Fess Up, New York Times. You Didn’t Break the George Santos Story

Read almost any story about the fraud perpetrated by a lying George Santos before his election to the House of Representatives from New York’s 3rd congressional district and you will see the blockbuster news attributed to the New York Times (NYT).

Certainly, the NYT made no effort to disabuse readers of that presumption. 

In its Dec. 19, 2022 blockbuster story exposing Santos’ lies, “Who Is Rep.-Elect George Santos? His Résumé May Be Largely Fiction”, the paper attributed its discoveries to “…a New York Times review of public documents and court filings from the United States and Brazil, as well as various attempts to verify claims that Mr. Santos, 34, made on the campaign trail,…”

In a print introduction to a Jan. 5, 2023 podcast on the story, the NYT repeated this claim. “George Santos, the Republican representative-elect from New York, ran for office and won his seat in part on an inspiring personal story. But when Times reporters started looking into his background, they made some astonishing revelations: Almost all of Mr. Santos’s story was fake.”

But it wasn’t the NYT that broke the fraudster’s story. 

It was the North Shore Leader, a local Long Island weekly newspaper with a circulation of about 20,000. And the North Shore leader exposed Santos well before the November election.

The leader has now raised the issue in a story titled “The Leader Told You So: US Rep-Elect George Santos is a Fraud – and Wanted Criminal”.

“In a story first broken by the North Shore Leader over four months ago, the national media has suddenly discovered that US Congressman-elect George Santos (R-Queens / Nassau) – dubbed “George Scam-tos” by many local political observers – is a deepfake liar who has falsified his background, assets, and contacts,” the story says.

Either the NYT failed to give credit where credit was due or the mighty publication utterly failed to check reporting done by a tiny local paper less than a 1-hour drive from the NYT Building on W. 41st St. in Midtown Manhattan.

By the way:

Neither the North Shore Leader nor the NYT newspapers have reported on another interesting journalistic matter tied to Santos. The NYT did report that Santos once told associates he was (in the NYT’s words) “a journalist at a famous news organization in Brazil,” but didn’t go deeper. According to ta Jan. 10, 2022 report by the Columbia Journalism Review (CJR), Gregory Morey-Parker, who briefly lived with Santos in New York eight or so years ago, told CJR’s Jon Allsop that Santos claimed to have been working at the time for Globo, the Brazilian media behemoth, as a reporter covering human-interest stories out of the US.

According to Morey-Parker, Santos also claimed to be an executive at Globo. When Allsop put this to Ali Kamel, the director-general of journalism at Globo, he described it as “a crazy story” and “a lie, pure and simple.” (Santos’s office did not return a request from Allsop for comment)

Mark-to-Market: A Terrible Idea from the Oregon Center for Public Policy

The liberal Oregon Center for Public Policy (OCPP), in its never-ending quest to soak the well-off, is advocating a big change in how capital gains are taxed. 

The problem is the idea is misguided, unworkable and would hit Oregon’s middle class as well.

And if If you think the federal tax code is complex and labyrinthine now, you ain’t seen nothin yet if mark-to-market is put in place.

In the name of addressing income inequality, OCPP is proposing that capital gains on assets be paid annually rather than when the assets are sold, as under current law. In other words, if the value of your assets such as stocks, bonds, real estate, a business, or even a work of art. goes up, you would owe taxes on the increase, even if you didn’t sell anything. The proposed approach is called “mark-to-market”.

“Oregon currently has several tax breaks favoring capital gains income that collectively cost the state more than $1 billion per budget period,” the OCPP says in a just posted issue brief. “Lawmakers should reject any proposal to further cut taxes on capital gains income and reign in tax breaks that benefit capital gains income.”

The current system “allows the wealthy to amass vast fortunes,” OCPP argues. “Because such assets are highly concentrated in the hands of the rich, the income produced by the sale of those assets flow to the top,” the issue brief says. 

One major problem with the mark-to-market proposal is that, despite OCPP’s attempt to position it as a tax-the-rich idea, it would affect all investors.

OCPP’s proposal would also be a nightmare to implement, particularly because it would require taxpayers to value assets annually. 

Changes in stock prices of publicly traded companies are usually easy to determine. Figuring the changing value of many other assets can be a lot tougher.

“Ownership of private businesses, artwork…and other luxuries, among other assets, are difficult to appraise,” according to the National Taxpayers Union Foundation. “These assets may have limited markets for them, or no markets at all, making valuation a guessing game. In such a scenario, naturally the incentive for a taxpayer will be to minimize the value of such assets while the incentive for revenue officials will be to maximize the value, setting up a highly-adversarial relationship that could lead to administrative difficulties from lack of independently-verifiable comparisons.”

OCPP’s proposal could also artificially drive down market prices. Savvy stock market investors, knowing their taxes will be impacted by their portfolio’s value at the end of each year, will be inclined to sell assets, driving down stock prices to minimize tax liability. 

In an October 28, 2021 paper, the Congressional Research Service said another concern about mark-to-market is liquidity. Some high-income individuals may have no problem coming up with the necessary cash. Others, particularly middle-income taxpayers, might have a hard time doing so. 

As S-Corporation Association of America put it, “…unrealized gains are not income.  You can’t spend them.  If you could, they’d be realized gains.  And while the (Washington) Post and other observers are fond of talking up the ability of billionaires to borrow, most S corporation owners don’t have unlimited borrowing capacity.  Depending on how leveraged their business is, they might have no capacity at all.”

Or as the National Taxpayers Union Foundation has opined, “Just because an investor’s underlying assets appreciate in a given year does not mean that the investor has sufficient cash to pay any tax liability.”

In short, OCPP’s mark-to-market proposal is a half-baked idea. It deserves a quick demise.

ADDENDUM:

On Jan. 17, 2023, the Washington Post reported that a group of legislators in statehouses across the country has coordinated to introduce bills simultaneously in seven states later this week, with the same goal of raising taxes on the rich.

“The point here is to make sure we do at the state level what is not being done at the federal level,” said Gustavo Rivera (D), a New York state senator who is part of the seven-state group.

The state legislators said they would like to try such ideas as a test case for future national policy while acting collectively to minimize the threat of people moving to a nearby lower-tax state. Sponsors told The Washington Post that they will introduce their bills on Thursday, January 19, in California, Connecticut, Hawaii, Illinois, Maryland, New York and Washington.,

Skeptics of wealth taxes say the idea might be even worse on a state level than a national level, since the rich can easily move to another state, the Post reported.

“High net-worth individuals are fairly mobile, and it is much easier to change residency to another state than it is to leave the country,” said Jared Walczak, who works on state tax policy at the right-leaning Tax Foundation.

In addition, he says, assessing the value of a person’s wealth would be challenging for state bureaucrats and sometimes lead to unfair results, as in the case of Silicon Valley founders, whose companies may have huge valuations on paper that are hard to assess or tax in a straightforward way.

“Just because a company might sell for hundreds of millions of dollars in the future doesn’t mean that its current owners have any significant wealth,” Walczak said. The on-paper net worth of billionaires fluctuates drastically as companies’ stock prices or valuations rise and fall, making it hard to figure out how much they should pay if taxed on that wealth, he added.

In four states, lawmakers say they will float versions of a tax on wealthy people’s holdings, or so-called “mark-to-market” taxes on their unrealized capital gains. But other states will pitch more conventional tax proposals.

Memo to the Oregon Democratic Party: Do The Right Thing; Give the Money Back

The cryptocurrency firm FTX has begun an effort to claw back payments made by its former management to politicians. FTX filed for Chapter 11 bankruptcy protection in the U.S. on Nov. 11, 2022. John J. Ray replaced Sam Bankman-Fried as FTX’s CEO.

The Oregonian has reported that a $500,000 contribution to the Democratic Party of Oregon PAC came from Nishad Singh, director of engineering at FTX.

FTX “intends to commence actions before the bankruptcy court to require the return of such payments, with interest accruing from the date any action is commenced”, the company said on Dec. 19, 2022, sharing an email address – FTXrepay@ftx.us – that recipients could use to voluntarily return money.

“Recipients are cautioned that making a payment or donation to a third party (including a charity) in the amount of any payment received from a FTX contributor does not prevent the FTX debtors from seeking recovery from the recipient or any subsequent transferee,” FTX added in a statement.

FTX.US made contributions totaling $21,882,932 in the 2022 election cycle, with 81.44% of that going to Democrats. 

The Oregon Democratic Party hasn’t yet said what but will do so with Singh’s contribution. As of Jan. 5, 2023, the PAC had a cash balance of $333,139, according to the Oregon Secretary of State. That is down substantially from the $691,532 it had on hand as of Nov. 28, 2022, according to OpenSecrets.org.

My advice to the party. Take the high road. Don’t stall in hopes the public and the media will tire of the whole FTX affair. Repay the money. It’s the honorable thing to do.