Opinion: Some Charity Dollars Should Be Taxed

If the late Leona Helmsley’s mammoth bequest to her dogs was taxed like the rest of her estate, $3.6-billion of the $8-billion she left to their care would have been paid in taxes — a sum that amounts to a federal subsidy of one person’s charitable intent, writes Ray D. Madoff in a column in The New York Times.

Ms. Madoff, a professor at Boston College Law School, says that the current system of allowing for tax-free charitable donations does not necessarily mean that such gifts are given for the broad public good. She cites Ms. Helmsley’s bequest as a key example. She also takes issue with the rule that requires private foundations to pay out 5 percent of their assets annually, saying the rule guarantees their perpetual existence and even allows for internal fees to be included in the payout sum.

Ms. Madoff calls for changes in the tax code that would tax charitable gifts above some set limit and require foundations to pay out more of their assets, even if doing so threatens their 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,” she writes.

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