Newman's Own Tax Break Matters Far Beyond Just One Foundation
It sells pasta sauce, lemonade, and 31 kinds of salad dressing with Paul Newman’s face splashed prominently on the label. Its profits go entirely to charity. And, if the GOP tax bill passes, it will more or less have a section of the U.S. tax code all to itself.
The Newman’s Own Foundation isn’t mentioned in the Senate or House tax bills by name, but appears to be the target of a specific carveout—among the many highly targeted breaks and exemptions in the new GOP tax plans.
The unusual structure of the Newman’s Own Foundation, a nonprofit charity that wholly owns a for-profit food company, leaves it vulnerable to a punitive 200 percent tax that would break up the arrangement, and for the past nine years it has spent hundreds of thousands of dollars lobbying Congress to change U.S. law so it can be exempt.
In this fall’s tax overhaul, it looks like Congress is complying. Both the House and Senate tax bills contain a small provision with an almost impenetrable title—an “exception to the private foundation excess business holdings rules for philanthropic business holdings”—that would let the foundation keep owning the company without the tax penalty. The carveout, sponsored by Sen. John Thune (R-S.D.) and Rep. Dave Reichert (R-Wash.), could spare another 20 to 30 foundations that would face a similar fate in the future...