June 20, 2017
David Callahan had an interesting NYT column on the philanthropical efforts of the latest cohort of the newly rich. The piece makes the important point that people like Bill Gates, the Walton family, and Mark Zuckerberg often use their givings to push their specific political agenda. As Callahan points out, these contributions involve a large amount of taxpayer dollars, these very rich people are getting their taxes reduced by roughly 40 cents for every dollar they give. This means, in effect, that Gates, the Waltons, Zuckerberg and the rest are effectively getting taxpayers to put up a large amount of money to support their political agenda in important areas of public policy.
There are a couple of additional points worth adding on this issue. First, these charitable efforts likely have advanced these billionaires in their efforts to get ever richer. This is especially likely to be the case with Bill Gates where efforts to establish himself as a great humanitarian likely discouraged efforts to take more actions against his company’s near monopoly in the computer operating system market. (Also, a program officer in the Gates Foundation once once told me that they would not support any work questioning the usefulness of patent support for drug research because of Gates’ dependence on intellectual property protections.)
The other point is that the foundations themselves help to contribute to inequality with the outsized paychecks given to their top executives. It is common for these people to get salaries at or above $1 million a year. (This is discussed in chapter 6 of Riggged: How Globalization and the Rules of the Modern Economy Have Been Structured to Make the Rich Richer [it’s free.])
It would be possible to require that philanthropies limit pay in order to qualify for tax-deductible status. The president of the United States earns $400,000 a year. (This doesn’t count the special deals for his businesses that Donald Trump gets from those seeking favors.) Many highly talented people compete vigorously for this job. Charitable foundations should be able to find qualified people for the same pay. If not, then they are probably not the sort of organization that deserves the public’s support.
Limiting pay for the top executives at institutions receiving taxpayer subsidies, which would include presidents of universities and non-profit hospitals, should help put downward pressure for pay at the top more generally, leaving more money for everyone else.
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