Elaine Chao, US Department of Transportation Secretary, and her husband Mitch McConnell, Republican Senate Majority Leader, recently attended a ceremony at Harvard Business School.
The ceremony was in honor of a new building for Harvard’s Executive Education program, which was named The Ruth Mulan Chu Chao Center after Chao’s mother.
A $40 million donation from the Chao family and it’s foundation, which is also named for Chao’s mother, funded the building.
While this may seem like a generous gesture on the surface, if one digs a little deeper, the truth isn’t pretty. Millions of dollars have been funneled to the Ruth Mulan Chu Chao Foundation via offshore tax havens.
The Marshall Islands, which are “known as one of the world’s most secretive offshore havens for firms seeking to avoid taxes and a preferred foreign locale for the Foremost Group, the Chao family’s New York-based shipping business”, are home to two of the entities which have transferred funds to the foundation.
Had the funds stayed in the US, they been taxed accordingly and placed in the public treasury. The Chao family was donating funds that should have been taxed.
Unsurprisingly, Chao is a vociferous supporter of President Donald Trump and his economic policies, including the rewrite of the tax code.
The passage of that legislation was probably the high point of her husband’s career, and shifted the corporate tax code to a territorial system.
That change is expected to reward firms like the Chao family foundation which use offshore tax havens.