Senate Democrat targets college donors’ tax deductions after admissions scandal

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A top Senate Democrat is looking to end tax breaks for college donations that parents may be making to universities in an attempt to get their children admitted.

Ron Wyden of Oregon, the ranking minority member of the Senate Finance Committee, said Wednesday he plans to introduce a bill that would prohibit donors to colleges to take a tax deduction for those charitable contributions before or during the time a family member is enrolled.

Wyden’s announcement follows the indictments of dozens of wealthy parents, college coaches and a college admission counselor in a sweeping criminal conspiracy to gain admission to elite universities, including Yale, Stanford and Georgetown.

The parents are accused of paying bribes to get their children admitted, giving cash to test-takers to help students cheat on entrance exams and paying coaches to designate applicants as athletic recruits. Parents paid from $100,000 to $6.5 million in bribes, with most payments around $200,000, according to U.S. prosecutors.

Some of these payments were disguised as donations to a non-profit called Key Worldwide Foundation that allegedly allowed parents to deduct the cost of the bribes they paid as charitable gifts on their taxes.

Wyden’s legislation would target otherwise legal donations for scholarships or buildings on college campuses, or the purchases of season sports tickets.

“Middle-class families don’t have access to this back door for their children,” Wyden said in a statement. “If the wealthy want to grease the skids, they shouldn’t be able to do so at the expense of American taxpayers.”

Wyden didn’t say how he would structure the legislation or when it would be impermissible to take the deduction.

Bloomberg News
Tax deductions College planning Philanthropy Ron Wyden