Texas has raised $54M in donations for its border wall. Almost all came from 1 billionaire.

A member of one of America’s richest family dynasties, Timothy Mellon, contributed nearly 98% of the fund’s total donations when he donated $ 53.1 million in stocks to the state in August, according to public records. Mellon is the 79-year-old grandson of bank tycoon and former US Treasury Secretary Andrew Mellon from Wyoming.

Prior to Mellon’s donations, Abbott’s private fundraising campaign stalled at about $ 1.25 million in mid-August, two months after it started – a drop in the bucket for a project valued at an estimated billions in dollars. But on Aug. 27, a state website tracking donations to the crowdfunding effort said the fund rose to nearly $ 19 million. At the end of the month, it had exceeded $ 54 million.

Since then, donations have stalled again.

Mellon did not respond to multiple requests for comment to his company, New Hampshire-based Pan Am Systems, and a marketing firm that promoted his 2015 autobiography.

Abbott declined to comment.

Mellon doesn’t seem to have close ties to Texas. But he was a top donor to former President Donald Trump’s re-election campaign, who made building a border wall a top priority, and has previously donated money to defend laws against immigrants.

In 2010, he gave unsolicited $ 1.5 million to the legal defense of a law in Arizona that required police to investigate the immigration status of people suspected of being illegally in the country, according to the Washington Post. Critics said the law would introduce racial profiling. The bill was challenged to the US Supreme Court, which struck down portions of it but left the section that allowed officials to inquire about immigration status intact.

Last year Mellon donated $ 20 million to America First Action, the main super-PAC in support of Trump’s re-election. As of 2018, he has donated $ 30 million to the Congressional Leadership Fund, House GOP Super PAC, and he donated $ 30 million to the Senate Leadership Fund, which seeks to elect Republicans to the U.S. Senate in 2020.

Mellon didn’t donate to Abbott, but he gave $ 2,500 to Republican gubernatorial challenger Allen West when West ran for Congress in Florida in 2012. Mellon increased its political donations in 2018.

While overwhelmingly supporting Conservative campaigns and Republicans, Mellon also gave two Democrats: US MP Alexandria Ocasio-Cortez of New York in 2018 and former US MP Tulsi Gabbard of Hawaii for her bid for the 2020 Democratic presidential nomination. Ocasio-Cortez’s campaign later said it did not solicit the donation and would return it.

Mellon made himself hot in his self-published autobiography for using offensive stereotypes to describe black Americans.

In the 2015 book, Mellon wrote that after the Great Society programs of the 1960s aimed at combating poverty and racial injustice, blacks “became more bellicose and unwilling to meddle to improve their own situation”, according to The Washington Post.

He also called programs of the social safety net “slave redux”.

Mellon is the chairman of Pan Am Systems, a private transportation and freight holding company. In the 1980s he founded a railroad company called Guilford Transportation Industries. He renamed the company in the 1990s after buying the bankrupt Pan Am Airways brand.

Forbes estimated the value of Mellon at nearly $ 1 billion in 2014, and last year the magazine estimated the value of the Mellon family at $ 11.5 billion.

Abbott’s crowdsourcing wall

Abbott, a two-term Republican, has made border security his top priority this year as he wants to be re-elected next year and battles challenges to his right. Abbott blames the Biden administration for an increase in migrants at the border.

In March Abbott deployed state military and police resources at the border to help federal agencies enforce immigration law. In June, he announced a state of disaster in 34 counties where the number of migrant crossings had soared, and revealed his plan to build a government-funded border wall that will pick up where Trump left off.

The Texas legislature has approved nearly $ 3 billion for border security for the next two-year budget cycle, with approximately $ 1 billion going in grants to the governor’s office, including $ 750 million towards building a border wall.

Texas is already paying $ 25 million for a nearly 2-mile concrete barrier along State Loop 480 in Eagle Pass. Parts of the federal border wall, begun by the Trump administration and put on hold by the Biden administration, ranged from $ 6 million per mile to $ 34 million per mile for construction. Abbott’s office said it had identified a 733 mile limit that may need some kind of barrier.

While the state shows the total of private donations to the border wall on its website, it does not readily disclose the names of individual donors, even though Abbott made an early commitment that the crowdfunding effort would have “transparency and accountability.”

Outside of Mellon, the fund received more than 12,100 individual donations as of September 14, totaling approximately $ 1.3 million. The average donation was $ 50.

This level of fundraising is more like a similar crowdfunding attempt by Arizona lawmakers 10 years ago to raise private money to build a fence on the Mexican border. According to The Arizona Republic, those efforts got about $ 270,000 in three years.

During the Trump administration, a nonprofit called We Build The Wall, which included former political adviser Steve Bannon as a board member, raised $ 25 million for a border wall. Bannon and Brian Kolfage, the group’s leaders, were accused by the federal government in August 2020 of looting the charity for personal gain. Bannon was later pardoned by Trump.

Tax advantage

Tax experts say Mellon’s decision to donate stocks instead of cash could give the billionaire a tax break.

Ordinarily, a person must pay taxes on the profits made on their investments when they are sold. However, investors donating shares to charity avoid paying a tax on the returns on their investment and receive a withholding tax on the entire amount of shares.

“It is common to give away value-adding stocks because they can get rid of the profits and withdraw the donations,” said Lloyd Mayer, professor at Notre Dame Law School.

Such donations usually go to charitable organizations. But according to the tax code, a charitable donation to a state would probably be tax deductible if it was made “exclusively for public purposes”. For example, some people get tax deductions for donating money to reduce their national debt.

The only hurdle is to make sure that the money is only used for public purposes.

“In the case of the [a] Border wall, which is believed to have been built on public land, can hardly be said to have private uses, ”said Lisa De Simone, professor of accounting at the McCombs School of Business at the University of Texas at Austin.

However, Mayer said such donations raise questions about the undue influence of wealthy donors on government policy.

In June, Tennessee billionaire Willis Johnson offered South Dakota Governor Kristi Noem $ 1 million to aid a state national guard on the border to help Texas efforts to illegally cross people catch. The state’s soldiers were then sent to the Texas border.

“There is some controversy about these types of donations as to whether they skew the government’s priorities. When the government collects money in the form of taxes and the government – the legislature and the governor – decide how to spend it, they set their priorities based on the political environment, ”Mayer said. “But when you open it up to donation, you’re giving what the government should be spending its money on to wealthy donors.”

Disclosure: The University of Texas at the McCombs School of Business in Austin was a financial supporter of The Texas Tribune, a nonprofit, non-partisan news organization funded in part by donations from members, foundations, and corporate sponsors. Financial supporters play no role in the journalism of the Tribune. You can find a full list of them here.

This article originally appeared in The Texas Tribune at https://www.texastribune.org/2021/10/06/timothy-mellon-texas-border-wall/.

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