The Nonprofit Boom
9th October 2007
Arnold Kling has some interesting speculations, but it makes sense. If taxes are high, then people tend to do things that aren’t taxed. If profit is penalized, then people tend to do things that are nominally not-for-profit.
I’ve always thought that the perfect inheritance-tax-avoidance scheme would be to leave all the money to a “charitable” foundation, with self-selecting trustees. Give each of the kids a trusteeship for about $75k a year, the only duties of which are to attend quarterly meetings (expenses paid) and vote on where to put the 5%-a-year the law requires to be distributed. Poof, a self-perpetuating gravy train like one of the ancient estates of Old England. Not a shred of profit or taxable activity to it, and everybody winds up quite comfortable.