Clarence And Ginni Thomas Have Given Harlan Crow A Huge Tax Headache

Surprising literally no one, Clarence and Ginni Thomas have been slurping at Harlan Crow’s trough of largesse for 25 years, including yacht vacations in Indonesia worth $500,000. Quite the gig if you can get it. So yes, Clarence has an ethics problem and should resign immediately, in spite of his lame excuses.

In a statement (probably drafted by Ginni), Thomas said Harlan and Kathy Crow are among their “dearest friends,” having enjoyed their friendship for over 25 years, which means said friendship has been entirely cultivated while Clarence Thomas has been on the Supreme Court. Weird how a Texas billionaire would befriend a Supreme Court justice like that for no reason other than the joy of hanging out with the Thomases, isn’t it?

But wait, there’s more from him. “As friends do,” he wrote, “We have joined them on a number of family trips during the more than quarter century we have known them.” Interesting family there. According to the ProPublica article:

A public servant who has a salary of $285,000, he has vacationed on Crow’s superyacht around the globe. He flies on Crow’s Bombardier Global 5000 jet. He has gone with Crow to the Bohemian Grove, the exclusive California all-male retreat, and to Crow’s sprawling ranch in East Texas. And Thomas typically spends about a week every summer at Crow’s private resort in the Adirondacks.

Family vacations at an all-male retreat? Flights without Harlan Crow on his jet? Hardly “family vacations.”

He goes on to say he didn’t think he needed have to report anything because Crow didn’t have any business before the court. The full statement is here.

As Dahlia Lithwick and Mark Joseph Stern point out, he has broken the law, indeed.

Clarence Thomas broke the law, and it isn’t particularly close. The best argument in his defense is that the old definition of “personal hospitality” did not require him to disclose transportation, including private flights. This reading works only by torturing the English language beyond all recognition. The old rule, like the statute it derives from, defined the term as hospitality that is “extended” either “at” a personal residence or “on” their “property or facilities.”

Read the whole article, it’s very good and thorough. There’s no question that Clarence Thomas has broken the law and must resign or be removed.

But it’s not just Clarence Thomas on the wrong side of the law. According to tax law, those trips, flights and vacations could be gifts subject to gift tax. They were supposed to be reported by Harlan Crow to the IRS at the time they were given. IRS rules state that “The gift tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether or not the donor intends the transfer to be a gift.

That same guidance is very specific. “The gift tax applies to the transfer by gift of any type of property. You make a gift if you give property (including money), or the use of or income from property, without expecting to receive something of at least equal value in return. If you sell something at less than its full value or if you make an interest-free or reduced-interest loan, you may be making a gift.”

That tax is owed by the giver of the gift: Harlan Crow, not the recipients, Clarence and Ginni Thomas.

Let’s say for the sake of argument that Crow deducted these expenses as a business expense. In that case, he might still owe gift tax, or he might have the expense disallowed under audit, but either way it locks down the corruption of the Supreme Court justice and his lovely bride. Let’s not take Ginni off the hook here. When Clarence Thomas says he didn’t discuss matters before the court, that certainly doesn’t preclude Ginni from running off her mouth or both of them discussing their own brand of conservative thought with those simpatico friends, now does it?

So here we have the ethical and tax issues wrapped up in one bow. On the one hand, Harlan Crow clearly gave Clarence Thomas the use of his property — the yacht, the private club, the cruise around Indonesia, the man-club stay, all of which should have been reported as gifts to the IRS. And if they had been reported as gifts, the ethics violations would have been clear as day.

Of course, this isn’t the world billionaires travel in. They fully expect to befriend powerful officials, give them expensive gifts, fund their lobbying efforts which did involve matters before the court, by the way (cough, cough – THE ACA), and the favor flows their way without any actual transactions being reported or even subject to the minimum ethical requirements.

I understand the IRS boost in funding is meant to increase audits on the rich folks. They might want to start with Harlan Crow.

(h/t Kyozou on Mastodon for the gift tax tip)

Clarence And Ginni Thomas Have Given Harlan Crow A Huge Tax Headache

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