Tell Kansas’ senators not to give ultra-wealthy a ‘Big Beautiful’ tax loophole | Opinion
“I want a big beautiful yacht! Sell that $10 million stock I bought for $6 million — woo hoo! What? You want me to donate it to a private school voucher program? Nope, I don’t believe in those. A tax loophole? OK, well, donate it to children’s cancer research instead. What do you mean that won’t work?”
How’s that for a fun new federal tax scam to help the super-wealthy? “Donate” $10 million in stock to charity, purchased for $6 million — then get all $10 million back in tax credits and avoid more than $1 million in capital gains taxes. Massive benefits for already rich individuals — you gotta love it. And it’s all created by House Resolution 1 in Congress — the “One Big Beautiful Bill Act.” Kansas Reps. Ron Estes, Tracey Mann and Derek Schmidt all voted yes for it.
Who benefits from these “donations”? Farmers devastated by drought? Disabled veterans? Your cherished cause? No. At best, you net a maximum tax benefit of 35 cents per dollar. Donating that $10 million to any other cause would likely net a just $3.5 million tax benefit, not enough for that $10 million yacht.
The “dollar for dollar plus” tax scheme was cooked up for nonprofits known as Scholarship Granting Organizations, for private school vouchers only, such as Renewanation, a Virginia-based SGO operating in Kansas, whose mission is to promote the “Christian worldview.” If your donations go to one of these entities, you get back everything you put in as tax credits, plus you skirt the capital gains tax.
Rep. Estes, whose constituent Charles Koch could have profited $2.4 million from this loophole, voted no on an amendment to end it. Koch’s state Rep. Susan Estes, supports Senate Bill 87, another expansion of the Kansas voucher program, which attempted to make the state tax credit equal to 100% of voucher donations, and create three new categories of eligibility with no income limits at all. The federal voucher would benefit families with incomes at or below 300% of the area’s median income. In Johnson County, this includes families earning over $320,000, based on 2023 data.
The Wichita Diocese, in the Estes’ districts, operates the only Catholic schools in the country that charge no tuition, doing so successfully for 28 years before private schools came to the Legislature to siphon tax revenue. Since 2014, these schools have received $9.7 million of the $32 million that could have funded other state priorities, such as public safety, agriculture and the Intellectual/Developmental Disability waitlist. Why aren’t we promoting the Wichita stewardship model instead of funding private schools using public funds with no accountability?
Evidence shows we shouldn’t support vouchers at all. More than 60 of 105 Kansas counties don’t have private schools. Those that pop up in response to vouchers have a terrible track record of student learning losses. Elite private schools parents dream of can still deny any child admission for any reason they want. Vouchers overwhelmingly benefit students already enrolled in private schools (92% in Oklahoma), and raise tuition at private schools (21-58% in Iowa), keeping them out of reach for low-income families, even with the voucher.
One Big Beautiful Bill creates one big beautiful windfall for one type of charitable contribution, unavailable for any other cause — wildly unprecedented cronyism in the federal tax code. Whether the ultra-wealthy agree with vouchers or not, their accountants would be absolutely negligent in their fiduciary responsibility if they don’t recommend this profitable way to liquidate appreciated stocks. Research from the 501(c)(3) nonprofit Institute on Taxation and Economic Policy notes it harnesses “wealthy families’ interest in tax avoidance and personal profit as a means of bolstering private schools at the expense of public budgets” — to the tune of $26 billion of federal and state dollars over the next 10 years if capped. Sen. Ted Cruz of Texas wants no cap.
Angry? Me, too. Tell Kansas Sens. Jerry Moran and Roger Marshall — and Sens. Josh Hawley and Eric Schmitt in Missouri — to vote no on this egregious tax scheme for the super-wealthy. Perhaps suggest that they fund special education at the full level in the Individuals with Disabilities Education Act instead?