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Op-Ed

Betsy DeVos’ $40 million yacht, and all the other ways she’s dodged taxes

Just another way to deprive the public of revenue for critical education services.

Betsy DeVos, U.S. secretary of education, was in attendance at President Donald Trump's event on combatting drug demand and the opioid crisis, in the East Room of the White House, on Thursday October 26th, 2017. (Credit: Cheriss May/NurPhoto via Getty Images)
Betsy DeVos, U.S. secretary of education, was in attendance at President Donald Trump's event on combatting drug demand and the opioid crisis, in the East Room of the White House, on Thursday October 26th, 2017. (Credit: Cheriss May/NurPhoto via Getty Images)

Secretary of Education Betsy DeVos came under fire this week after reports suggested she has avoided paying taxes on the $40 million yacht she registered in the Cayman Islands. Although the vessel was moored in northern Ohio, where someone recently untied it, the DeVos family has reportedly managed to dodge paying more than $2 million in taxes — money that would have funded a number of public services, including the education system DeVos has devoted herself to dismantling.

This isn’t the first time DeVos has tried to avoid paying her fair share.

In 2016, the Detroit News reported that DeVos was among a number of vacation home and rental property owners that took advantage of Michigan’s 100 percent principal residence tax exemption, which saves property owners from paying local school district taxes. In 2005, the state instituted annual audits to determine whether people receiving the exemption actually resided on the property as a primary residence. The state partially denied the exemption for the $7.8 million DeVos compound featuring a tennis club and convention center, finding that the property was used for another purpose, such as business or rental.

In 2003, DeVos founded the national All Children Matter Political Action Committee (ACM), based in Virginia, to help candidates who support school vouchers. In 2008, the Ohio Elections Commission determined that the national ACM office in Virginia improperly sent funds to the Ohio-based affiliate in violation of Ohio election laws. The Commission instituted a $2.6 million fine against each office involved: the national ACM in Virginia and the Ohio affiliate. Despite ACM’s attempts to challenge the Commission’s decision, the Ohio Court of Appeals upheld the decision and the Ohio Supreme Court refused to hear the case.

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As director for ACM, DeVos paid for the cost of litigation, but the overall $5.3 million fine was never paid. ACM essentially dissolved with minimal assets and was unable to pay the fine due to insolvency. Although DeVos was not explicitly named in the lawsuit and therefore is not technically responsible for paying the fines out-of-pocket, the PAC was under her leadership when it incurred the fines.

Given her background of using loopholes and technicalities to avoid making necessary payments, it should come as no surprise that DeVos is a proponent of tax credit scholarships. These scholarships provide two ways to reduce taxable income.

The first is on state taxes. States can allow individual or corporate donations to organizations that provide scholarships for private school tuition to claim an exemption on state taxes for all or some of the donated amount. The second is on federal taxes. Because these scholarship programs are non-profit organizations, they can receive tax-deductible donations. Thus, these donors can also claim a deduction for the same donation on federal taxes, essentially being reimbursed twice for their donations. The programs are essentially a loophole, to get the state to pay for a portion of the cost of private schools, but not directly funding them.

DeVos’ tax-dodging is all the more concerning when coupled with her work as Education Secretary, in which she has deprived the public of revenue for critical education services. She has supported rescinding protections for student loan borrowers who were defrauded by for-profit colleges. She has sought to expand funding for voucher programs, which funnel money away from public schools and into private schools that are often not required to abide by civil rights protections and that fail to address the needs of vulnerable student populations. In this vein, she proposed sweeping cuts to the Department of Education budget that included elimination of funding for after-school programs for students who need it the most.

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DeVos’ reluctance to pay her taxes and her commitment to slashing public education funding make for a dangerous combination — one that keeps her wealthy, while students and teachers suffer.

Bayliss Fiddiman is a Senior Policy Analyst for K-12 Education at the Center for American Progress (CAP). ThinkProgress is editorially independent of CAP.