Is it true that our tax laws that allow individuals to donate tax free, as much of their assets as they wish to charitable causes is really another gift to the rich paid for on the backs of the rest of us? Ray Madoff, Boston College Law School Professor, would have us so believe. And her point is one that should give us all pause. Noting Leona Helmsley’s bequest of $8 million for the care of dogs, she questions the acts of other similarly wealthy individuals, their private foundations, idiosyncratic causes, their search for immortality, and, of course, the charitable deduction laws that provide them this playground.
Helmsley’s $8 million gift, Madoff explains, is really only a $4.4 million gift from her estate, and a $3.6 million dollar gift from taxpayers. What, you say? Given that her estate would be taxed at 45%, the government just lost $3.6 million in estate taxes, as that is what would have been owed on her $8 million had it not gone to charity. I wonder how we, the taxpayers, might have spent that $3.6 million had we been asked. Were I asked on my 2008 tax return how I would like my share of that $3.6 million spent, and my choices were dogs, early childhood education, feeding the hungry, or literacy programs, I’d have a hard time selecting amongst the last three options. But the dog thing just wouldn’t be there.
And before you jump, don’t misunderstand: my family and I love animals; we give much to causes that ensure the care and feeding of dogs, cats, whales, endangered species, etc. But it is a rather niched interest, unlike the other choices which, based on the number of such organizations and programs and the dollars they receive, are not so niched. So, if donors seeking to avoid tax payments get to select their charities of choice, shouldn’t taxpayers be allowed to do so, as well?
Perhaps Helmsley should have been allowed to give $4.4 million to the dogs and while the taxpayers were asked how to distribute the other $3.6 million. I doubt that any employee of a nonprofit would argue that tax benefits for charitable donations should be eliminated. And I’m sure the wealthy, charity-inclined individuals would agree. But Madoff’s implied question lingers and begs to be addressed: who or what do these laws really benefit—the wealthy or the public good?