Grassley Seeks Data on Proposal to Change Private Foundation Excise Tax
WASHINGTON – Sen. Chuck Grassley, ranking member of the Finance Committee, is asking for data to gauge how a proposed change to private foundation excise taxes would affect foundation pay-out rates. Grassley said Congress should have such information at hand before voting on the tax change.
Private foundations generally have to pay out 5 percent of their assets each year as required by law. Foundations currently pay a 2 percent tax on their investment income annually but get a reduced rate of 1 percent in any year in which a foundation exceeds the average historical level of its charitable distributions. A proposal endorsed by the Council on Foundations and being promoted by several senators would flatten the excise tax rate. The foundations claim the current structure hurts them by forcing them to increase their pay-out to be eligible for the 1 percent rate.
“This isn’t something to vote on without having studied who might benefit, who might be hurt, and what effects this would have on foundation payout rates,” Grassley said. “Flattening the rate without mandating that the tax savings be paid out seems like it’s rewarding those who just do the minimum while hurting those who go above and beyond what’s required.”
Grassley said Congress should consider how to fund IRS oversight and enforcement efforts of laws governing private foundations. The excise tax proceeds, which were meant to fund IRS oversight of foundations, currently go to the general U.S. Treasury instead; the proposed legislation doesn’t change this. The IRS has said it does very little oversight of private foundations. In 2004, an in-depth series in the Boston Globe described some abuses resulting from the lack of checks and balances on private foundations. The Globe wrote, “The abuses included excessive salaries paid to foundation board members, many of whom work a few hours a week to approve a handful of grants to public charities; expensive perks for foundation directors, including private jets and luxury cars; and board members who direct legal and investment management contracts to their own companies.” In one case, a Massachusetts foundation executive boosted his salary at a family foundation to $1.3 million to cover the expense of a daughter's $200,000 wedding. In another instance, a Florida foundation spent $36 million to buy a 12-seat jet.
Grassley sought data and an explanation of the need for the requested excise tax change from the Council on Foundations.
Next Article Previous Article
- WYDEN: Trump’s Failure to Enforce USMCA Provisions Leaves Workers, Farmers and Businesses in the Lurch
- Wyden Slams Trump Claim That He Has “Ended The Pandemic” As COVID-19 Cases Surge Nationwide
- Wyden, Grassley, Finance Committee Members Continue Investigation into U.S. Organ Transplant System
- Wyden and Murray Sound Alarm on Trump Move to Stop Diversity and Inclusion Trainings
- Wyden Blasts Continued Attempts by Senate Republicans to Influence the Election with Bogus Allegations