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.

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Many private foundations fund crucial civil society functions such as providing food, shelter, and clothing to the most vulnerable and least capable members of society. The Salvation Army, Goodwill Industries, and pregnancy resource centers all benefit from foundation funding, as do many job training and drug rehabilitation programs.

While many nonprofit organizations benefit from new donors, grants from foundations to organizations that carry out such good work depend on income generated from foundation investments. A tax hike on this investment income would mean less money for voluntary charitable services and more for government programs, which often, and often deliberately, displace private charity.

Under the House Ways and Means Committee legislation that passed this week, foundations with assets between $50 million and $250 million would see their tax rate double to 2.78%. Foundations with assets between $250 million and $5 billion would see their rate rise to 5%, and foundations with more than $5 billion in assets would see their rate increase to 10%. Each of these would force significant cuts to charitable programs.

The motive behind the tax hikes is not entirely baseless. Many foundations, especially those founded decades or generations ago by philanthropists who are now long dead, have drifted from their original missions and, in many cases, actively fund causes antithetical to the cause for which they were created.

Andrew Carnegie, for example, spent millions of dollars founding and stocking free public libraries nationwide before he created the Carnegie Corporation in 1911, which he intended to “help those who will help themselves.”

“One man or woman who succeeds in living comfortably by begging is more dangerous to society, and a greater obstacle to the progress of humanity, than a score of wordy socialists,” he once said.

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But by 1968, the Carnegie Corporation’s annual report promised “aggressive new community organizations which … the comfortable stratum of American life would consider disturbing and perhaps even dangerous.” The corporation has since funded disruptive far-left organizations such as the Mexican-American Legal Defense Fund, National Public Radio, and the Association of Community Organizations for Reform Now. John Rockefeller, who once worried to his lawyer that his Rockefeller Foundation would end up funding the views of professors who drifted toward “socialism and some forms of Bolshevism,” ended up funding the false and anti-marriage research of Alfred Kinsey. Henry Ford II quit the board of the Ford Foundation in 1977 when he concluded that its staff had turned against the free market system that had allowed its creation.

Ensuring that such private foundations stay true to their founders’ missions is an ongoing problem, but taxing all foundations and thereby limiting some of the good work that many of them do is not the answer. The full House and the Senate should work to fix the blunt instrument delivered by the Ways and Means Committee as President Donald Trump’s One Big Beautiful Bill moves toward final passage.