The Penalty for Exposing How Our Plutocracy Operates? Five Years Behind Bars

A U.S. federal district court has just sentenced Charles Littlejohn to five years in prison. What exactly did Littlejohn — a contractor for the IRS — do? He committed a public service. He revealed just how astoundingly little America’s richest are paying in federal taxes.

In 2019, after Donald Trump had reneged on his campaign pledge to publicly share his personal tax data, the then 33-year-old Littlejohn passed detailed info from Trump’s tax returns to the New York Times. The subsequent Times exposé revealed that Trump, in 2016, had paid a mere $750 in federal income taxes and not paid any such taxes in all but five of the fifteen previous years.

A year later, Littlejohn shared a much wider federal income tax data set with the nonprofit news organization ProPublica. These new numbers helped expose how a variety of wealthy public officials, including the mega-millionaire Rick Scott, a Republican U.S. senator from Florida, had exploited tax code loopholes “to preserve their family fortunes for their heirs.”

A fuming Senator Scott would go on to position himself — before Littlejohn’s sentencing this past Monday — as among the “thousands of American taxpayers” that Littlejohn had subjected to “partisan abuse.”

The Wall Street Journal shared Scott’s indignation. “The man behind the largest heist of taxpayer data,” the Journal insisted, fully deserves a “multiyear sentence” severe enough to “deter future political raids on unpopular Americans.”

But the outrage over Littlejohn’s IRS data leaks went far beyond the ranks of right-wing lawmakers and editorial boards. The presiding U.S. district court judge on Littlejohn’s case, Ana Reyes, could barely contain her fury.

“I cannot overstate how troubled I am by what occurred,” Reyes announced last October at the hearing where Littlejohn pled guilty to one count of unauthorized disclosure of income tax returns. Reyes went on to promise “serious consequences” for Littlejohn’s transgressions.

“People taking the law into their own hands,” she intoned, will always be “unacceptable.”

U.S. Attorney-General Merrick Garland would be equally aghast.

“By using his role as a government contractor to gain access to private tax information, steal that information, and disclose it publicly,” Garland harrumphed, “Charles Littlejohn broke federal law and betrayed the public’s trust.”

The federal prosecutors on Littlejohn’s case, meanwhile, totally rejected any suggestion that the government ought to be taking Littlejohn’s noble motives into account.

“Based on his training, his personal experience, and his work, he understood the gravity of his offense,” the prosecutors charged. “He understood the impact that it would have on his victims. But he acted anyway.”

By “stealing and leaking private, personal tax information,” prosecutors would add, Littlejohn had stripped “individuals of the legal protection of their most sensitive data.” He had denied them “equal protection under the law.” He deserved the maximum sentence for his offense. End of story.

But the “law” — in a plutocracy — protects some individuals far more than others. Take the top execs at consulting firm Booz Allen Hamilton. Littlejohn had three separate stints working as an IRS contractor for Booz Allen, the last between 2017 and 2021. These execs would do their best, before Monday’s sentencing, to distance themselves from Littlejohn and his leaks.

“We condemn in the strongest possible terms the actions of this individual, who was active with the company years ago,” a Booz Allen spokesperson told the Washington Post. “We have zero tolerance for violations of the law and operate under the highest ethical and professional guidelines.”

But these professed law-abiding execs at Booz Allen, turns out, have themselves been playing exceptionally fast and loose with the law. Just last July, the Justice Department’s Office of Public Affairs announced that Booz Allen had “agreed to pay” Uncle Sam some $377.5 million “to resolve allegations” that the company had violated the False Claims Act and improperly billed “commercial and international costs to its government contracts.”

The difference between these Booz Allen misdeeds and the misdeeds of Charles Littlejohn? Booz Allen execs advanced their own private gain at public expense. Littlejohn did his leaking, his lawyers noted in their pre-sentencing filings, “out of a deep, moral belief that the American people had a right to know the information and sharing it was the only way to effect change.”

The Booz Allen settlement with the government does not require any prison time for any of the firm’s executives. Littlejohn, by contrast, now has to spend his next five years in prison, do another three years under probation, and perform 300 hours of community service. He also has to pay a $5,000 fine.

All this amounts to a perfectly justified penalty, federal prosecutors would have us believe, for Littlejohn’s heinous offense. The “extensive and ongoing” harm from his disclosures, they avow, remains “impossible to quantify.”

We can quantify, on the other hand, exactly how much our federal tax system’s current operations are costing the American public, thanks to the work that ProPublica has done with Littlejohn’s leaked disclosures.

One example: Since the start of this century, ProPublica reports, billionaire Jeff Bezos has had at least two years where he paid “not a penny in federal income taxes.” His fellow mega-billionaire Elon Musk enjoyed the same privileged status in 2018.

From 2014 through 2018, Bezos reported income of $4.22 billion and paid just 0.98 percent of his increased wealth during those years in federal taxes. Musk, for his part, paid just 3.27 percent of his wealth gains in taxes over the course of those years.

In those five years overall, ProPublica’s data crunching indicates, America’s 25 richest paid only 3.4 percent of what they added to their fortunes in federal tax.

Some perspective: Over those same years, 40-something Americans holding the “typical amount of wealth for people their age” paid almost as much in federal taxes — about $62,000 — as the $65,000 they added to their personal net worths.

How do we stop this pervasive perversion of tax justice? Simple. We could start by making basic data from tax returns available for public scrutiny. So argues Boston University’s Laurence Kotlikoff.

“Disclosure,” this economist notes, “could be an automatic enforcement device.”

And that disclosure doesn’t have to be particularly invasive. The information released need only be an individual’s income and tax liability, “figures that cannot be readily used to steal someone’s identity,” observes business journalist Anna Bernasek.

The United States, Bernasek points out, has actually had moments when the public could see just how much the richest among us were — and weren’t — paying in taxes. In 1923 and 1924, individual and corporate taxpayers had to reveal what they were paying out in federal income tax. Newspapers had “a field day,” notes Bernasek, publishing the tax liabilities of the famous and their corporations.

America’s rich would not be pleased. U.S. Treasury Secretary Andrew Mellon, himself one of the nation’s richest men, would flex his ample political muscles and soon get Congress to drop the disclosure mandate.

Today, a century later, we average taxpayers need to flex our own political muscles. Our wealthiest should no longer be able to keep private how precious little they’re paying at tax time.

Want to learn more about the Charles Littlejohn case and how you can help defray Littlejohn’s legal fees and expenses behind bars. Check the GoFundMe legal defense fund site that Littlejohn’s friends and supporters have just created online.

Sam Pizzigati, an Institute for Policy Studies associate fellow, co-edits Inequality.org. His latest books include The Case for a Maximum Wage and The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970.