Reviews | Leonard Leo’s $1.6 billion donation shows how money corrupts politics
The Marble Freedom Trust’s donation, perhaps the largest ever made to such an advocacy group in US history, manages to encapsulate the problems of the status quo in a single instance. The problem is not simply the distortion of democracy enabled by the 2010s Citizens United v. Federal Election Commission. The move allowed unlimited political spending by corporations and outside groups — which, in turn, the ultra-rich can channel their own unlimited funds into. The problem is also that the distortion remains, in most cases, invisible. Nonprofit groups registered as 501(c)(4)s, such as Marble Freedom Trust, do not have to disclose their donors.
Adding insult to injury, donors can also use these nonprofits to dodge taxes – in this case, up to around $400 million. To sell his business on his own, Mr Seid would have had to pay capital gains tax, leaving him less to bequeath to Marble Freedom Trust. But as a supposed “welfare organization,” 501(c)(4)s are exempt from paying taxes. So instead, he turned over his shares to the trust, which then itself sold Tripp Lite: for the $1.6 billion currently in Mr. Leo’s coffers. As a result, conscientious everyday taxpayers are essentially financing the extravagant spending of a privileged few, who use their know-how to evade their obligations and twist the political landscape.
Congress should close the tax loophole these donors are exploiting. And the Disclose Act, a version of which has languished in Congress for more than a decade, blocked by GOP filibusters, would at least tell voters who is trying to buy their votes. The Internal Revenue Service can improve things on its own by collecting donor information again, after its 2018 shutdown. Unfortunately, without a change in Supreme Court precedent or a constitutional amendment, only marginal improvements are possible. .
Mr Leo defended his bet, saying it is “high time for the conservative movement to join the ranks of George Soros, Hansjörg Wyss, Arabella Advisors and other leftist philanthropists, going hand in hand in the fight to defending our Constitution and its ideals. Really, it’s not face to face but billions upon billions – and neither side should be proud of that.