People who want to go after billionaires for taxes should be tackling non-profit charity donations. At this point I am not sure non-profits should get such liberal tax status and that includes churches, NGOs, and billionaire charities.
there is that whole doing good that they're for. I know cynicism is easy to lean into, but let's not forget there is actually an element of good that some of them actually manage to do
It’s not requisite, but the people working there want to do good for the world. It’s not like there’s a non profit out there who’s mission is to do evil.
I think we should be looking for irregularities and investigate based on known accounting practices regardless of entity. A Church that pays taxes is just a business, and maybe they are already, but I'm not interested in religious institutions gaining fixed government representation (beyond what already exists) or becoming a theocracy.
I believe what was intended by "tackling capital income" is reducing the favorable treatment of income derived from capital relative to income derived from labor.
I agree but it doesn't matter either way if donations are a tax write off.
In some cases these are write offs with no personal benefit but in some they are just shifting the money to a place where the user still has complete control. I am ok with throwing the baby out with the bath water here. I want churches, billionaires, school endowments, and everyone else to pay taxes like everyone else.
It's simple, their taxes should go towards the same stuff everyone else's goes to. I also donate to charity, after I pay taxes. It is hard to find a good one. The me myself and I memorial foundation doesn't serve anyone.
The only thing the con got going for it self is a demonstration of government corruption.
I'm no billionaire, but if there's a legal way for me to avoid paying a tax, of course I'm going to do it. Why should billionaires be held to a different standard? Tighten up the laws for everyone instead.
I think that would very quickly become a rat’s nest of proving that something isn’t truly philanthropic. It seems a lot easier to say gifts aren’t tax deductible and raise taxes enough that important social services aren’t expected to be funded by largesse.
I dont think anything can be done about billionaires. I mean Pareto wrote his Circulation of Elites 100 years ago. No one has been able to present a different mpdel that doesnt collapse. Failure of Wikileaks/Arab Spring/no one being held responsible for 2008 gfc/endless wars all are evidence Pareto was right. Lot of energy is being wasted on a mathematical imposability. There are no ecosystems where Nature has got rid off Predators.
That is a difficult problem in general, but in this specific case it's easy because Elon's charity has not been operating legally, as the article says. We could start by just enforcing the existing laws.
Wouldn't most genuine charities be a dollar in and a dollar out type situation, and any unused income/funds that year should be fairly minimal.
The large endowment funds that have billions like Harvard ($50bn) probably have massive excess but at that point I'd have no problem taxing them if they are not spending the excess.
There be some some scenarios where charities get large donation right at FY end and need some rollover function to push funds to the next year's spend before being taxed, or they have to make payment schedules for multiyear projects they are 'saving' for but generally it seems to make sense that charities are taxed.
Other scenarios not considered that would make this a bad thing?
I think there can be some middle ground. Someone I have followed on YouTube for years has done yearly donation drives for a homeless youth shelter around Christmas. They raised maybe 10k a year for a few years. Last time, they decided to go through the effort to setup an endowment for the charity, and raised a couple hundred grand. That charity now no longer has to look for donations during Christmas to provide presents to the kids and meals to families on hard times. I think that's a great thing. I wouldn't want that to go away. I absolutely want tax shelters for billionaires to go away.
Given the paywall, I can't read the article, but a post on Twitter[1] appeared in my newsfeed as related coverage. Perhaps it's been updated to take this into account?
I once worked for a fairly high-net worth individual, and of course he had a charitable "foundation". I couldn't tell what the foundation did besides "own his assets". It certainly seemed like something set up to avoid taxes, but I didn't really get into his business so who knows. Apparently everyone with that much money has a "charitable foundation", or so I'm told.
> But unlike Bill Gates, who has deployed his fortune in an effort to improve health care across Africa, or Walmart’s Walton family, which has spurred change in the American education system, Musk’s philanthropy has been largely self-serving — making him eligible for enormous tax breaks and helping his businesses.
This seems to be one of the pitfalls of setting up our society such that philanthropy funds the public good as opposed to taxes and government: You're at the mercy of the morality of individual rich people. You can get lucky and have Bill Gates steering the money, providing infectious disease research. You can get unlucky and have guys like Musk aiming the money funnel at themselves. You can also get really unlucky and have a not so wholesome "philanthropist" who donates their billions to a terrible or deadly cause, like a group bent on hate, discrimination, erasing people's rights, ethnic cleansing or some other evil. And we, as citizens, have no say in the matter because "how can you tell someone how to spend their hard earned money?"
If a billionaire avoids taxes by giving the money to charity, in a “net gain, net loss” kind of way, doesn’t that mean the public tax-payers are effectively paying the charity? I.e. by missing out on the tax the government would have collected.
So then if the billionaire owns the charity and they are holding the money as assets on the balance sheet, then the public has effectively paid the billionaire right?
> If a billionaire avoids taxes by giving the money to charity, in a “net gain, net loss” kind of way, doesn’t that mean the public tax-payers are effectively paying the charity? I.e. by missing out on the tax the government would have collected.
Yea, as usual, the public gets the worst of both worlds: They partially pay for the charity (through loss of tax revenue) and also have no control over what the charity funds.
Opportunity cost is very different than actual cost, and even further from net loss. It has to do with what the null situation is.
The government could net more money if it sent the army house to house and collected all the valuables, but choosing not to do so isn't costing it money, and it certainly isn't paying those people.
When it comes to US charities, it seems most people dont understand how tax deductions work. Long term capital gains rate are 20% of income. A billionaire pays $1 less taxes for every $5 they donate. So as long as charities are >20% as effective as government, the public is better off with a $5 charitable donation than collecting the $1 in taxes.
> A billionaire pays $1 less taxes for every $5 they donate. So as long as charities are >20% as effective as government, the public is better off with a $5 charitable donation than collecting the $1 in taxes.
Only if the public's good is aligned with where the donation is going.
How much of the money from Bill gates comes in the form of Microsoft windows and office licenses though? not that that makes his philanthropy a bad thing, but there's still a element of self dealing there. Then again, I'm sure he can get a discount for those licenses, so maybe it comes out as better in the end?
Currently it's less self dealing that you probably assume. The global heath stuff is well outside Microsoft's core business.
A percentage of grants from the gates foundation gets spent on access to technology for low income people. But quite a bit of it has been spent on Chromebooks etc not just windows devices.
Though earlier when MS had a more dominate market position spending on access to technology more directly translated into buying MS software.
Oh cool, that’s good to know. My thoughts here are dated back to when Microsoft was the only option and Chromebooks didn’t exist. Seems like that’s changed so there’s less self dealing then
> You can get lucky and have Bill Gates steering the money, providing infectious disease research
Actually Bill Gate's research all goes towards creating more intellectual property he can profit off of. It is an investment strategy with great PR, but is not in fact pure philanthropy. It is philanthrocapitalism. This is why Gates led the push to make sure the covid vaccines were not open source. Despite the millions of lives it could have saved or improved around the world, the opportunity for profit won out over the needs of the global population.
Very true. But, at least if the government is democratic, then the public has (at least in theory, maybe not so much in practice) the ability to vote for one that will direct the money in the direction the public would like the money to go. When it's a private individual, the public cannot do this. You could have the entire country disagreeing with what Philanthropist X donates their money to, and it doesn't matter. There is no way to stop him.
The U.S. government (federal and state) spend more than $10T annually. By comparison, the top 1% wealthy Americans combined donate about 1% of that amount ($100B) annually.
Furthermore, government spending is ostensibly in the hands of the people via our elected representatives. It took me about 15 seconds to Google the San Francisco city budget and see that the city plans to spend $200M(!) on the city's public library this year.
We are not at the mercy of rich people we don't control. Instead, we are at the mercy of the people we elect, who we do control. As things should be.
Sadly, we just don't seem to care very much as a populace. Government budget breakdowns don't make headlines, whereas information about the spending habits of the rich tend to capture our imaginations.
It's also worth nothing that in his prime Bill Gates was not the philanthropist he is today. He "retired" into it. I'm not sure why people have expected Musk, Bezos, etc. to do in their primes what Bill Gates is doing in his retirement.
Comparing government expenditures on infrastructure (roads, bridges, sewers, power grids, schools, libraries), and earned benefits (social security, medicare) with a "charitable foundation's donations" can only be seen as disingenuous. Please don't insult us with this sort of sophistry.
Anything can be compared. In fact, you may be surprised to learn that the entire point of the word "compare" is to point out similarities between otherwise dissimilar things.
>Both the Milky Way and sardine sandwiches are visible objects.
Sure. Aside from that?
I'm trying very very hard to not be pedantic, but you are making that difficult. Thing is, comparing incompatible items is disingenuous.
Another consideration is that Federal, state, and local tax collection currently stands at approximately 40% of US GDP for the US.
This puts a natural upper limit on how much the government can just raise revenue and simply do. Eventually people need to consider not revenue, but instead what they want the government to prioritize, and how efficiently it does it.
I find that most people are in disbelief when they hear this Stat because they think in terms of individual tax rates and not serial multiplication. Take a widget company by way of example. It produces a widget which it sells for profit. Company pays corporate income tax, then passes the rest on to investors who pay income or capital gains tax again. The investor then uses that income to pay sales taxes on anything they buy as well as property taxes and miscellaneous fees.
We have a say in how the government spends our tax dollars? This is news to me. I would prefer that much less be spent on war and military, among other things.
That is the choice that is given to them. Despite all the technology we have for direct communication, data analysis etc, you cannot vote for issues individually, only personalities who if your lucky might follow through on one of their promises about an issue you care about but mostly just politick and look out for their party, themselves and their backers interest. You can't really blame people for not getting involved when that is the state of play. Politics is essentially a game show on the surface and nepotism and self-interest underneath.
there is nothing lucky about having Bill Gates control the massive monopoly rents he collected from us, rents that came at the cost of weakening and holding back (through artificially high prices) progress in microcomputers, a vital and nascent part of our industrial infrastructure.
And maybe billions spent swatting mosquitoes in fever swamps overseas is not the best public policy objective for us, so perhaps his tax deductions should not be able to now divert (through huge deductions) huge quantities of our taxes paid to his pet projects without any democratic consideration.
I would look harder at what companies bill and the waltons are invested in. I would be really surprised if they didn't own startups/other companies that directly benefit from their charitable endeavors.
There is a lot of FUD in this article, Which ignores how charities and foundations actually work.
It mentions that they are required by law to give away 5%, but then ignores the rest of the laws, which are quite reasonable.
>However, a foundation may set aside funds for up to 60 months for certain major projects. Excess qualifying distributions may be carried forward for a period of five tax years immediately following the tax year in which the excess was created.
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[ 3.3 ms ] story [ 152 ms ] threadReally, they should be tackling capital income. But it wouldn’t hurt to also tackle charity donations.
In some cases these are write offs with no personal benefit but in some they are just shifting the money to a place where the user still has complete control. I am ok with throwing the baby out with the bath water here. I want churches, billionaires, school endowments, and everyone else to pay taxes like everyone else.
The only thing the con got going for it self is a demonstration of government corruption.
The problem is how can you protect honest charities and prevent these shenanigans?
So rectifying that means, among other things, being aware of ways in which billionaires can hide their taxes that aren't available to ordinary people.
Wouldn't most genuine charities be a dollar in and a dollar out type situation, and any unused income/funds that year should be fairly minimal.
The large endowment funds that have billions like Harvard ($50bn) probably have massive excess but at that point I'd have no problem taxing them if they are not spending the excess.
There be some some scenarios where charities get large donation right at FY end and need some rollover function to push funds to the next year's spend before being taxed, or they have to make payment schedules for multiyear projects they are 'saving' for but generally it seems to make sense that charities are taxed.
Other scenarios not considered that would make this a bad thing?
Doctors Without Borders annual report says they have $400 million in net assets.
Get rid of tax deductions.
[1] https://twitter.com/hackclub/status/1766937503691428007
> But unlike Bill Gates, who has deployed his fortune in an effort to improve health care across Africa, or Walmart’s Walton family, which has spurred change in the American education system, Musk’s philanthropy has been largely self-serving — making him eligible for enormous tax breaks and helping his businesses.
This seems to be one of the pitfalls of setting up our society such that philanthropy funds the public good as opposed to taxes and government: You're at the mercy of the morality of individual rich people. You can get lucky and have Bill Gates steering the money, providing infectious disease research. You can get unlucky and have guys like Musk aiming the money funnel at themselves. You can also get really unlucky and have a not so wholesome "philanthropist" who donates their billions to a terrible or deadly cause, like a group bent on hate, discrimination, erasing people's rights, ethnic cleansing or some other evil. And we, as citizens, have no say in the matter because "how can you tell someone how to spend their hard earned money?"
So then if the billionaire owns the charity and they are holding the money as assets on the balance sheet, then the public has effectively paid the billionaire right?
Yea, as usual, the public gets the worst of both worlds: They partially pay for the charity (through loss of tax revenue) and also have no control over what the charity funds.
The government could net more money if it sent the army house to house and collected all the valuables, but choosing not to do so isn't costing it money, and it certainly isn't paying those people.
When it comes to US charities, it seems most people dont understand how tax deductions work. Long term capital gains rate are 20% of income. A billionaire pays $1 less taxes for every $5 they donate. So as long as charities are >20% as effective as government, the public is better off with a $5 charitable donation than collecting the $1 in taxes.
Only if the public's good is aligned with where the donation is going.
A percentage of grants from the gates foundation gets spent on access to technology for low income people. But quite a bit of it has been spent on Chromebooks etc not just windows devices.
Though earlier when MS had a more dominate market position spending on access to technology more directly translated into buying MS software.
Actually Bill Gate's research all goes towards creating more intellectual property he can profit off of. It is an investment strategy with great PR, but is not in fact pure philanthropy. It is philanthrocapitalism. This is why Gates led the push to make sure the covid vaccines were not open source. Despite the millions of lives it could have saved or improved around the world, the opportunity for profit won out over the needs of the global population.
Vandana Shiva co-authored a report critical of Gate's work, if you want to learn more: https://navdanyainternational.org/publications/report-synthe...
Governments suffer from similar issues though. They can and do use your money for all sorts of bad things, even in democratic countries.
Furthermore, government spending is ostensibly in the hands of the people via our elected representatives. It took me about 15 seconds to Google the San Francisco city budget and see that the city plans to spend $200M(!) on the city's public library this year.
We are not at the mercy of rich people we don't control. Instead, we are at the mercy of the people we elect, who we do control. As things should be.
Sadly, we just don't seem to care very much as a populace. Government budget breakdowns don't make headlines, whereas information about the spending habits of the rich tend to capture our imaginations.
It's also worth nothing that in his prime Bill Gates was not the philanthropist he is today. He "retired" into it. I'm not sure why people have expected Musk, Bezos, etc. to do in their primes what Bill Gates is doing in his retirement.
That's a comparison that's not disingenuous.
If you're going to label a comparison as disingenuous, the onus is on you to provide a reason why. Otherwise, you're being unreasonable.
Sure. Aside from that? I'm trying very very hard to not be pedantic, but you are making that difficult. Thing is, comparing incompatible items is disingenuous.
This puts a natural upper limit on how much the government can just raise revenue and simply do. Eventually people need to consider not revenue, but instead what they want the government to prioritize, and how efficiently it does it.
I find that most people are in disbelief when they hear this Stat because they think in terms of individual tax rates and not serial multiplication. Take a widget company by way of example. It produces a widget which it sells for profit. Company pays corporate income tax, then passes the rest on to investors who pay income or capital gains tax again. The investor then uses that income to pay sales taxes on anything they buy as well as property taxes and miscellaneous fees.
Sadly most people don’t even vote for issues anymore. They just vote along party lines.
And maybe billions spent swatting mosquitoes in fever swamps overseas is not the best public policy objective for us, so perhaps his tax deductions should not be able to now divert (through huge deductions) huge quantities of our taxes paid to his pet projects without any democratic consideration.
It mentions that they are required by law to give away 5%, but then ignores the rest of the laws, which are quite reasonable.
>However, a foundation may set aside funds for up to 60 months for certain major projects. Excess qualifying distributions may be carried forward for a period of five tax years immediately following the tax year in which the excess was created.
https://www.irs.gov/charities-non-profits/private-foundation...