"The Rockefeller Family Offloads Its Oil Holdings" (and we should start taxing foundations)

Personally I think it's time to tax foundations (and carried interest) and just do away with these multigenerational wealth (and power) transfer entities. More after the jump.

From Penta:

The Rockefeller Brothers Fund—the $866 million-asset foundation started in 1940 by John D. Rockefeller Jr.’s five sons—announced in September that the family would divest itself of all their coal, tar-sands, and fossil-fuel investments held in the fund’s endowment. The eight Rockefeller family trustees and nine outside board members decided the fund needed “to better align its endowed assets with its mission” of combating climate change.

The irony of Standard Oil’s heirs shedding fossil fuels wasn’t lost on the media. “Rockefeller Brothers Fund forsakes its legacy,” screeched the tabloid headline of normally polite NPR. The fund holds less than 5% of its portfolio in fossil fuels, down from 7% when it began divesting in 2014, and it has reduced its coal and tar-sands assets to just 0.8% of the overall endowment. RBF hopes its endowment will be fossil-fuel free in the next three years.

Seven months after the announcement, Penta circled back with a pointed question: Where are the Rockefeller heirs reinvesting their former “dirty” money? The answer: clean technologies like solar and wind energy. Some readers might roll their eyes, but we’re giving them a pass. The Rockefeller family foundation is shrewdly leveraging its asset base, not just its grants, to have more impact in the family’s chosen field of battling climate change. “If we’re only using the 5% we’re required to pay out each year in grants,” reasons Stephen Heintz, president of RBF, “we’re underutilizing our assets.”

Clean-energy investments will eventually make up as much as 10% of the fund’s overall endowment. But earning healthy returns from a portfolio is rather important, too. Will their squeaky-clean investments fare better than fossil fuels? It’s too soon to tell, concedes 35 year-old Justin Rockefeller, RBF trustee and son of John D. the fourth. “But it’s obviously helped us that the price of oil dropped,” he says, before dryly adding that there are “some conspiracy theories out there.”...MORE

A 2012 post: "TAXES, CAPITAL AND JOBS":

Over the last few years I've come to believe that all income, earned and unearned, should be taxed at the same rate, that preferential taxation of capital no longer leads to the intended policy effects of job creation and increasing capital investment in plant. property and equipment but rather is a bought-and-paid-for scam perpetrated by the financier class.

On a related point, it's time to get rid of the carried interest loophole which taxes income at cap gains rates for private equity and hedge funds.
That carried interest should not be treated as a capital gain can be proven quite easily.
Show me one tax return where a carried interest capital loss was allowed.
[you won't be invited to any of the meetings ever again -ed]

At the lower end of the income scale there should be some minimum tax. Everyone should have some skin in the game.

I'll be coming back to all these topics throughout 2012, in the meantime here's the granddaddy of Econ papers for folks interested in this stuff, sincere thanks to the reader who turned my vague recollection of the thesis into an actual PDF copy. It is as pertinent and fresh today as the day it was written, 34 years ago.

TAXES, CAPITAL AND JOBS
By Mason Gaffney
A paper delivered to the National Tax Association, Chicago, August, 1978.
Adapted for use in a course in Macro-economics, Winter, 1996.

INTRODUCTION
We hear a lot these days about the need for more capital to make jobs. Some of what we hear and read we may discount as self-serving, lobbying for more preferential tax treatment of profits. Yet there is a case argued by sincere and public-minded people on objective grounds which we must take seriously.

It had better be a good case, because it goes far toward destroying the progressivity case, the one on which the American public has bought the income tax concept. Preferential income tax treatment of property income cuts off the top brackets of income receivers from tax liability, especially when we exempt capital gains. Preferential treatment exempts or favors the unearned increment to land values, especially again when we favor capital gains. The thrust of proposals being seriously advanced today is to convert the income tax into simply another payroll tax, socializing a large share of personal effort while eliminating the public equity in the land and capital resources of the nation.

Preferential tax treatment for property also destroys the neutrality or uniformity argument for income taxation. It encourages substituting capital and land for labor. It forces higher rates on personal effort, thus weakening the incentive to work while maximizing the incentive to lobby in legislatures and the Congress for public works and other federal outlays which create unearned increments to land values....MUCH MORE