The classic billionaire tax move. Donate money to your own foundation to work on things you want while getting a big tax break.
Just because someone is a billionaire or not shouldn't determine whether their charitable contributions are self-serving or not. Millions of people donate to their churches on a weekly basis and directly benefit from those contributions as well.
[0] https://www.irs.gov/charities-non-profits/charitable-organiz...
Musk's behavior being currently legal or incentifized is kinda beyond the point.
When street parking laws have nothing to do with wether you’re rich or not, that becomes an issue. Charitable contributions having nothing to do with it is (to me) an issue.
TBH I’m atheist, so my sympathy for churgoer tax breaks is limited, but I’d argue donation to orgs that benefit yourself shouldn’t be tax free in general. To take a silly example: if my street looked like a garbage slum and I made a non profit to make it look gorgeous, while there might be wider communal impacts, it’s something I and the street residents should have been doing anyway, and with no tax break involved.
Who exactly is this perfectly unbiased, disconnected, non-influencable group of people you call “our government”?
That $5.7B is still effectively his, untaxed.
In addition it’s also great for asset protection. For example if he gave a personal guarantee on some of the Twitter debt, then moving money into the foundation (as long as his Twitter stint was not fraud) will remove that out of his name and make it untouchable to the banks.
He can now use those funds to support trips to Mars and other projects. For those projects the charity might pay his expenses - for example a flight to attend a meeting in Hawaii. He can even use the money to hire his kids. The kids would have a much lower (w2) tax rate so effectively he reduced tax but kept the money in the family.
Another thing people are missing is that it's not an income tax dodge, but rather an estate tax dodge. The money will remain in control of his heirs, assuring they'll never go hungry or want for a place in the world.
It also creates more opportunities to play with asset valuations to evade taxes (eg separate the financial and voting interest of some stock in a closely held company, then claim the financial interest is worth very little without the control interest). But it's impossible to know if this is actually being done without seeing tax filings, including his (eventual) estate tax filing.
A distressingly large slice of eligible voters don't even understand how marginal tax rates work. Which is, like, the absolute minimum to have any clue whatsoever how US income taxes are applied, what tax bills will actually do if they become law, and so on. I'd be surprised if understanding of how deductions work is any more widespread.
[EDIT] Not a great source, but it's in-line with the results I've seen from better ones in the past:
https://today.yougov.com/topics/politics/articles-reports/20...
Roughly half don't understand how marginal tax rates work.
Can't find data on how many US adults understand how deductions work, but I doubt it's better.
Almost certainly much much lower seeing as how a ton of people here don't understand how deductions work.
To run the numbers on the 37%:
Charity: 5.7B deduction * 0.37 rate = 2.109B value of the tax deduction
Selling: 5.7B deduction * (1-0.37) = 3.5B value of the stock sale
In addition, the shares were at an inflated value - if he dumps 5.7B onto the market, it's going to drop the value of the remaining 100B of shares. Whereas by donating to the charity, you get the 5.7B deduction, and the fund you donated to does not even have to sell the stock. Even if the stock drops shortly after, such as in this case, he still gets to keep the large deduction. See https://dlj.law.duke.edu/article/insider-giving-avci-vol71-i..., illegal but unenforced.
Also, he can use the charity money anyway to pay for various things he feels like spending money on - other billionaires have used personal charities to settle lawsuits, employ their children / cousins, invest in businesses of friends, etc.
Now say I make the same $100 but I give $20 to a qualifying nonprofit. I have $80 left, on which I pay 35% ($28), leaving me with $52.
I have $13 less than I would have without the contribution. But if I own the nonprofit, funds under my control go from $65 to $72.
It is under your control, but you can't use it to buy a Hawaiian island vacation home.
At that point it comes down to regulators’ appetite and ability to enforce, and of course the worst cast is some fines. As long as the EV of fines for inappropriate spending that is caught is less than the tax savings from both caught and uncaught abuses, I’m still ahead.
But really I don’t think the abuses are that overt anyway; Elon can buy his own Hawaii property. These things are usually more funds to hire friends and family and engage in political/social spending at lower effective costs.
Or are we talking about the charity workers themselves living it up... like we've seen in those famous recent fancy houses purchases in Canada and UK.
If I'm gay and donate to an LGBT rights charity, I would love to see direct benefit.
If I play sports and donate to my nonprofit Club, I also hope to see direct benefits.
Charitable donation by definition is donating to things that Advance your priorities. Those might be a world with less hunger, saving lives, or whatever. Nobody donates to charities that work against their priorities.
Here's a nice 6 million dollar house bought by a charity:
https://nymag.com/intelligencer/2022/04/black-lives-matter-6...
And a nicer 8 million dollar house bought by the same charity (all cash, must be nice)
https://www.washingtonexaminer.com/restoring-america/fairnes...
you see stories like this in the news fairly often, this is just two recent examples.
My point was simple, someone said charities cant buy houses, but they in fact can and do.
Maybe I wasn't clear, but my point what that charities cant legally operate for the sole benefit of the donor.
I used buying a vacation home as example of this. A charity cant do that legally. A shady charity might buy a headquarters as a pretext an use it as a vacation home.
I know for my self, I don't really care when I donate 1-2 $/eur. I don't think that in "value" terms because amount is so small and often I don't question too much (or investigate) where the money goes. But if I donate $500 then I try to gather as much information as I can about the organization, people involved, previous projects etc. I can imagine this feeling (having control) would only be amplified if I tried to donate millions of dollars.
Let's say you give $50 to your charity from your $100. Then you "borrow" it back from the same charity to invest. You chose a high dividend investment strategy and make $10 in dividends alone. You pay $17.50 on your taxable income ($50) and $1.5 on taxable gains ($10). You can donate, borrow, and spend through that charity until the day you die. And you would still pay less in (19%) than your average working stiff.