A new round of billionaires have committed to taking The Giving Pledge, created by Bill Gates and Warren Buffet, agreeing to leave most of their significant wealth to charity. That’s the good news. But by making these contributions, these wealthy individuals reduce the federal tax base. And not all of these donations are being made to charitable organizations that actually serve the greater public good.
The Giving Pledge, a challenge being taken on by more and more billionaires, is a commitment and promise to give away more than half of one’s wealth to charitable causes – either through estate planning or by gifting during their own lives. Many of these charitable donations go to worthy causes.
However, it is possible that many of the donations go to closely-controlled family foundations that have more questionable charitable intent.
Either way, the giver or his estate receives a tax deduction. When all of the donations are added up it amounts to a massive amount of money that the federal treasury is not collecting through the estate tax.
A recent post on the Oxford University Press Blog entitled “The continuing benefits (and costs) of the Giving Pledge” argues that new laws should be created that tax some of this money going to charity.
In the absence of such a law, the author encourages the billionaires taking the pledge to voluntarily give some of the money to the federal treasury. Of course, since many people do not believe that estates should be taxed at all not everyone will agree with the author’s position.
Nevertheless, it is an interesting question to think about.
Should billionaires who are giving their money away to private charities also feel an obligation to give something to the federal government?