Probably a fair complaint. I’d question whether enough people with foundations take bald-face risks with enough of the assets to be relevant to tax policy.

More pedestrian stuff (eg expensing a conference in Seychelles) definitely slips through, but we could make the same principal-agent complaint about business expenses or other settings where one person gets to spend money from different buckets that are taxed differently.

I’d challenge the notion that the rules are unenforced though - someone will have questions if you’re living in a house your foundation purchased or somesuch. At the very least several people with an obligation to know better and much less to lose we’re going to be very nervous.