When Supreme Court Justice Clarence Thomas flouted longstanding ethics laws by refusing to disclose billionaire gifts, he avoided public outrage for years. Based on new revelations about the potential motivations behind those gifts, he also may have avoided laws requiring Americans to pay taxes on such donations, legal experts have told The Lever.
Recent reporting from ProPublica revealed that Thomas was showered with luxury gifts from wealthy benefactors, including vacations, private flights, school tuition, and even a loan for a high-end RV. Though Thomas has insisted the gifts were just the innocent generosity of friends, many came after he threatened to resign over the justices’ low salaries — and one of Thomas’ vacation companions said the money was given to supplement the justice’s “limited salary.”
According to experts, if these benefits were given to Thomas as a way to buttress his regular pay and keep him on the court, they could be considered a taxable transaction rather than a gift. By refusing to publicly disclose such transactions, Thomas made it impossible for watchdog groups to alert tax enforcement officials about the potential issue in real time.
“If there are in fact people saying more or less, ‘We’re offering these goodies to the justice so that he will stay in his role’… it sounds like it would be taxable income for him,” said Brian Galle, a law professor at the Georgetown University Law Center who focuses on taxation.
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Much of the public outcry over Thomas’ long history of undisclosed gifts has centered on whether the activities violate federal ethics laws. Lawmakers have also zeroed in on one particular donation — a $267,000 loan Thomas used to purchase a RV — arguing that if part of that loan was forgiven, Thomas would have to pay taxes on that amount.
Thomas has denied that the gifts were granted in exchange for favorable court rulings. Explaining that some of these donors were “among [his] dearest friends,” he declared in an April 7 statement via the Supreme Court’s public information office that the cushy trips they bankrolled were just vacations: “As friends do, we have joined them on a number of family trips during the more than quarter century we have known them.”
But if these billionaires’ largesse were designed to retain the conservative judge on the country’s highest court, the donations might fall outside of the definition of tax-free gifts, which according to the Supreme Court must stem from “detached and disinterested generosity.” If the benefits showered on Thomas were designed to elicit court actions or job decisions, they could be considered taxable income, whether or not there is definitive proof of quid pro quo on Thomas’ part.
“What Clarence Thomas has done would result in not only any judges in America being removed from the bench, but there is a good chance it would result in criminal prosecution for income tax fraud and for false filings in his mandatory financial ethics disclosure statements,” David Cay Johnston, a visiting lecturer at Syracuse University’s College of Law, told The Lever.
Taxation of unreported income recently emerged as a political flashpoint and focus of federal prosecutors: In January, President Donald Trump’s longtime financial chief was sentenced to five months at the Rikers Island jail complex for failing to report or pay taxes on $1.7 million in off-the-books compensation.
Elliot Berke, Thomas’ attorney, did not respond to a request for comment ahead of publication. Thomas has not released his tax returns, so it is unclear whether or not he paid taxes on the gifts he received.
“Personal Hospitality From Close Personal Friends”
Thomas was appointed to the Supreme Court in 1991 by President George H.W. Bush, and was immediately embroiled in a scandal when Anita Hill, a former staffer for Thomas, claimed he routinely sexually harassed her.
According to ProPublica, less than a decade later in January 2000, Thomas complained to Rep. Cliff Stearns (R-Fla.) that “unless the compensation for Supreme Court justices is increased, ‘one or more justices will leave soon.’”
The following year, Thomas publicly complained that he sacrificed earning potential to sit on the court. “The job is not worth doing for what they pay,” Thomas said during a speech at the Bar Association in Savannah, Georgia, in 2001. “The job is not worth doing for the grief. But it is worth doing for the principle.” (Today, Supreme Court Justice salaries range from $285,400 for associate justices to $298,500 for chief justice.)
The idea that Thomas could step down was taken seriously enough that Leonidas Ralph Mecham, director of the Administrative Office of the U.S. Courts at the time, sent a confidential memo about the matter to then-Chief Justice William Rehnquist on June 13, 2000.
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Since then, Thomas has reportedly been treated to dozens of high-end destination vacations and other perks from multiple billionaires, including former Berkshire Hathaway executive David Sokol, Blockbuster billionaire Wayne Huizenga, and oil baron Paul Novelly. The excursions involved private jet flights, helicopter flights, VIP passes to sporting events, luxury resort stays, and a standing invitation to an exclusive golf club.
The most generous benefactor has been real estate mogul and Republican megadonor Harlan Crow. Thomas has enjoyed annual luxury trips on Crow’s dime, including stays at the billionaire’s private Adirondacks resort and excursions to Bohemian Grove, a highly exclusive retreat in California. Crow also purchased Thomas’ mother’s home in 2014, and she continued to live there as significant upgrades were made to it.
Thomas refused to disclose many of these perks, argued that ethics rules governing Supreme Court justices were unconstitutional, and The Lever found that he also pushed to kill mandatory disclosure laws for other elected officials.
A 1978 federal ethics law forbids gifts to federal officials from those whose “interests may be substantially affected by the performance or nonperformance of the individual’s official duties.” Judicial Conference rules, which set ethics codes for the federal judiciary, also broadly forbid gifts from donors with business before the court, but offer exceptions, including gifts that amount to a cumulative maximum of $100 per calendar year.
In an April statement to the Supreme Court’s public information office, Thomas said that he was instructed early in his tenure that “this sort of personal hospitality from close personal friends, who did not have business before the Court, was not reportable.”
But in at least three separate instances, The Lever found that Thomas ruled on matters or reversed his position in ways that directly benefited Crow and several of his other donors’ business interests.
“Detached And Disinterested Generosity”
By asserting these trips and benefits were gifts, Thomas also likely avoided paying taxes on what was by all accounts millions of dollars’ worth of donations and gifts.
The U.S. gift tax law, established in 1924, was created to minimize estate and income tax avoidance. According to the law, any transfer of money or property from one person to another is subject to a gift tax. But it’s typically the giver, not the recipient, who’s responsible for the tax, and they only end up paying it once they have exhausted their allotted lifetime gift tax exclusion, which in 2023 is $12.92 million.
Given the personal nature of gifts between family and friends, the gift tax law has proven to be a particularly difficult rule to enforce.
Legal precedent over whether a contribution qualifies as a gift is largely derived from the 1960 Supreme Court case Commissioner v. Duberstein, which dealt with a commodities dealer rewarding a vendor with a new car after a business conversation about potential customers. The decision clarified that a gift must be given with “detached and disinterested generosity” and divorced from business interests to not qualify as income.
In the early 1970s, the IRS issued several binding agency-wide guidelines that clarified how this rule applied to donations to elected officials.
“There were a couple of rulings from the IRS that essentially said, ‘When you give money to a public official in order to help them do their job or continue in office, that's not a gift,’” said Galle at the Georgetown University Law Center.
For example, a 1973 ruling concluded that political donations used to defray the costs of constituent outreach should not be considered tax-free gifts because “when a payment is made by a customer to a taxpayer who provides services to assure continuation of those services, that payment is not a gift, even though not made in consideration for past or current services.”
Another ruling three years later found that donations that are used to cover the travel expenses of Congress members and their staff are also not gifts, because the travel allows officials “to become more accessible to constituents.”
Galle thinks these rules could directly relate to the gifts Thomas received.
George Priest, a Yale Law School professor who has vacationed with Thomas and Crow, told ProPublica he believed the billionaire was aiming to make the justice’s life more comfortable. “He views Thomas as a Supreme Court justice as having a limited salary,” Priest said. “So he provides benefits for him.”
“If the facts are as they are reported,” said Galle, “that sounds a lot like those 1970s rulings about contributions to public officials.”
Daniel Hemel, a law professor at New York University, said that if he were to argue a case against Thomas, he would cite a federal court case over how a church structured a gift scheme for its pastors.
Hemel pointed to Goodwin v. U.S. in which an Iowa church hosted multiple events a year for congregants to give pastors gifts and money. The church suggested that this was not part of the pastors’ income and just merely gifts from the congregants, but the government viewed this as taxable income, Hemel said.
“[The church argued] if it weren’t for these gifts, then it would have been hard for the church to retain these pastors. And then that starts to look like ‘Well, conservative donors are giving money to Thomas so that he doesn’t leave the court,’” he added.
The actions of Thomas’ donors also cast doubt on the idea that the justice’s perks should be considered tax-free gifts, said Steven Rosenthal, a senior fellow in the Urban-Brookings Tax Policy Center at the Urban Institute, a nonprofit focused on economic policy. As Rosenthal pointed out, Crow paid for Thomas’ grandnephew to attend private high school, and he did so through his corporation, Crow Holdings, LLC.
“To me, it’s strange for Harlan Crow to route his personal payments through a business, like Crow Holdings LLC,” said Rosenthal in an email. “Were the tuition payments routed in order for Crow Holdings LLC to deduct them?”
If so, and the corporation deducted the payments as a business expense, it would be hard to argue these donations were an example of “detached and disinterested generosity.”
“Paying off Justice Thomas, arguably, provided a substantial financial benefit,” said Rosenthal. “But then the payments would not be a ‘gift.’ And, if Crow Holdings took a business deduction, it also would highlight the absurdity of Justice Thomas’ ethics position [that] the tuition payments were merely a gift from a friend.”
The Case Against Thomas
Even if Thomas technically owes taxes on the millions of dollars he’s received from donors, the IRS is unlikely to recoup most of the lost taxes, given that statutes of limitations for IRS audits typically range from three to six years — far shorter than the time period in which Thomas refused to disclose the gifts.
While the federal prosecutors could pursue a fraud case against Thomas, such a claim would be difficult to prove.
“The IRS or the [Justice Department] would have to prove that Thomas understood that this was taxable income and he was trying to hide it from the IRS,” said Hemel at NYU.
Gabe Roth, executive director of the judicial reform nonprofit Fix the Court, agreed that Thomas is unlikely to face tax fraud charges anytime soon.
“With Thomas, it’s not hard to connect the dots from some of his financial obligations to the conversation with Congressman Stearns to the billionaire buddy program that he was soon enlisted in,” Roth said. “[But] a lot of this also comes down to [the idea that] laws are only as strong as the government’s desire to prosecute, and I can’t imagine a situation where Justice Thomas would be prosecuted.”
Moving forward, concerns about judicial gifts could be addressed by a new Supreme Court ethics code implemented by the justices in November in response to recent scandals. The code prohibits justices from accepting a “gratuity, favor, discount, entertainment, hospitality, loan, [and] forbearance” in most cases, and especially from a “person whose interests may be substantially affected by the performance or nonperformance of the judicial officer’s or employee’s official duties.”
Matt Gardner, a senior fellow at the Institute on Taxation and Economic Policy, believes that ethics reforms like this will be the best way to address Thomas’ questionable behavior. “To me, this sort of example is inevitably going to be primarily, if not entirely, fixable through ethical rules, not through tax rules,” said Gardner.
But Gardner adds that concerns about Thomas’ potential tax bill highlight the need to boost financial support for the IRS, which has been systematically underfunded for years.
“The bottom line is that at this moment, this year, last year, five years ago, twenty years ago, this entire time, there’s been very little effort by the IRS to police this gray area in the law,” said Gardner. “If the allegations in the ProPublica article are true, then this is a really dramatic indication that the gift tax isn’t working.”
