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Comment by maxerickson | Hacker News Reader

Any tax benefit from putting money into a foundation is limited to the money put into the foundation. So if you put $1 into a non profit, the government forgoes collecting the tax on just that dollar.

The way this can be used to protect money from taxes is to establish a foundation that then employs you and your descendants. The money paid out is taxed, but the principle can sit there untouched.

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Exactly true, however he's donating STOCK not money. So he's avoiding the taxation on the stock gains that he would have seen, which could easily have been upwards of 50%. Then, yes, he can be employed by and can expense costs to his foundation - so that money that he's not being taxed on is still within his control.

However, the bigger deal is that he can use that foundation to wield significant power and to distort public policy to his benefit.

Foundations of course, can invest in for profit companies, whose goal it is to generate returns for the foundation.

Foundation -> invests in a holding/investment company -> invests in a property company -> invests in a special purpose vehicle that owns a $100m NYC penthouse. Check.

Check out Ikea; it's a non profit.

For other organizations that are split into a for-profit/non-profit, check out Planned Parenthood and the Lance Armstrong Foundation. Genius move, really.

John Malone is a great example of how understanding taxes really well can help create significant wealth: http://www.bloomberg.com/news/articles/2014-11-03/malone-gai...

Let's not assume the worst here and consider the intent/effect is to effect influence on public policy toward his philanthropic or otherwise closely held goals.

It's possible he may not be Lex Luther, _lex.

My understanding is that stock gains are (in this case) LONG TERM capital gain, and therefore only 20% [1].

[1]: https://en.wikipedia.org/wiki/Capital_gains_tax_in_the_Unite...

The number is closer to 33% as long term capital gains are taxed as income in California.

More. 20% (federal LTCG ) + 3.8% (medicare) + 12.3% (CA) + 1% (CA mental health surtax over $1mm/yr). 37.1% (more like 35% since you can deduct state on federal).

vs. 15% and no state tax if you lived in other states before recently. or, 0% up to $10mm gains if you held a stock for 5Y and bought it before 2012.

That's 20% on stock you haven't liquidated. If you own a few hundred million in stock, that's a hefty CASH tax bill you have to pay for gains that haven't materialised.

Isn't this what Sarah Palin did for her daughter... they setup a non-profit "foundation" for teen pregnancy awareness or some such and then paid Bristol Palin some absurd salary as the head of the NP.

Who is "they"? The foundation that paid Bristol isn't run by Sarah.

IMO, $262,000 is a lot to pay a spokesperson for a year's work, but at the same time, it's very little to pay someone who comes with a ton of free PR due to who her mom is.

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