What's a politician to do upon discovery that a generous billionaire donor turns out to be a major tax dodger? It's a dilemma already encountered by the Republican and Democratic parties in this season of unprecedented political fundraising.
At a time when newly powerful Democrats, including presidential hopeful Sen. Hillary Clinton of New York, are pressing for aggressive pursuit of unpaid tax bills to boost federal revenue, the party's biggest financier and prominent Clinton backer is tied to one of the largest individual tax avoidance schemes on record.
And two Republican billionaires -- Texas brothers who have poured a small fortune into supporting the presidential bids of two George Bushes and, more recently, Sen. John McCain (R-Ariz.) -- were accused last year of exploiting offshore havens to escape taxes on nearly $200 million in gains.
Amid predictions that the 2008 presidential campaign will be the most expensive in history, with spending possibly topping $1 billion, pressure to raise huge sums of cash is a certainty. For candidates, the question is whether the headlong pursuit of deep pockets may also risk embarrassment over their donors' financial baggage.
Sheila Krumholz, executive director of the Washington-based Center for Responsive Politics, said that candidates sometimes have to make their own "cost-benefit analysis."
"The political cost of taking tainted money can be far greater than the value of the contribution itself," she said.
The alleged tax-dodging billionaires may offer a case in point. They ended up being challenged by the Internal Revenue Service and investigated by Congress. The billionaires denied wrongdoing even as they acknowledged trying to avoid or defer significant tax bills.
And while some politicians have returned the businessmen's donations, others seem not to have been troubled by their gifts. Such cases tend to be complex and the distinction between error and wrongdoing murky.
"It all boils down to which side the public comes down on. Will they blame the candidate for being involved, or the donor?" Krumholz said.
With a personal fortune worth billions and control of the leading Spanish-language media company in the U.S., Hollywood mogul Haim Saban stands alone among Democratic Party donors.
