The Charitable Deduction Scam

In the years following President Bill Clinton’s terms in office, the Clinton family (Bill, Hillary and Chelsea) created a charitable foundation. Its purpose was broad but basically it was alleged to be created to help suffering in the world. What is was in reality was a scheme by which the Clintons could receive enormous sums of money from all sorts of people seeking favors from the government – sums of money that could not go directly to sitting politicians (Hillary Clinton was then Secretary of State) or campaigns for elected office (Ms. Clinton was preparing a run for the presidency in 2008 – which she lost to former President Barack Obama, and another run in 2016 which she lost to President Donald Trump). The result was that hundreds of millions of dollars poured into the foundation from foreign governments (or ties to foreign governments) or wealthy individuals seeking access and support from the Clintons). The vast majority of the money went towards paying salaries, benefit and travel for a host of people who were or would become active participants in Ms. Clinton’s election campaigns or various other political focused activities. Some of the money went toward legitimate charitable purposes. But the real clue to the purpose of the foundation and its initiatives is found in the fact that funding for it basically dried up after Ms. Clinton’s second loss for the presidency – nobody gives money to a loser.

Now it is revealed that assumed president-elect Joe Biden created the Beau Biden Cancer Initiative and received nearly $4.8 Million in contributions of which exactly $0.00 went for cancer research, treatment or prevention. Over $3 Million went for salaries of people previously connected to Mr. Biden’s political activities and/or campaigns. The remainder was eaten up in travel and meeting expenses. After the public disclosure of the “initiatives” spending habits, Mr. Biden shut down the initiative – probably to avert continued scrutiny and embarrassment.

These foundations, charities and initiatives all bear the same imprimatur: they allow organizations to raise significant amounts of tax deductible contributions, little oversight of their activities and little risk of disclosure of the persons making the contributions. Prior to President Trump’s tax reduction package, the donor could deduct such contributions up to fifty percent of his adjusted gross income – now those contributions are limited to about $25,000 for married couples. However for corporations, the limitation is 10% of the pretax profits with the balance being available for application to ensuing years. In practice this invites the type of abuses evidenced by the foundations and initiatives advanced by politicians – or for that matter those who dabble in politics under the guise of public policy research and/or education. As usual it has been corrupted by the very people who authorized it.

But these aren’t the only “tax deductible” scams used by politicians to become instantly rich on what would otherwise be pretty modest incomes from their authorized salaries. They write books which are purchased in droves by those seeking political favor. I don’t mean there are droves of people out buying those books, I mean that a limited number of people seeking political favor buy those books by the thousands – they write them off as a business expense and then dole them out to every Tom, Dick and Harriet that they can impose upon. It’s legal but it verges on unethical. Likewise, the politicians give speeches and charge unbelievable fees for such speeches. They don’t give speeches to the general public, they give them to businesses and organizations that are seeking political favor. For instance, Former president Bill Clinton charged up to $750,000 for a speech, Ms. Clinton charged over $300,000. Forbes documented that the Clintons had received over $240 Million in speaking fees. Mr. Clinton never worked in private enterprise or created anything commercially marketable. What is that he could tell a business association, a labor union or any organization for that matter that would be worth $750,000 – or for that matter $300,000 for thoughts from Ms. Clinton.

But they aren’t the only ones. Former President Barack Obama charges about $400,000 for such speeches despite the fact that he has never held a job that produced or created anything of value. Mr. Biden charged about $200,000 for such speeches demonstrating how little contributors thought of him before he was the Democrat presidential nominee. (But even at that, Mr. Biden amassed a fortune of about $16.5 Million from books and speaking fees after leaving the vice-presidency.) And the list can go on and on among Democrats and Republicans alike.

The abuse of tax deductible foundations and charities is lawful but unethical. The tax deductible fees for books and speeches by politicians are likewise lawful but even more unethical. In all such instances it is neither charitable works nor usable advice that those who pay the freight seek – it is access, influence and the right decision for the business or enterprise. And you and I pay for it the “cost of goods sold” by such enterprises. It makes you sick to your stomach.