In My Feelings About Weaponizing The Undemocratic Charitable Contribution Deduction
Henry Ford, 1931. Wealthy Philanthropist and Anti-Semite
There is a good article in the British Financial Times about the “weaponisation” of charitable contributions. I hope the author doesn’t get a lot of hate mail for it.
Some of you might remember the reaction I got after I published The Undemocratic Charitable Contribution Deduction in Tax Notes. I talked about the undue influence over Civil Society afforded to concentrated wealth. Only the wealthy itemize so rich people benefit the most from the “illiberal” charitable contribution deduction. It ain’t rocket science and as a stated proposition it’s boring, actually. I needed a hook. So I presented and defended the proposition using the Israeli/Hamas war and how rich donors — Gentiles and Jews alike, mind you — were threatening to withhold their wealth from universities who did not get their heels lined up on an ideological line. The Financial Times article does the same thing, by the way.
The hook worked. But I got a lot of hate mail and those cowards at Tax Notes still have their own sniveling apology appended to the online version. A coward’s feeble attempt at a high-tech lynching, according to the dramatic side of me. I am in my feelings about it again, that’s right. Because the Financial Times story is entitled “How America’s billionaire alumni weaponise elite university donations.” Here’s a sample from the first few paragraphs:
These very differing relationships between rich donors and the universities they support is sparking a wider reflection about the institutions’ reliance on big gifts, the influence that wealthy philanthropists should be allowed to wield, and the tensions over academic freedom. Both Rowan and Ackman declined to comment. Amir Pasic, dean of the Lilly Family School of Philanthropy at Indiana University, says: “Post October 7 [when Hamas launched an attack on Israel], there is an intensification of people exercising their voice. We don’t really have policies to think about what a philanthropic donation entitles you to do. Formally, it should not give you any larger governance voice.”
The article discusses a debate amongst two billionaires over whether their dissatisfaction with Civil Society should have caused them to withhold donations. I translate everything into tax so what they were really debating is whether they should use the levers tax law affords them to weaponise the charitable contribution against universities. I could report that the debate was between two Jewish donors just to prove that reasonable people can differ without one being Semitic and the other anti-Semitic. But I don’t know or care who the billionaires worship. It’s besides the point anyway and I am almost out of my feelings now. The point is that by subsidizing wealthy donors’ participation in Civil Society, and nobody else’s, the Tax Code undermines the liberal democratic traditions fundamental to Civil Society. Fundamentally, the Tax Code contributes to the shutting off of the public square to all but the wealthy.
Ray Vagelos was one of the billionaire donors in the debate. He disagreed with universities’ responses to anti-Israeli protests but he thought it “ridiculous” to stop donating:
“Marc Rowan wrote to me as a retired trustee and urged me to stop my contributions to Penn,” Vagelos told the Financial Times. “Universities are presumably training people to do good things, to be involved, to try to keep us out of wars. The idea of stopping the functioning of a university because there’s a dispute among some people sounds like a ridiculous response. I was very happy to continue our donations and would urge others to do the same.”
Both sides — billionaires favoring divestment and billionaires favoring investment — have legitimate points to make. They have the right to make those points. Neither point was ever my point. My point is that a billionaire’s existing economic advantage over Civil Society should not be enhanced by the Tax Code. It’s only billionaires having this debate because the rest of us don’t much matter in shaping Civil Society anymore. It’s not quite that bad, but you know what I mean. The article doesn’t mention the Tax Code but the Tax Code contributes to the problem people are noticing, hopefully without be called “anti-Semitic:”
Lynn Pasquerella, president of the American Association of Colleges and Universities and former president of Mount Holyoke College, says she is concerned more broadly by “a new permission structure for the weaponisation of donations” — partly fuelled by the more polarised politics of the US ahead of November’s presidential elections.
Tax Notes’ apology contained some bullshit, by the way, about the need to just stick to tax next time and leave world events alone. As if tax law germinates in a seed deep under ground and then one day blossoms into whatever word exists above ground. Nope, and its hard enough already to get students to care without showing them the effects of dry tax rules on real life events. Tax law germinates above ground and is fertilized by the human excrement of world events. Here is proof from the article:
Universities are set to come under fresh pressures this autumn linked to the conflict in Gaza and their students’ response to it. They are also bracing for renewed attacks from Republican Party leaders and supporters seeking to exploit populist divides between graduates and non-graduates, even though many of those leaders studied at elite institutions. Presidential candidate Donald Trump attended Penn’s Wharton business school, for example, but has threatened to cut federal funding and remove the tax-exempt status of university endowments. His running mate, JD Vance, went to Yale law school, while Elise Stefanik, who has led Congressional attacks on the elite universities, herself studied at Harvard.
I might still be in my feelings about it.
darryll k. jones