on Joe Wurzelbacher, the plumber who asked embarrassing questions of Obama on the campaign trail.

Third, there was a sly semantic trick in implying that the company, which has registered several of its entities as "S" corporations, LLCs and LPs - all of which are perfectly legal and legitimate ways of doing business - was somehow evading taxes.

Though the White House official decried that Koch didn't pay corporate taxes, that doesn't mean it paid no taxes. The private company does indeed pay taxes - through personal returns and alternative means rather than the corporate code.

The White House, in its reply to the Koch lawyer, asked that people read the August 2010 report on Tax Reform Options. The report (which never mentions Koch Industries) suggests that the U.S. corporate tax code is so unworkable and inefficient that a company would be stupid to register under the corporate code when other tax regimes, such as those Koch has chosen, are available.

For a White House so keen on searching the Koch Web site, it's interesting that its operatives don't seem to have read that report.

Instead, they seem obsessed with silencing the political activities of a company simply exercising its rights of free speech.