On endowments: simple change.

Reader comment on: Taxing Charities

Submitted by Lyle (United States), Oct 26, 2011 16:49

Enforce the rule on perpetuties against foundations, i.e. they must terminate after x years, with a payout ratio of 1/x of their balance, where earnings must be distributed immediately. Of course this problem is not new there used to be rules against giving land to the church in England before Henry VIII, because that land ceased to pay taxes, but Henry solved the problem by taking over all the land.

Actually Bill Gates has the right idea in that his foundation has a drop dead date, and Buffett agrees with the idea.

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