NY Times: Helmsley Dog Bequest Highlights Need to Reform Charitable Deduction

Ray D. Madoff (Boston College) has published an op-ed in today's New York Times:  Dog Eat Your Taxes?:

The latest news from the Palace, that Leona Helmsley left instructions that her charitable bequest of as much as $8 billion be used for the care and welfare of dogs, rubs our noses in the tax deduction for charitable gifts and its common vehicle, the perpetual private foundation. Together these provide a mechanism by which American taxpayers subsidize the whims of the rich and fulfill their fantasies of immortality. ...

If this were only a matter of Leona Helmsley wasting her own money, no one would need to care. But she is wasting ours too. The charitable deduction constitutes a subsidy from the federal government. The government, in effect, makes itself a partner in every charitable bequest. In Mrs. Helmsley’s case, given that her fortune warranted an estate tax rate of 45, her $8 billion donation for dogs is really a gift of $4.4 billion from her and $3.6 billion from you and me....

We should not give a blank check to support the whims of the wealthy. There should be a limit — a dollar amount or a percentage of the estate — on the estate tax charitable deduction. People could still give to charity as they like, but after a point they would be giving after-tax dollars. The deduction should be lower for bequests to private foundations than for money given directly to good causes.

We should also stop subsidizing immortality. Private foundations should be required to spend more of their assets on charitable work, even if it threatens their perpetual existence.

Until Congress makes these changes to the tax code, it is not just Leona Helmsley’s fortune that is going to the dogs; it is our tax dollars as well.

For more, see ataxingmatter.