This editorial was originally published in the July 24 Salt Lake Tribune.
Former Utah Gov. Mike Leavitt and his family explain, correctly, that their charitable foundation, which gave them millions in tax deductions but little to any charity, is legal. The question is: Should it be?
The Leavitt family established the foundation in 2000 and donated nearly $9 million of its assets to it. Since then, the foundation has bankrolled loans, business operations and investments for Leavitt, now secretary of the U.S. Department of Health and Human Services, and other family members. And it has provided them millions in tax write-offs, since the money donated to the foundation is ostensibly going to charity.
But, in truth, very little of the money has gone to help anyone not surnamed Leavitt. Only a little more than $100,000 has gone to charity, and that went mainly to causes of personal interest to the family, including the Leavitt family genealogical society.
The foundation has given Leavitt an interest-free loan of more than $250,000, and he has taken about $1.2 million in tax deductions. The foundation’s assets have provided, among other things, a $332,000 loan to Leavitt Land and Investment Inc., in which the secretary has a substantial interest. This is not philanthropy so much as familial banking with benefits. While the Leavitt family is abiding by the letter of this poorly written law, they are treading heavily on its spirit. Fortunately, the way the Leavitts are using this particular tax structure could be severely restricted under a provision of pension-reform legislation that has passed the U.S. Senate and is now in the House. Congress should act quickly to secure the lid on the Leavitt family cookie jar.
It’s common practice for business owners to take advantage of tax loopholes, and Leavitt was a canny businessman before he entered politics in Utah. Still, it seems to us the business of public servants is to watch out for the public good and for the taxpayer’s pocketbook.
It just doesn’t seem right that a government executive would add a tidy sum to his personal wealth by taking advantage of a little-known law of little worth.
