Money in politics is as old as politics itself. While some Democratic partisans like to imagine this doesn't happen on the left, the philanthropy and campaign donations of large liberal donors like Google, George Soros or General Electric just happen to coincide with their business interests. And a look at the electoral and business ambitions of President Donald Trump's largest political donors, hedge fund billionaire Robert Mercer and his daughter Rebekah, reveals an incredible amount of intersection.
Like big-time conservative donor Cary Katz (who only started giving to the hard right after his business was upended as part of a little-known provision of Obamacare), Robert Mercer's family foundation donated almost exclusively to conventional charity groups and medical researchers, according to The New Yorker's Jane Mayer, until coming under intense IRS scrutiny.
Rebekah Mercer began redirecting the family's philanthropy after her father's primary company, Renaissance Technologies, became the subject of an IRS inquiry into its practice of temporarily storing investment income in bank accounts as a method of avoiding higher tax rates. In 2010 the agency ruled that firms utilizing "basket options" were engaged in illegal tax avoidance and warned Renaissance Technologies, the world’s most profitable hedge fund, to discontinue the practice.
Renaissance declined to do so, and in the intervening years the agency has been collecting evidence apparently in preparation for a future court case. According to a 2014 Senate report reviewing some of the allegations, the company could owe at least $6.8 billion in back taxes.
Since the 2010 IRS ruling, the Mercers have dramatically stepped up their giving to conservative groups, particularly to those engaging in full-on attacks against the IRS and the agency's commissioner, John Koskinen.
The agency has long been on the receiving ends of journalistic attacks from Breitbart News, the conservative website that was formerly headed by top Trump adviser Steve Bannon. He was instrumental in securing over $10 million in Mercer funding for the publication according to several media reports.
The family also began heavily investing in supporting the political ambitions of Ted Cruz, the Texas Republican senator who has repeatedly promised to "abolish the IRS" if he were elected president. Cruz has a variety of connections to hedge funds in his own right as well as through his wife Heidi, a long-time employee of the investment bank Goldman Sachs. In a 2015 interview, Cruz explicitly mentioned hedge fund owners, arguing that they should pay the same tax rate as other Americans. If enacted, his proposal would have raised income tax rates for people with incomes around the median level and lowered them for the ultrarich.
“Zero income tax, zero payroll tax, zero nothing,” Cruz told conservative radio host Hugh Hewitt in 2015. “Beyond that, everyone pays a flat 10 percent. And that applies across the board so that the hedge fund billionaire pays the same rate as the secretary instead of paying less as they often do now.”
The case against Renaissance began before Koskinen's term, however. The IRS chief became controversial in right-leaning circles after the agency was accused in 2015 of improperly delaying the processing of applications from Tea Party groups. The agency was also revealed to have delayed the applications of several nonprofits that leaned leftward.
While thus far the Trump administration has done nothing against the IRS besides lob a few verbal criticisms, Richard Painter, the former chief White House ethics adviser in George W. Bush's administration, told the McClatchy News service that doing anything that appeared to help Mercer would look "terrible."
“The guy’s got a big case in front of the IRS,” Painter told the news organization. “He’s trying to put someone in there who’s going to drop the case. Is the president of the United States going to succumb to that or is he not?”
Trump himself is also involved in litigation with the tax agency. He has repeatedly claimed that he will not release his personal tax returns as they are under IRS audit.