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Beth Kaufman Comments on Wealth Tax Plans

November 7, 2019, Dow Jones Newswires

The wealth taxes proposed by top Democratic presidential candidates might spark a short-term boom in billionaires' donations to charity, as they accelerate gifts to avoid years of taxes eroding their fortunes.

Facing an annual tax that eats into returns and shrinks wealth, billionaires would have an incentive to move money out of their control -- and out of the wealth-tax base. Otherwise, every year would see more of their money sent to the government for public projects and less to charities of their choosing.

 . . .

The same wealth-tax incentive for accelerated charity could spur other spending, such as political donations or personal consumption. Groups organized under 501(c)(4) of the tax code -- social-welfare organizations that have fewer restrictions than charities and foundations -- could become more attractive, said Beth Shapiro Kaufman, a tax lawyer at Caplin & Drysdale in Washington. But some kinds of consumption -- such as buying property -- would just turn taxable assets into other taxable assets.

For the full article, please visit Dow Jones Newswires' website (subscription required).

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