When I feel an idea I’m about to write about verges on weird, I bring out my friend the Supreme Grand Poohbah. He was the one to suggest an easy way to save Social Security for future generations. Eventually, it would eliminate the employment tax forever.
Eliminate the Employment Tax???
Yes. You read that right. Eliminate the largest tax most Americans pay. According to an analysis by left-leaning American Progress.org, 67.5 percent of all taxpayers pay more in payroll taxes than income taxes.
You can read that column here. Or read my CliffsNotes. We can eliminate the employment tax by creating a National Retirement Fund. It is funded at the birth of each child with an initial investment of less than $7,812. This puts compound interest on our side.
We’re Short on Babies
Only 3.7 million babies were born in the US in 2022. So, the highest amount of money that would be required would be no more than $29 billion for the year. It could be less if you make a more generous rate of return assumption.
In the same year – 2022 — the federal estate tax collected $24 billion. While there is much handwringing about the cruelty and cake deprivation caused by the estate tax, it’s handy to note that only the top 1 percent of all households are subject to the tax.
How can that be? Easy. Each person got an exemption of $12 million in 2022. It has risen to $14 million for 2025.
And, before I forget, the exemption is per-person. A couple, with modest tax planning, can have an estate of $24 million and avoid the dreaded, senselessly cruel estate tax.
But here’s the wonder. When I wrote that column, I had not examined charitable giving in America.
An Eye-Opener
According to Giving USA, American philanthropies contributed $592.5 billion to nonprofit organizations in 2024. That’s 20 times the maximum amount required to fund each newborn at birth. A small incentive to fund the future, year by year, would lead to the elimination of the largest tax most Americans pay. That, in turn, might lead to a unique political change — rational discussion of tax policy. (But I’m not going to hold my breath.)
Indeed, a relatively new portion of the charitable giving world, donor-advised funds, provided grants of $54.77 billion in 2023 – enough, all by themselves, to save Social Security and end the employment tax.
To be sure, donor-advised funds won’t devote 100 percent of their grants to this project, but they are only a relatively new part of total charitable giving. They also have an unexpected origin, proof positive that mixing abundance with the chance flapping of butterfly wings can have amazing results.
Here’s the story.
Lunch with Ned Johnson
Decades ago, when I was still living in Boston, I ran into Ned Johnson. He was the head of Fidelity Investments. It was Saturday and we were both summer bachelors. I knew him from my job as Business Editor and personal finance columnist for the Boston Herald American. But we also had a mutual friend. A Boston Brahmin like Johnson, he had told me of water skiing with Johnson in morning suits during a wedding celebration.
Try the Cannelloni!
We went to the Marliave Restaurant and had lunch on the rooftop terrace. If you’ve seen the 1968 version of “The Thomas Crown Affair,” you’ve seen the place. Just remember that neither Johnson nor I resemble Steve McQueen.
I asked Johnson why the annual meetings for his newer funds were in Boston but the annual meetings for the oldest funds were in Miami.
“That’s where the shareholders are,” he answered. He went on to explain that mutual funds have a life cycle. They grow and add shareholders when they are new. But eventually the aging shareholders outnumber new shareholders and the assets in the fund decline. It bothered him. It meant Fidelity would lose shareholders and assets. There was no way to avoid death.
But Johnson Was Not One to Give Up.
Decades later, in 1991, I went to the Dallas Country Club for a presentation by Fidelity Investments. I went with my friend Ed Fjordbak. Ed was then head of the Communities Foundation of Texas, one of the largest and fastest growing community foundations in the country.
Ned Johnson had found a way. Fidelity introduced the first donor-advised fund. Modeled on community foundations, it was a way to allow small investors to avoid the costs of establishing a foundation. Instead, they could give money to a fund. The fund would manage the money before and after your death and make grants according to your wishes.
Fjordbak ground his teeth. He saw the Fidelity offer as competition. Worse, it was competition that was likely to be imitated.
It was. Today, Fidelity, Schwab and Vanguard are the top three donor-advised funds in a field of hundreds.
In fact, the new funds were just another way to release our amazing abundance and care.
Related columns:
Scott Burns, “The Supreme Grand Poohbah Saves Social Security,” 5/4/2025: https://scottburns.com/the-supreme-grand-poohbah-saves-social-security/
Sources and References:
National Philanthropic Trust: The 2024 DAF Report: https://www.nptrust.org/reports/daf-report/
Transparent Hands: “The List of Top 10 Donor-Advised Funds in the USA: https://www.transparenthands.org/the-list-of-top-10-donor-advised-funds-in-the-usa/
Fidelity Charitable 2024 Annual Report: https://www.fidelitycharitable.org/insights/2025-giving-report.html
Schwab DAF360 2025 Annual Report: https://www.dafgiving360.org/giving-report
Vanguard Charitable: https://www.vanguardcharitable.org
Giving USA: “Giving USA: U.S. charitable giving grew to $592.50 billion in 2024, lifted by stock market gains,”: https://givingusa.org/giving-usa-2025-u-s-charitable-giving-grew-to-592-50-billion-in-2024-lifted-by-stock-market-gains/#:~:text=estimated%20%24592.50%20billion%20to%20U.S.,by%20individual%20and%20corporate%20giving.
Don’t Quit Your Day Job wealth percentile calculator: https://dqydj.com/net-worth-percentile-calculator/
Nick Buffie, “5 Little-Known Facts About Taxes and Inequality in America: 8/30/2022: https://www.americanprogress.org/article/5-little-known-facts-about-taxes-and-inequality-in-america/#:~:text=For%20most%20Americans%2C%20including%20the,in%20income%20taxes%20in%202022.
Jules Spector and Matthew Dickey, “Tiny Story: The Marliave Restaurant,” 7/08/2021: http://www.bostonpreservation.org/news-item/tiny-story-marliave-restaurant
This information is distributed for education purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, product, or service.
Photo: Scott Burns, 6/21/2008 Launch of 3 restored New York 30 yachts.
(c) Scott Burns, 2025