Of course they’re not coming right out and putting it that way but . . .
The terms of the private loan were as generous as they were clear: With no money down, Justice Clarence Thomas could borrow more than a quarter of a million dollars from a wealthy friend to buy a 40-foot luxury motor coach, making annual interest-only payments for five years. Only then would the principal come due.
But despite the favorable nature of the 1999 loan and a lengthy extension to make good on his obligations, Justice Thomas failed to repay a “significant portion” — or perhaps any — of the $267,230 principal, according to a new report by Democratic members of the Senate Finance Committee. Nearly nine years later, after Justice Thomas had made an unclear number of the interest payments, the outstanding debt was forgiven, an outcome with ethical and potential tax consequences for the justice.
“This was, in short, a sweetheart deal” that made no logical sense from a business perspective, Michael Hamersley, a tax lawyer who has served as a congressional expert witness, told The New York Times.
It turns out Thomas probably only made a year’s worth of interest payments, and he almost certainly didn’t pay off any of the principal debt, before it was so generously forgiven by his benefactor.
Thomas of course didn’t report the forgiven loan, which constitutes the most straightforward possible tax fraud, Forgiven loans are income, because otherwise it would be possible to dodge income taxes simply by getting loans from your employer, who would then forgive them.
Also, the benefactor’s explanation for why he forgave the loan — because by that point Thomas had made payments exceeding the original principal amount — is really farcical. Even if Thomas had made payments for all of the ten years before the loan was forgiven — and there’s zero evidence that he made more than a year’s worth of payments — the total amount would still be far less than the original principal sum.
“Hey mortgage company, my interest payments have now exceeded the original purchase price of the home so it would only be fair to consider the mortgage paid.” (Don’t try this at home kids).
At what will happen to Thomas, the answer of course is nothing, because of The Wisdom of the Framers.