September 29, 2011
Private Foundations: Benefactors or Malefactors?
The "Super Committee" charged with deficit reduction should take notice of a tax policy that permits the wealthiest Americans to divert a third of their tax obligations away from the Treasury and to causes of their own choosing. The same system also subsidizes conversion of taxable investment income to tax-free income and removal of billions in investment assets from the reach of estate and gift taxes. The system at work lies in the intricate body of tax law that subsidizes the creation and perpetuation of so-called "private foundations." Briefly described, these are trusts or similar entities that control hundreds of billions of dollars in investment securities in the form of "endowments." Although they are accorded the status of "charities" under section 501(c) of the Internal Revenue Code, they do not meet any accepted definition of a charity. They do not raise money from the general public, but are instead the creatures of wealthy families and their...(Read Full Article)