Quirk in Senate Rules Could Kill Newman's Own

The food company Paul Newman gave to his charitable foundation months before his death in 2008 may have been doomed by a quirk in Senate regulations. The tax overhaul recently passed by the Senate included a measure that would have spared Newman's Own a crushing 200% tax, but it has been axed by Senate Parliamentarian Elizabeth MacDonough, Politico reports. MacDonough is in charge of interpreting the Senate's rules, a role that includes deciding what measures can be passed under the "reconciliation" process Republicans are using to pass the tax bill. Newman's Own faces the tax under a 1969 law that states private foundations can't own more than 20% of a business.

The Newman's Own Foundation—which passes all after-tax profits to educational and charitable organizations—owns 100% of the company and has already received an extension to the deadline by which it was supposed to divest its holdings. News that the provision removing the punitive tax had been deleted was a "bolt from the blue," foundation president Bob Forrester tells Politico. "It was a stunning, devastating, brutal even, notification when I had heard this had happened." He says unless the provision is passed somehow, Newman's Own will have to start breaking itself up early next year. MacDonough cut more than a dozen other measures from the Senate bill, including a provision for tax breaks for people hit by flooding. It is possible for lawmakers to overrule her, though this almost never happens. (More Newman's Own stories.)