Billionaire Jeff Yass Avoids Taxes and Buys School Voucher Policies
Updated to recommend a piece about Jeff Yass and his company’s connection to TikTok, “How an Obscure Chinese Real Estate Start-Up Paved the Way to TikTok,” by Mara Hvistendahl and Lauren Hirsch of the New York Times.
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Who is Jeff Yass?
In honor of Tax Day coming up, I thought I’d revisit one of America’s most successful multi-billionaire tax-avoiders, Pennsylvania’s Jeff Yass.
The more I learn about the “school choice” movement, the less surprising it is that one of its major proponents is a guy who made it big first at using statistics to game the system for racetrack gambling, and who now owns a multibillion-dollar business but doesn’t like paying taxes. And it’s not surprising at all that Yass, like Betsy DeVos, has parlayed being a tax-avoiding billionaire into driving the kind of public policy that will have its most severe impact on the poorest families in the country.
Yass has been in the news a little more than usual lately, partly because his company owns a 15% stake in TikTok. And, as Reuters and others have reported, former President Donald Trump publicly changed his mind about banning TikTok shortly after having a conversation with Yass— this despite the fact that Yass had in the past described himself as a “Never Trumper”. That kind of perceived clout gets attention.
But Yass has been a powerful player in American politics for years, donating $47 million to candidates and committees in 2022 alone, and another reason he has been making headlines is that he was— at least at one point— “the biggest institutional shareholder of the shell company that recently merged with former President Donald J. Trump’s social media company,” according to the New York Times.
According to Open Secrets, Yass is currently the #1 source of funding for outside political spending groups in the country, with $46,418,281 in donations so far in 2024 to groups supporting “conservative” candidates (whatever that means in the post-Freedom Caucus, post-Trump era).
In recent years, Yass has donated, according to Open Secrets, $6,250,000 to Texas governor and prominent voucher supporter Greg Abbott, $6,600 to far-right Speaker of the House Mike Johnson, and at least $10,000 to the South Carolina Republican Party. The donation to Abbott was, according to the Texas Tribune, the largest in state history.
Similarly, in South Carolina, Yass’ “Education Freedom Fund” poured $750,000 into the midterm primary contest between Palmetto State Teachers Association president Kathy Maness and Jim DeMint think tank protégé Ellen Weaver, an amount that dwarfed the rest of the spending in what is normally a small race. After a primary in which Maness was actually ahead of Weaver by about eight points, Yass’ $750,000 infusion of money arrived and paid for two weeks of attack ads falsely and ominously labeling Maness as a “liberal.”
Weaver won the runoff to become the GOP nominee for state superintendent of education. She went on to defeat full-time teacher and educational advocate Lisa Ellis in the general election. (That Ellis received more votes than any other non-Republican statewide candidate that year suggests how unpopular Weaver was.)
Yass’ School Freedom Fund exists primarily to push “school choice,” which, in this context, mostly means more school vouchers for families of private school students and less tax dollars for traditional public schools. The group was one of a number of powerful political organizations which explicitly supported the spread of a conspiracy theory narrative tying pandemic-era “school closures, mask mandates, critical race theory, & more” together, and offering “choice” as the solution to these supposedly linked crises.
Yass has poured major dollars into the right-wing Club for Growth (a group in which Ellen Weaver was a fellow in 2022, though it is unclear whether she is currently affiliated with the organization). Club for Growth’s platform on “school choice” mirrors that of School Freedom Fund. The group calls for closing down the federal Department of Education and providing “school vouchers to give more control and choice to parents.”
What does Yass want?
Since Yass is not a public figure, and since he conducts much of his support for political figures through PACs, it takes some guesswork to assign specific goals to his expenditures. As a “veteran Republican operative” told the Daily Beast, “I never could figure out what [Yass’] agenda was… He was all about school choice, but what was driving him to that? Of all the issues I could think of, I don’t know why this one specifically has been so constantly at the front of his mind.”
He doesn’t seem to be especially socially conservative, or especially fond of far-right politics. He once served on the board of the libertarian Cato Institute, and in 2015 he poured $2.8 million into Rand Paul’s presidential campaign.
I’ve seen him labeled as anti-abortion based on support for groups and candidates with anti-abortion positions, and it’s hard to say what his personal position on reproductive rights might be. Last year, Yass’ Commonwealth Leaders fund donated at least $4 million to conservative Carolyn Carluccio in her run for the state Supreme Court (she lost). Because Carluccio was also endorsed by the Pennsylvania Pro-Life Federation, many concluded that this was also an important issue for Yass. Perhaps it is, or perhaps Yass was hoping to bankroll a justice sympathetic to his anti-regulation and pro-voucher interests.
While Yass has supported candidates from both parties in the past (although not during the current election cycle), an aversion to taxes/ regulation is presumably one of his main ideological motives for supporting vouchers, and could be the reason he has shifted his support further and further to the right of the political spectrum. As ProPublica reported during the midterms, Yass has a long history of major tax avoidance, saving $1 billion through various tax avoidance schemes in the six years leading up the article’s publication alone:
Yass has devised trading strategies that reduce his tax burden but push legal boundaries. He has repeatedly drawn IRS audits, yet has continued to test the limits. Susquehanna has often gone to court to fight the government, with one multiyear audit battle ending in a costly defeat. The firm has maintained in court filings that it complied with the law.
At one point, Yass was lobbying against a Trump reelection campaign, but now seems to be at least temporarily allied— to some extent— with Trump. According to the Philadelphia Inquirer, Yass could be on the shortlist to become Secretary of the Treasury if Trump wins a second term. (This is something like an oil baron becoming head of the Environmental Protection Agency— or Betsy DeVos becoming the federal Secretary of Education— though to be fair there seems to be a large amount of speculation here.) Yass has said he has no plans to donate to Trump directly, although a statement on his behalf didn’t rule out that any of his many political organizations might do so.
And Yass, based on what little information is available about his thinking, doesn’t seem especially interested in schools, generally, despite the fact that the vast majority of American children attend them, and will like continue to do so regardless of what happens with school vouchers.
He does have a scholarship organization that gives out the “Yass Prize” to educational organizations it sees as deserving. But unsurprisingly, one of the markers, according to the Prize website, of a deserving organization is that it operates without the “permission” of any “regulatory body”.
Perhaps more tellingly, Yass has supported “school choice” candidates (and conservative and rightwing candidates who will presumably be more friendly to “school choice”) all over the country. Regardless of what’s specifically going on in these states, Yass and his organizations seem mainly interested in rewarding candidates, like Weaver and Abbott, as well as South Carolina’s Senator Tim Scott— another longtime school-choice shill— and Representative Nancy Mace, as well as Florida Governor Ron DeSantis, who have promoted “school choice”/ vouchers. (After all, that’s about the only obvious commonality between, for example, Tim Scott and Ron DeSantis.)
And while Yass’ direct donations are to “conservative” candidates, he also, for example gave $1 million in 2022 to Moderate PAC in Pennsylvania in 2022; according to Politico, he has been donating to the SuperPAC again as it runs ads against Pennsylvania Representative Summer Lee, a Democrat, and on behalf of her opponent, who is also a Democrat.
My guess is that for Yass, these forays into politics are fundamentally about de-regulation instead of any proactive policy goals, and that deregulation is primarily about reducing the tax burdens of the wealthy, something school vouchers and privatization are designed to do quite effectively. Yass is driven, perhaps, by a vague libertarian belief— convenient for a guy who doesn’t want to pay taxes— that Regulation is Bad and Innovation is Good. In the style of economist Milton Friedman, Yass presumably would like for Americans to believe that funding public schools with public dollars is inefficient, and that a better way to tackle educational funding— if at all— is to increasingly subsidize private schools, ideally through money that comes increasingly at the expense of public school budgets.
Vouchers for the wealthy, funding cuts for public schools.
Of course, history doesn’t support this plan, or suggest that Yass or other prominent voucher supporters really believe in its central promise of somehow improving education through defunding and deregulation — unless, that is, they’re coming from a perspective that doesn’t actually value educational opportunities for all students. (This is, of course, where the rubber of Milton Friedman’s theories met the road of segregationist “school choice” policies in the post- Brown v Board of Education era, where “government regulation” often took the form— as it does today— of civil rights protections that state governments were actively attempting to erode— as they are today.)
Evidence from existing “school choice” programs suggests that most of the families receiving government subsidies such as vouchers for private school tuition were already paying for private schools— a major mark against characterizing vouchers as being predominately about creating “choices” or “alternatives” to public schools (and a decent explanation for why rich guys like Yass might be incentivized to support them). For example, according to Politico, in Florida about 69% of students whose families received vouchers were already attending private schools, while only about 13% of “voucher students” had actually left public schools after receiving them. So the narrative that vouchers are predominately about “choice” for the average family has always been misleading.
And there isn’t great evidence that vouchers improve school achievement, either— in fact, traditional voucher programs tend to actually hurt achievement (with the caveat that “achievement” is too often, and sometimes misleadingly, measured by standardized tests).
There is some evidence that the presence of such programs may motivate lower-performing districts to make modest “achievement” gains, but experience has taught me to be cautious about interpreting such findings. Public school districts are often heavily pressured and incentivized to prioritize whatever most impacts funding, so if a district is in an arms race with private schools for funds, and standardized testing is the metric used to compare them, guess what school districts are going to pour all available time and resources into?
Not incidentally, there’s a lot of evidence that private schools actually don’t produce better test scores— especially when other factors are controlled for— and so, lo and behold, many voucher proponents no longer support having private and public schools take the same tests.
“Education Savings Accounts”
Now, the reason I used the term “traditional voucher programs” above is that while we have decades of data on vouchers, states have moved in recent years towards “Education Savings Accounts” (or ESAs, often called neo-vouchers. While ESAs are effectively very similar to traditional vouchers, it isn’t a pure apples-to-apples comparison to use traditional vouchers in analyzing their probable effects.
And this seems to be exactly what proponents of ESAs want. (Probably because the term “vouchers” itself became very unpopular over the years. As Peter Greene recently pointed out, “no voucher measure has ever been passed by the voters in a state. All voucher laws have been passed by legislators, not voted in by the public.” Another reason for the existence of ESAs is that many state constituents explicitly forbid direct funding of private schools; ESAs create a possible loophole by giving the same money to families, who then hand it to the private schools.)
For example, in South Carolina, the legislature passed a law last session that is poised to spend $30 million on ESAs this year. (There is a pending state Supreme Court case about this law, which seems to pretty transparently violate the state constitution’s prohibition against state funding for private schools.)
But before that law— promoted by proponents as a kind of test-case for vouchers in the state— could even go into effect, the SC House had already moved to raise limits on who could qualify for an ESA. The House bill also, predictably, removed requirements that private schools receiving state funds use the same assessments required for public schools.
So much for creating a test case.
It seems obvious that many supporters of “school choice” promote the narrative that vouchers are primarily a method of giving choices to poor and working-class families (choices they have often created the demand for, themselves, through decades of underfunding in community public school systems) merely as a way of wedging open the door to privatization and private school subsidies for wealthy. This brings to mind the quote, sometimes attributed to Dr. King (update: it’s not clear whether he said these exact words, though he frequently wrote about two radically different Americas for the rich and poor), about “socialism for the rich and rugged individualism for the poor,” as literal billionaires like Yass push for policies that sap resources from taxpayer-funded public schools— which, in South Carolina and other states now serve more nonwhite students than white students— while subsidizing private entities.
It’s much easier to push this narrative, of course, when you can spend some of your billions in corporate earnings on advertising and campaign financing, instead of on the taxes the rest of us have to pay.
All of this seems like a great argument for bringing to bear all the pressure we can to make our tax system more fair, and our campaign finance systems more transparent and sane. In a representative government, it’s only “one person one vote” if the size of the vote doesn’t directly correlate with how many billions you have in the bank.
Happy Tax Day!
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