Tax the Wealthy and Their Charities Will Suffer
Nonprofit organizations would probably get more donations but become less efficient.
Pre-wealth-tax art lovers.
Photographer: Nicholas Hunt/Getty Images North AmericaAmerica’s corporate economy has long been divided between a taxed, for-profit sector and a non-taxed, not-for-profit sector. This division has significant implications for tax policy: To wit, if the wealth gained from for-profits is penalized, the nonprofit sector will also suffer.
Consider the wealth taxes that have been proposed by Elizabeth Warren and Bernie Sanders. Even an apparently modest annual wealth tax of 2% could, applied cumulatively, erode most of the value of an asset over a few decades. In response, billionaires won’t be so keen to hold those assets in their personal portfolios; they may decide to place more of them in their personal foundations and in donor trusts.