Massive Tax Avoidance For Wealthy Political Donors Alleged In Washington State

by lewwaters

With the State of Washington suffering some of the worst budgeting and revenue troubles since the Great Depression, it is unconscionable reading that some well-connected wealthy donors to political campaigns may have avoided paying Millions in dollars of taxes, while the legislature continues scheming o take more taxes and fees from the still struggling middle class.

But that is what is happening in our state alleges a 29-year employee of the Department of Revenue.

First broke by the Washington State Wire, Dennis Redmon, who has been employed in the DOR for 29 years, is alleging in a Whistleblower complaint to the State Auditor, “as much as $35 million in taxes have been excused for taxpayers with [political] pull…”

Claiming what has become “routine occurrence,” the complaint states a well connected political contributor known for “large political contributions to the Governor and Democrat among others” avoided paying over $2,000,000 in use tax & penalties on a jet aircraft dating back to 2007. Privacy issues prevent the contributor’s name from being made public, but it is further alleged that when the Tax Assessment was prepared in January 2011, the Compliance Management Team placed a ‘hold’ on the assessment citing “political considerations.”

Contacted by the Washington State Wire, Redmon is quoted on the identity of the contributor, “This person is a very strong advocate for raising taxes, for an income tax on the rich, for the rich not paying their fair share. This person got caught with their pants down, with a very nice aircraft. It is acknowledged by all parties, including his tax advocates, that he owes the money. But he can buy his way out of it because he has paid enough money to politicians in Washington State. And that is about as nasty a fact pattern as it gets.”

In spite of repeated warnings from Yakima staff that the Dec. 31, 2011 deadline for the statute of limitations was fast approaching, Compliance management continued to maintain the hold until some time around the middle of January 2012 when Yakima staff received word “that there were no problems or issues with the tax bill, and the assessment could be delivered.”

Of course, with the statute of limitations for imposing the tax passed, it was too late and the well connected Democrat contributor did not have to pay the tax that should have been paid back in 2007 when the aircraft was purchased from another state.

By all appearance this was a deliberate act returning favors to a well connected political contributor as the complaint names “several top Department of Revenue managers who ‘may have directed or known of or influenced the improper governmental action’.”

Noting that “DOR still had one option, assessing a ‘use tax’ in compensation for the annual lease value of the airplane, an approach that would capture far less money but still might net the state a few bucks,” Redmon states, “Compliance agents have suggested that approach, but DOR has placed a hold on that assessment as well.”

Stating this is “part of a pattern that has emerged in recent years in which well-connected taxpayers have seen tax bills reduced significantly or even eliminated outright without proper legal justification,” Redmon says “This is a direct favor to a politically influential person, where the state is in a budget crisis, the state has lost $2 million bucks plus, and if that wasn’t good enough, they are going to block assessing even the crumbs around the edges that are still assessable.”

Caught unaware, DOR Director Brad Flaherty sent out an email claiming, “At this time, we are not aware of any improper actions on the part of the agency to impose taxes related to the purchase of a private airplane. This is certainly not the way we do business and not consistent with our values. We have an obligation to follow the law and make decisions based on our authorizing statutes.”

“In order to maintain impartiality in an investigation, we are taking immediate steps to ensure the matter is fully and independently investigated.”

Flaherty was just named Director earlier this year and this did not happen under his watch. It has been going on under the watch of former Director Suzan DelBene, appointed to the position by Governor Christine Gregoire in December 2010, who held the office until replaced by Brad Flaherty in January 2012.

DelBene left office in December 2011 to run for congress.

While the call for the investigation is warranted, it too raises concerns depending on just who is enlisted to investigate. If the Washington State Patrol conducts the investigation, there is a better chance at impartiality and getting to the bottom of it.

However, if individuals who were in sub-offices at the time this was happening investigate, chances are they will work to cover their back sides and we could see a sham investigation. At the very least we might see a stalling tactic to try to keep this quiet until after the elections this year.

I have not seen word of this yet in any major media in our state, but it is indicative of over a decade of one party rule that has held power far too long and feels it acceptable to return favors to those who help keep them in power, at the expense of citizens.

This is exactly the sort of allegations we repeatedly hear from Democrats, yet it turns out once again, they are who are doing it.

I’m not a big fan of Rob McKenna and even less of a fan of Jay Inslee. But whoever is our next Governor will be appointing people to run this department. Neither candidate has addressed this revelation that I have seen, but it is an issue that must be discussed publicly, before the election.

There is no place in our state for such favors to wealthy donors of either party.

The corruption alleged here along with the corruption seen daily with the Columbia River Crossing and even the Viaduct project in Puget Sound screams at us to change the face of politics coming out of Olympia and even in our own County.

Liberals and Democrats talk a good game, but once again we see they just utter hollow words.

It’s time this election to change the power in Olympia from Liberal Democrats and send more conservatives there, conservatives who will root out this sort of thing and hold people accountable for their wrongdoing.

We’ve had conservatives in office, but they have been the minority and silenced too often while corrupt politicians continue this pattern, shouting down critics. People like Senator Don Benton and County Commissioner Tom Mielke have been try to stand up to this sort of corruption while their opponents have turned a blind eye to it.

We need people like James Watkins in office as State Auditor, Kim Wyman as Secretary of State and Sharon Hanek as State Treasurer.

But most of all, we need to thank Dennis Redmon for putting his neck out on the chopping block to reveal to citizens of the state this pattern that has been ongoing these past years.

With Democrats in power he will likely face retribution and such tax avoidance will again be covered up.

Let’s take our state back and hold members of both parties and their appointees accountable.

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5 Comments to “Massive Tax Avoidance For Wealthy Political Donors Alleged In Washington State”

  1. When one party remains in power, without significant challenge, this sort of corruption grows and grows. Look at California and the corruption is obvious and is reaching the point where cities are going bankrupt (some counties will be next). Do we want Washington to follow the same path? Time to toss out the entrenched politicians and clean house. This is not a “party” thing, it is a political power thing. Note that Governor Sarah Pallin’s reforms in Alaska were targeted at entrenched Republican politicians.

    When the politicians have too much power and tax payer money, then liberty is lost and tax payers are cheated.

    It goes with the territory — it’s what government and politicians do. THAT is why it is imperative that government power be kept limited and the tax payer money under control of politicians be kept to an absolute minimum.

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  2. The democrats have occupied the Governor’s mansion since 1985. Political appointees by the governor include the heads of 49 state agencies and members of over 200 boards and commissions. A few state agencies include the Departments of; Revenue, Social and Health Services, Transportation, Labor & Industries and Employment Security. Some boards are Tax Appeals and Industrial Insurance Appeals, and a few commissions include the Public Disclosure Commission and the Citizens’ Commission on Salaries for Elected Officials.

    A 1 page State Organization Chart is here: http://www.ofm.wa.gov/reports/orgchart/orgchart.pdf and Boards & Commissions are here: http://www.governor.wa.gov/boards/default.asp These political appointees make rules and decisions that all must abide by. Yet these unelected officials are accountable only to the politics of power, not voters.

    Rather than individual office holders, lets put term limits on political parties for all state-wide elected officials, especially the Governor.

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  3. Is this screaming, anything less than crying for term limits?

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  4. Term limits?

    The effect of term limits is ambiguous. California established term limits some time ago. Of course, as those term limits kicked in, the incumbents made a fuss about “losing knowledgable representatives”* … and the career politicians were forced to jump around from one position to another — For example, one political hack, served in the state Assembly, then the State senate. Then served in a state-wide office — then snagged a Clinton appointment to a deputy cabinet post. Back to California, he served in another state-wide office and finally (when term-limited out of all California positions) won a congressional seat that had become vacant.

    *Proposals to amend the term limit rules to the benefit of the politicians have been advanced as ballot propositions, with very misleading arguments. (I don’t know the outcome, as I escaped from California before the election.)

    In some respects, the voters were worse off due to the bouncing around of career politicians from one post to another. Good party hacks are regularly rewarded with high-paying appointed positions when they are temporarily not in an elected position. The public service workers unions continue to fund “reliable” candidates campaigns, no matter what position they happen to be seeking. The survivors of this system, all too often end up in Federal elected seats (in Congress or Senate), as they’ve proven to help the monied interests regardless of where they’re at. Of course, the Federal positions are not subject to term limits.

    The only practical effect of the term limits is that staff and lobbyists seem to have more influence, as they tend to have more experience and knowledge than the representative for that term. (This is not a good thing.)

    While I am emotionally pre-disposed toward term limits, the empirical facts (as I’ve experienced them) do not seem to support term limits as a ‘solution’ to the corrupt representation we all too often get.

    The better solution is for the more fiscally conservative groups to “agree to disagree” on certain issues that do not require legislative solutions and then come together on practical tax and spending issues to elect politicians who will consider the impact on taxpayers first.

    There has been, for example, considerable criticism of Ron Paul “conservatives” on this blog. But the Ron Paul supporters are also supporters of smaller, lower cost, government. Please note, I am absolutely not a Ron Paul supporter — there are very serious disagreements I have with many of Ron Paul’s positions. But I will happily join with Ron Paul supporters to elect local and national representatives who are less likely to squander taxpayer funds. (And squandering taxpayer money is what our current legislature(s) do best.)

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  5. Small correction, John.

    I have criticized “Paulbots,” those died in the wool followers of Ron Paul that believe all or nothing for Ron Paul.

    There several supporters of his I can agree with and disagree with at other times.

    But the died in the wool Paulbots want everything there way and their way only with no intention of compromise.

    As for the rest of your comment, we agree.

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