Bill Gates pays less taxes as he donates to a charity
Bill Gates runs that charity
Bill Gates then gets to decide how that charity spends his donated money
This then means that he can use what should have been tax to:
Pay himself with the charities money, as he is an employee of the charity
Lobby politicians using the charity’s money
Otherwise direct the charity to work in his best interests
Which part are you disagreeing with? I guess he doesn’t “make money” in the strictest sense, but it sure seems like he’s exploiting the system to keep more of it
Otherwise direct the charity to work in his best interests
I guess you can argue that eliminating malaria is in his best interests, but it’s pretty reaching. I guess nobody should do anything good if it might indirectly benefit themselves.
Fair, in this example Bill Gates isn’t exactly the best one to pick. And the clarification on the lobbying rules is definitely a valuable bit of information, so thank you for adding that.
I was more trying to point out that the original comment wasn’t saying that the tax break “made money”. It’s all about shuffling it around to avoid taxes.
At the end of the day, it allows Bill Gates (or other billionaires) to spend otherwise taxable income on whatever they deem important. Whether or not you agree with how they’re spending their money is irrelevant
$1 in charitable contributions does not lower your tax burden by $1, and certainly not more than $1.
If that dollar would have been taxed as capital gains, assuming 20% capital gains and 3.8% NII tax, it saves 23.8 cents meaning the $1 donation costs 76.2 cents.
If that dollar would have been taxed as normal income, assuming a marginal tax rate of 37%, it saves 37 cents meaning the $1 donation costs 63 cents.
(These two examples are not intended to be an exhaustive list.)
Charitable contributions cost money, just not as much money as they would if there wasn’t a tax deduction.
The above post seemed to be saying that:
Bill Gates pays less taxes as he donates to a charity
Bill Gates runs that charity
Bill Gates then gets to decide how that charity spends his donated money
This then means that he can use what should have been tax to:
Pay himself with the charities money, as he is an employee of the charity
Lobby politicians using the charity’s money
Otherwise direct the charity to work in his best interests
Which part are you disagreeing with? I guess he doesn’t “make money” in the strictest sense, but it sure seems like he’s exploiting the system to keep more of it
Why does Bill Gates earn nothing through the Bill and Melinda Gates Foundation?
A 501©(3) organization is subject to heightened restrictions on lobbying activities, A 501©(3) organization may engage in some lobbying, but too much lobbying activity risks loss of tax-exempt status. Lobbying may not constitute a “substantial part” of the activities of the 501©(3) organization. [1]
I guess you can argue that eliminating malaria is in his best interests, but it’s pretty reaching. I guess nobody should do anything good if it might indirectly benefit themselves.
source ↩︎
Fair, in this example Bill Gates isn’t exactly the best one to pick. And the clarification on the lobbying rules is definitely a valuable bit of information, so thank you for adding that.
I was more trying to point out that the original comment wasn’t saying that the tax break “made money”. It’s all about shuffling it around to avoid taxes.
At the end of the day, it allows Bill Gates (or other billionaires) to spend otherwise taxable income on whatever they deem important. Whether or not you agree with how they’re spending their money is irrelevant
The part where he “gets to keep more of it.”
$1 in charitable contributions does not lower your tax burden by $1, and certainly not more than $1.
If that dollar would have been taxed as capital gains, assuming 20% capital gains and 3.8% NII tax, it saves 23.8 cents meaning the $1 donation costs 76.2 cents.
If that dollar would have been taxed as normal income, assuming a marginal tax rate of 37%, it saves 37 cents meaning the $1 donation costs 63 cents.
(These two examples are not intended to be an exhaustive list.)
Charitable contributions cost money, just not as much money as they would if there wasn’t a tax deduction.