Leaving Wealth to Uncle Sam

January 3, 2011 at 6:53 PM

Writing on the Oxford University Press blog, Yeshiva University law school prof Edward A. Zalinsky argues that the Giving Pledge donors should pledge a portion of their bequests to the federal Treasury. Wealth given to charities upon death is not taxed, as the portion left to heirs will be.

For two reasons, the Giving Pledge donors should direct a significant fraction of their charitable donations to the U.S. Treasury in lieu of the federal estate taxes…First, their billions were created with the help of the nation’s laws, institutions and infrastructure…Second, the future economic strength of the United States is a vital cause.

Zalinsky anticipates counterarguments:

The standard retort is that these billionaires can allocate their money more efficiently and effectively than can the federal government. Perhaps. Nevertheless, the rest of us don’t have the financial freedom of the signers of the Pledge…

I too might allocate my resources more efficiently and effectively than does the federal government. However, I am not afforded that chance…for me and others who work for a living, the vast majority of our contributions to the federal Treasury are involuntary tax payments. We lack the practical option to send the bulk of our money to a charity of our choice – even though we too might direct that money more productively than does the federal government.

He argues that this is an issue of “fairness.” I’m not sure making the rich filter their largesse through inefficient, wasteful government programs just like we working stiffs must is the best way to correct it, though.

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Entry filed under: Big Donors.

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