I will state at the outset that I do not have a “solution to this problem.” I can’t even say that it is a problem. But, it definitely smells like a problem.
Let’s begin with a favorable circumstance. I, for one, think that the Gates Foundation has done a commendable job. The Gates Foundation is promoting education, fighting world hunger, trying to eradicate polio and the list goes on. No one, including me, is complaining that he “self directs” the Foundation activities. Indeed, I have said many times that he does a much better job of giving away his money than the federal government does giving away MY MONEY!
However, anyone who paid attention to the last election must have at least some misgivings about the Clinton Foundation. The Clinton’s direct their foundation’s activities, although the money being “directed” wasn’t THEIR MONEY as in the case of Bill and Melinda Gates.
The most notable example stems from the controversial approval of a Russian company’s purchase of Uranium One. That purchase gave Russia control of 20% of the uranium in the United States. While that deal was under consideration, however, the Justice Department was investigating a series of criminal acts inside the U.S. committed by Russian nuclear officials, including bribery, extortion and racketeering. During their investigation they uncovered evidence that Russian nuclear officials had routed millions of dollars to the Clinton Foundation, creating the appearance of, at least, a conflict of interest.
But today’s post is more about George Soros. Clearly I disagree with his politics, but shouldn’t he be allowed to give away his billions much like Bill Gates and his wife are doing? After all, unlike the Clinton’s, it is his money.
The issue is the “self-directed” aspect of these foundation. If these wealthy individuals gave their money, for example, to the Red Cross there would be no problem. They would loose control of the money. So let’s take a dispassionate look at “self-directed foundations.”
[Source: George Soros’s $18 Billion Tax Shelter, by Stephen Moore]
George Soros recently transferred $18 billion of his fortune to a private charity that he controls. By doing so, the money transferred to his Open Society Foundations will never be taxed.
- Gifts of appreciated stock escape any capital gains tax (despite the fact that billions of dollars are transferred).
- It escapes the estate tax, as well (I hate the “estate tax,” but it is the “law of the land”).
- When a person donates untaxed, appreciated assets to a private foundation, he may also deduct up to 20% of its market value on his/her personal return, carrying forward this deduction for five years.
- These foundations can employ family members to “administer” the distribution of assets at very high salaries (Chelsea Clinton’s payments by the Clinton Foundation are said to range from $0 – $900,000 depending on who you believe. If one looks at the Clinton Foundation website it sates the she was not paid “with taxpayer dollars.” Interesting word play. You decide.)
Warren Buffett wants to raise the capital gins tax to 50%, but he still wouldn’t have to pay that amount on the tens of billions of dollars he put into private foundations, and he would still be able to deduct a fifth of that contribution on future tax returns.
Generally, I believe in less taxation rather than more taxation. But somehow this seems WRONG!