Preventing a massive tax hike by making the Tax Cuts and Jobs Act of 2017 permanent is an admirable goal. So is identifying additional sources of revenue to prevent deficits from growing. But imposing an excise tax on private foundations, even on a sliding scale, takes resources away from voluntary private charitable work and transfers them to government bureaucrats. Many private foundations have drifted far from the purposes they were founded on, but a tax increase to deal with them takes a sledgehammer to a problem better suited for a scalpel.

Under current law, all nonprofit charitable organizations pay a 1.39% tax on net investment income. When the Tax Reform Act of 1969 first introduced the tax on net investment income, it was set at 4%, which was subsequently reduced to 2% in 1978 and then to 1.39% in 2019.