Tik Tok, Chinese Exclusion, and Charitable Tax Exemption

@johnleehooker Happy Friday, folks. Here’s John Lee performing “Crawlin’ King Snake” with Ry Cooder on the BBC show ‘John Lee Hooker And Friends.’ #JohnLeeHooker ♬ original sound – John Lee Hooker

John Lee Hooker hums the blues.   

Here are the first two sections of the infamously racist Chinese Exclusion Act:

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That from and after the expiration of ninety days next after the passage of this act, and until the expiration of ten years next after the passage of this act, the coming of Chinese laborers to the United States be, and the same is hereby, suspended; and during such suspension it shall not be lawful for any Chinese laborer to come, or having so come after the expiration of said ninety days to remain within the United States.

SEC. 2. That the master of any vessel who shall knowingly bring within the United States on such vessel, and land or permit to be landed, any Chinese laborer, from any foreign port or place, shall be deemed guilty of a misdemeanor, and on conviction thereof shall be punished by a fine of not more than five hundred dollars for each and every such Chinese laborer so brought, and maybe also imprisoned for a term not exceeding one year.

There has been no other time in American history that we have excluded a whole race of people from our shores, except perhaps through de facto measures employed at various times of panic.  In light of this history, we ought to take a good hard look in the mirror before we start targeting Chinese companies.  Just to make sure we are competing legitimately against the biggest dog in the geopolitical realm, and not from irrational fear like that leading to Exclusion Act.  And yes, I know that some Chinese kid’s tandem tractor-trailer sized birthday balloon floating across the heartland (taking pictures of American backyard birthday parties, no doubt!) does not make easier our efforts to be rational.  But we should remember that speech has consequences and as we constantly and continually make the word “China” and anything “Chinese” a pejorative, we unwittingly and with imperception put targets on the backs of little old Asian ladies walking to the grocery store.  And then some crazy despicable coward strikes, thinking nobody will care because these are our “enemies” anyway.  

I try — in my increasingly desperate attempts to generate clicks on this blog — to get at least a little background on the underlying topic of every post.  I haven’t read “Slaying the Global Coolie Myth” but it sounds very interesting.  I just wish I had time.  Here is just a snippet from Oxford University Press (scroll down to the tax stuff if you want me to shut up and get to the charities):

“Contrary to stereotypes of docile and powerless coolies, Chinese in Anglo-American societies were real people who worked hard, adapted, and persisted” So reads the caption to the final photo in Ngai’s magisterial work on global Chinese exclusion. It articulates the central theme of the book: that Chinese migrants had names, families, and communities of their own.

In tracing how the Chinese Question began in California and “circumnavigated the Anglo-American world,” Ngai demonstrates how debates over the ability of Chinese to enter and access rights in the world’s three “largest gold-producing regions”— the United States, Australia, and South Africa—were “an integral part” of the “global capitalist economy” that was emerging in the nineteenth and early twentieth centuries. The discovery of gold fueled the rise of U.S.-UK dominance; according to one statistic, the United States and Great Britain controlled eighty-eight percent of the world’s gold supply by 1904. Ravaged by the Opium Wars and unequal treaties, China engaged from a position of comparative weakness. Out of a convergence of economic dominance, colonial dispossession, and global racisms, the Chinese diaspora in the Anglo-American world was born. Questions of how to contain and control it arose immediately, and the coolie myth presented an answer.

THE TAX STUFF

I am on my soapbox today about the DITCH Act, a recent proposal sponsored by Sen. Josh Hawley and Rep. Gallagher mandating nonprofit divestment from Tik Tok and others like it.  And before you dismiss the effort as unlikely, just know that there is nothing more bipartisan in Congress today than a hatred of Tik Tok and many more things Chinese.   This proposal isn’t just some crazy election denying, back bencher calling the President a liar . . . . during the SOTU, on national and international TV.  The bill has a good chance of being swept along with the other anti-Chinese sentiments stoked, but not validly provoked by Tik Tok, COVID, and balloons.  On the bright side, though, proposed 501(s) is full of wonderful, intricate, regulatory- and fee-generating complexity so there’s that.  A veritable feast for the eyes:  

501(s) RESTRICTION ON  INVESTMENT  IN  CHINESE COMPANIES BY TAX-EXEMPT ENTITIES.

—

‘(1) IN GENERAL.—An organization shall not be treated as described in subsection (c) or (d) or section 401(a) for any taxable year if such organization —

‘(A) holds any interest in a disqualified Chinese company at any time during such tax-able year, or

(B) fails to timely transmit the annual report described in paragraph (5) for such taxable

(2) DISQUALIFIED  CHINESE  COMPANY.—For purposes of this subsection—

(A) IN GENERAL.—The term ‘disqualified Chinese company’ means any corporation—

(i) that is incorporated in China, or

(ii) more than 10 percent of the stock of  which (determined by vote or value) is held (directly or indirectly through any chain of ownership) by any of the following (or combination thereof):

(I) 1 or more corporations described in clause (i).

(II) China or any governmental agency

(III) Provincial,  regional,  municipal, Special  Administrative Regions, prefecture, county, township, village, or any other Chinese sub-national governmental entity or

(IV) Any entity controlled (directly or indirectly) by the Chinese Communist Party or any Chinese Communist Party

(V) Any Chinese National 

(B) APPLICATION TO ENTITIES TO OTHER THAN CORPORATIONS.—In the case of any business organization which is not a corporation, subparagraph (A) shall apply to such organization in the same manner as though such organization were a corporation.

(C) APPLICATION TO INDIRECT DERIVATIVE, OR OTHER CONTRACTUAL INTERESTS, ETC.—For purposes of this subsection, an organization shall be treated as holding an interest in a disqualified Chinese company if such organization—

(i) holds such interest (or any instrument described in subparagraph (A)) directly or indirectly through any chain of ownership, or

(ii) holds any derivative financial instrument or other contractual arrangement with respect to such interest or company (including any financial instrument or other contract which seeks to replicate any financial return with respect to such interest or such company).

Here is the PR announcing the measure late last year: