Solyndra CEO Resigns, Major Backer Evasive on Taxes; Will Media Report?

Two more shoes dropped in the Solyndra scandal today, but it remains to be seen their sound will stir the sleepy liberal lapdog media.

Solyndra CEO Brian Harrison resigned last Friday, the Associated Press reported early this afternoon.

Oh, and while the media of late have cheerleading the Democratic push for a new surtax on millionaires, don't expect the news media, particularly MSNBC, to note how a key Obama donor who pushed for the Solyndra loan has been delinquent on his evaded federal taxes for years. As Washington Examiner's Mark Tapscott noted this morning:

 


As the Sunlight Foundation's Bill Allison reports today, [Oklahoma billionaire George] Kaiser has become extraordinarily wealthy by taking advantage of the federal tax code in ways that some tax experts - including the IRS - believe to be illegal.

As Allison describes it in his Sunlight post today, "in one six year period, during which he increased his net worth enough to land him on the Forbes list of the 400 wealthiest Americans, Kaiser reported taxable income to the Internal Revenue Service just once, totaling $11,699--equivalent to a full-time hourly wage of $5.62."

During the 1980s bust in the oil industry in Oklahoma and Texas, Kaiser bought up struggling energy companies whose losses provided him with tax deductions that effectively hid his own income.

As an example, Allison points to Kaiser's purchase of Waterford Energy, "which had all of $7 million in assets and some $151 million in losses on its books. The losses were valuable--under the Internal Revenue Code, a company can use past losses as credits, known as net operating losses, to reduce their tax burden in profitable years."

That acquiring the firm's losses for his tax use was a key reason for Kaiser's purchase of Waterford was acknowledged when the firm "filed a plan of reorganization in a Texas bankruptcy court that stated that one of the principal motivations of the plan was to 'preserve the tax attributes of the debtor in order to allow the debtor to realize the benefits of the tax attributes,'" according to Allison.

But in 1997, the IRS rejected the Waterford losses, Allison reports, saying "losses resulting from acquisitions made to evade or avoid income tax are prohibited." Kaiser challenged the IRS in court and ultimately settled with the tax agency for $3.7 million, or 15 cents on the dollar.

Taking advantage of tax loopholes is, of course, legal, and Kaiser is far from unique among wealthy investors in doing so. Even so, critics across the political spectrum to point such cases as evidence the tax code encourages evasion, influence peddling and other forms of political corruption.

Ken Shepherd
Ken Shepherd
Ken Shepherd is the Managing Editor for NewsBusters