Such people are to be celebrated. They acquire wealth, and then use that wealth to support the communities that supported them. But it seems that we all might be better off if communities and governments had the resources they needed instead of relying on philanthropic endeavors for necessary services. It seems that the city of Vancouver should be able to pay for a third-party review if needed rather than hope the Ed and Dollie Lynch Fund can serve as its piggy bank.
This is an important philosophical and sociological issue that goes well beyond the Lynch family; and it is a relatively new one, at least on the timeline of American history.
When John D. Rockefeller ushered in the era of rich-person philanthropy by establishing the Rockefeller Foundation in 1913, former President Teddy Roosevelt said, “No amount of charities in spending such fortunes can compensate in any way for the misconduct in acquiring them.” And an influential pastor told Congress that the foundation was “repugnant to the whole idea of a democratic society.” And another opponent called foundations “a menace to the welfare of society.”
All of that might be an excessively negative view of philanthropic foundations. People can do whatever they want with their money, and if wealthy people choose to share it, we all benefit.
But as Stanford University professor Rob Reich recently told Vox.com: “What a large foundation represents is the exercise of the power of a wealthy person to direct private assets for some public influence. It’s a plutocratic element in a democratic setting. … Philanthropy can be an exercise of power.”
Reich authored a book, “Just Giving: Why Philanthropy is Failing Democracy and How it Can Be Better.” Which sounds like an interesting premise and one that fits with current discussions about wealth inequality. Because while we should laud those who generously contribute to public endeavors, we also should scrutinize a system that allows such wealth to be accumulated, and we should question the power wielded by dead people. We don’t allow the dead to vote or run for office, but we welcome their influence on public policy through charitable foundations.
Washington has an estate tax with an exemption of $2.193 million per person. It also has no capital gains tax, which allows for the accumulation of wealth based on wealth, rather than sweat or toil. The federal estate tax begins after an exemption of $11.4 million per person; as recently as 2013, the exemption was $5 million.
A handful of people are able to use that system to benefit their communities long after they are gone. That can be a good thing. But it might not be the best approach to public policy.