ProPublica’s quest for the truth

Nonprofit newsroom ProPublica was awarded the 2022 Seldon Ring Award for Investigative Reporting by the USC Annenberg School for Communication and Journalism. The organization won for their project called “The Secret FBI Files,” a series of articles exposing the loopholes exploited by America’s billionaires to avoid paying large sums of taxes. While the ultra-wealthy can evade taxes with little difficulty, reporting on their tactics comes with little ease.

Here’s Sophia Pelaez with the story.

ProPublica Senior editor Jesse Eisinger knew they were on to something big. He picked up the phone and called his colleague. He told him, “there is something you need to know!”

This is either the greatest day of your journalism career or we’re falling victim to a major hoax.

A still-undisclosed source had unleashed what is considered the largest leak of tax records in United States history.

And then it took us months to verify the data and call it. And then we realized that we did have a huge number of stories to do about the tax system and the injustice of the tax system in the American system.’

Eisinger and his team revealed how the American tax system is embedded with loopholes - Loopholes that can be exploited with few repercussions.

The median American household makes $70,000 annually. They pay about 14% in federal taxes, but the five richest Americans pay much less- only 3.4% in federal taxes. Another reporter at ProPublica, Robert Federici, points to an example in the award-winning report that illustrates this disparity.

And one thing we did there is we reached out to a stadium worker at Staples Center and, you know, obtained her tax records and used those to compare, you know, how a normal person pays taxes to how Steve Ballmer, owner of the Clippers pays taxes or how LeBron James pays taxes and what we learned, you know, using that as an example, what we learned is that despite the fact that he’s got a much higher income than LeBron James, and of course, you know, a typical stadium worker, Steve Ballmer pays a lower tax rate than both.

This is far from an anomaly, continues Jesse Eisinger.

You know, it turns out that the Kentucky Derby is one of the most tax subsidized events in American sporting because billionaires can take losses on their hobbies to own horse farms and write it off on their taxes.

We found that Peter Thiel, who is one of the most powerful Silicon Valley investors and enormously influential in American politics, well, it turns out he has a secret $5 billion Roth IRA that people didn’t know about until we revealed it. So it was exhilarating. We understood that these people were litigious and also were nonprofit, and we get donations from individuals. Many of them are wealthy individuals. I think of them as benevolent oligarchs, but we had to write about some of them. And so we were taking existential risk in writing about these people.

Reporting on some of the richest, best-connected people in the world does not come without risk - but to Eisinger, his responsibility to the public came first.

We’re reporting on the most powerful people in American society with the most resources literally at their fingertips. And they don’t want their affairs to be reported on, and they’re highly litigious. So we had an extraordinary responsibility to get things right.

Now in there is a law on the books in the United States that makes it a crime to publish private tax information. And so we had to weigh that law, and we decided that our First Amendment rights and responsibilities to publish information in the public interest superseded that law and that this was in the public interest to know that how the powerful and the wealthy are outside of the system. And and we really felt like we had extraordinary findings that the public should know about.

Eisenger’s sentiment is one he believes is shared by the rest of his team at ProPublica.

There was some personal risk. And everybody unhesitatingly said yes. I don’t think there was a moment of doubt in anyone on the team to participate in the reporting.

Their boldness paid off. Being awarded the Selden Ring prize today was only the beginning. guided by a resolve to expose injustice, there is only more to come.

For Annenberg Media, I’m Sophia Pelaez.