In a hearing held on December 13, 2023, Chairman Smith expressed his concerns regarding tax-exempt charities and their potential influence on the American political process. He stated, "Some individuals are acting like a wolf in sheep’s clothing and setting up tax-exempt organizations for the purposes of affecting our political process."
Smith acknowledged the significant growth in the number of tax-exempt organizations in recent years, coinciding with a substantial influx of capital. He pointed out that there are now nearly three times the number of charities in the United States compared to three decades ago. Furthermore, employment in nonprofits has increased by a third in the past 15 years, while jobs in the private sector overall have only grown by nine percent during the same period.
The chairman raised questions about the motives behind the explosion of these organizations and their impact on American politics. Of particular concern is the possibility of foreign nationals using tax-exempt organizations to influence the political landscape, despite being prohibited from directly donating to campaigns or outside political groups. Chairman Smith stated, "Foreign nationals are prohibited from directly donating to campaigns or outside political groups. However, there is evidence that some individuals are acting like a wolf in sheep’s clothing and setting up tax-exempt organizations for the purposes of affecting our political process."
He highlighted a specific case involving a Swiss billionaire who reportedly donated hundreds of millions through tax-exempt organizations to promote then-candidate Joe Biden's agenda. These organizations are part of a broader network operated by Arabella Advisors, which has played a significant role in the Democrat Party's political infrastructure in recent years.
Chairman Smith also drew attention to the influence of other billionaires on elections through supposedly charitable means. He cited an example from the 2020 election where Mark Zuckerberg donated $328 million to 501(c)3 organizations that funded state and local election offices, potentially favoring one political party over another.
Expressing concern for the integrity of American elections, Chairman Smith emphasized that wealthy foreign nationals should not be able to use the tax code to conceal their attempts to influence the political process. He stated, "Americans should be concerned that wealthy foreign nationals are using America's tax code to conceal their attempts to influence the American political process despite being prohibited from donating directly to campaigns. The only people that should be influencing the outcomes of American elections are Americans."
While addressing these issues, Chairman Smith also recognized the importance of protecting the privacy of Americans who donate to tax-exempt groups. He emphasized the need to safeguard donor privacy while protecting the electoral process from foreign influence.
In conclusion, Chairman Smith expressed gratitude to the witnesses who shared their expertise during the hearing. He stated, "I am pleased we are having this hearing today, and I'm grateful to our witnesses for sharing their expertise with us. My hope is that today's hearing will help us better understand the growth of the tax-exempt sector and its impact on American politics."
Click this link to access more information: https://waysandmeans.house.gov/chairman-smith-opening-statement-hearing-on-tax-exempt-charities-influencing-the-political-process/
