How the Rich Reap Huge Tax Breaks From Private Nonprofits

The journalist (Jeff Ernsthausen) was able to bargain their way into non-public tours, that provided evidence of tax evasion.

Basic sleuthing (photos of premises from the street, phone inquiries about hours, etc) seems like it'd qualify as first-hand information.

Sounds like a business opportunity then — the company just needs a lawyer on staff. Whistleblower fields the company with a tip, company splits the SEC reward with the whistleblower, maintains anonymity.

For SEC compliance reporting, I’ve seen banks take it both very seriously and provide the absolute minimum to pass muster such that the COs could barely do their jobs.

What’s clear is that the “same old” and “reasonable” approaches aren’t working, and a disruption is needed.

Yes, fraudsters will take full advantage of it.

Your example shows why we need more auditers and more frequent auditing, not less.

“The agency had never expected to pass, however, due to accounting issues officials said could take years to fix. Because accounting records needed to complete the assessment were not available, all five audits received a “disclaimer of opinion,” though there have been improvements each time. ”

https://thehill.com/policy/defense/3740921-defense-departmen...

The objection you’ve raised, if anything, highlights the need for a neutral outside party to annually audit and create thorough paper trails for very large organizations.

Do you want to pursue this line of argument further?

My observation is that size matters. Generally speaking: The larger an entity is, the more difficult it becomes to be a benefit to the public. The ability to cause harm doesn't diminish the same way (if at all).

Governments and NGOs at least have a realized duty to be a public benefit.

The same obligation is typically not recognized for corporations (eg: Shareholder good is applauded - even while it brings brings detriment to society, employees, the company).

Which phone company do you positively like ? Which internet operator are you paying because you want them to thrive ? How do you feel about Qualcomm and feeding them money ?

Were capitalism regulated, I'd agree with you - however the reality is that capitalism these days has devolved into monopoly and rent seeking:

Unhappy with your phone and especially internet provider? Good luck finding a new one, in most cases there is no competition at all or it's just as bad. Unhappy with your social network, say because there are too many Nazis and conspiracy theorists running rampant? Bad luck, no federation requirement means you'll lose all your followers and they'll lose you. Unhappy with your bank? Competition is just as fucked up. Unhappy with your railroad transport provider? Tough luck, they own the rails so you can't get another company to ship your stuff. Unhappy with your phone or PC operating system? Good luck, in the best case you just have to buy all your applications again (if they are even available at the competitor), in the worst you'll have to live with frankly sub-par open source alternatives. Your email provider banned you because you sent a photo of your naked child to the pediatrician? Even an international media outrage won't help you get your account, your digital life back.

The list goes on and on and on, and the common point is that anti-trust enforcement has gone completely down the drain.

But tbf, after a decade of a many public sector projects, I have first-hand seen really incompetent and wasteful actions on huge scales. Perhaps there should he a whistle blower program for reporting such things?

Look at Japan, across the board, as just one example, now look at the US - you genuinely think there isn't substantial incompetence and corruption here?

Watch out for propaganda, it comes in many forms, from a variety of sources. One of those is your own consciousness.*

But separately, what does "competent" mean? Is it a measure of waste, as in we could've done what the DoD does for less? Is it a measure of useless spending, as in we shouldn't have spent money on X because X doesn't work? I don't think the (narrowing to the federal government here) the US has a monopoly on wasteful or misguided spending. I think anyone here who's worked for a company can come up with plenty of examples of incompetent spending by their employer.

I think "the US is bad at spending money so it should spend as little money as possible" argument is really weird framing, because it implies that there's some entity out there that's actually good at spending money. But if anyone can find one at a large scale, or even define what "good" means, I'm interested.

Or, I'm sympathetic to a "large entities are necessarily bad at spending" argument, but then I think we need to assail big corporations with the same zeal we assail big government.

Parks and libraries are pretty well managed, too.

This is not universally agreed upon. Military spending has been a deeply controversial topic along political lines given its overall amount and lack of transparency.

As far as examples of competent spending goes, there are plenty but they tend not to get as much attention as the failures do. A big example that most aren’t aware of are the government backed small business loans granted by SBA. Clean energy subsidies are another (Tesla was originally capitalized by a government clean energy grant).

You might not have known that about Tesla, but you’re more likely to have heard about Solyndra, which was funded by the same initiative and tarred in the press as an example of wasteful spending. US gov stimulates a ton of business investment behind the scenes that often goes unnoticed.

I also think the relevant question here is “compared to what?”. The built in assumption is that the public sector is extremely wasteful compared to private but large private companies are also extraordinarily wasteful. Think of the amount of money Meta pisses away every year on frivolous stuff that goes nowhere.

You have to weigh that against the negative effects of profit maximisation of commercial entities for the consumer. To what extent is "Can I get away with making this product/service shittier and increase profit margins?" cause of a life getting more expensive and difficult for the average person? Take healthcare. It is getting more expensive with an aging population needing more care. But also large chunks of the healthcare supply chain become ever more commercial, with companies exploiting their cozy niche for every penny.

That question, without an agreed-upon definition of "competent," has built-in Schrödinger goalposts. Is it competent? Is it not? Is it the superposition of both?

The theory of privatization solving problems is predicated on the assumption that competition will exist. Competition in the private sector cannot be assumed to always exist.

Typically, sizable problems that need solving do not stay fixed. Issues that have broad impact are likely either chronic or will morph into new problems.

Downsizing in the face of a chronic problem seems unwise. So does downsizing to ignore the the offshoot (or new variant) of the problem.

Good heavens no.

Turn over the bureaucracy every few years, bringing in political sycophants to replace people who actually understand the system (and, by and large, follow the law instead of kowtowing to the current demagogue-in-charge)?

I think this is false if only because the premise of Democracy is so poorly defined. What are we voting on? Why? Who is "we"?

Am I allowed to call a vote to strip you of your property? Am I allowed to call a vote to tell you what to eat? Am I allowed to call a vote to tell what to do or where to go?

Why or why not? We have laws today that do all of these things. What does "failure" mean?

Unless you're arguing that the banks and large companies are breaking the law by avoiding their reporting requirements to the IRS (to what benefit?) that makes no sense.

This outcome isn’t by accident and it’s a huge undertaking to just get past the tribal bullshit just to have a sane conversation.

I have this idea rummaging about that I have never quite seen articulated in these discussions.

The earnings of "rich friends" are often seen as a singular, isolated achievement, and fairness is then discussed as relative to that: "they earned it, so is it fair to take X%?"

It seems to me that society at large facilitates those earnings. The roads that their workers drive on, the water facility that supplies the school that their employees send their children to. The unemployment safety net that lets employees take risks and take the job of the industrialist... The list is endless.

All this is the net sum of what was _also_ given to (taken by?) the person that makes a billion dollars. In this context I think the "fairness" argument against taxation becomes weaker.

I make around $600,000. My effective federal tax rate is in the low-mid 20s. I'd have to make way way way more money for my effective federal + state rates to approach 50%.

A better analogy of today’s would be so: - Your rich friend and his 19 employees order 20 steaks

- Somehow and out of sight the rich friend takes 19 of the steaks, takes 9/10th of each steak for himself, and then replaces them with 19 derived kiddie meals containing 1/10th the steak.

- Your rich friend then points out that he and his employees only should pay for 2.9 steaks.

- The bill and cost remains the same (100 steaks), so the remaining 80 people foot the bill for 97.1 steaks.

So long as you have more than enough to live on, absolutely. If you make a billion dollars, then the govt taking 501 million is the absolute minimum that should be expected. Better they take 999 million and leave you the million dollars, as you don't need more than that to survive.

Further, the only reason you made a billion was from not paying the workers a living wage. The government's job is to redistribute the money so that everyone gets a fair share.

I disagree. There are models of economics that can project taxation rates that will have better outcomes for society. It's far from being primarily subjective.

A rich friend arguing over the details of a tab is just an asshole.

Meanwhile, you're looking at top marginal rates. That's not the total rate. A single person making $500k a year has a total tax rate (federal plus state) of 41%. It gots up to 46% at $1,000,000/yr.

And the rate goes down if they marry, have kids, etc.

We (the people) want certain services of the government we elect — services that cost money.

If you tax the rich less, the poor and working class will therefore have to carry a larger burden. That seems pretty straightforward.

People also don't seem to learn from successful examples in history. Islam requires a 2.5% almsgiving/charitable contribution that is calculated on certain categories of wealth, but it seems that no western country is interested in implementing something that is proven to work, and much cheaper for everyone.

This is true of government as well. After all there’s some middle management pencil pusher tasked with whatever job, and if it’s a problem getting worse they can get more resources, hire more people, move up the ranks, no? That might be easier and a better way of growing their career than solving the problem!

“how do you know they're "qualified"?”

Interviews? Resumes? References? Same as any job in the market today?

“I don't know how you could know "it's very likely the people in those roles could make multiples more at private organizations.”

They’re providing free legal services to the homeless. I’m assuming they’ve hired lawyers.

Looks like average total pay for a lawyer is 150k in SF?

https://www.glassdoor.com/Salaries/san-francisco-attorney-sa...

“ What incentive do these orgs have to actually solve the problem, when their very existence depends on it continuing?”

You could ask this of any charity. What incentive does St. Jude have to cure childhood cancer? At some level, you just have to trust that the people involved in these organizations have altruistic motivations as a guiding principle. If you don’t trust them, you don’t have to give them your money.

> That means Copeland’s church gets a pass on what would otherwise be an annual property tax bill exceeding $150,000 — money that other local taxpayers must backfill to cover the cost of schools, police and firefighters.

How on earth does this make sense? It’s not like there’s some divine requirement that an exact number of dollars must be paid and now everyone else is on the hook. Taxing rich people more is convenient and mostly accepted but come on, it’s 1 person, they aren’t using more schools/police/whatever.

It's not "tax free" when those salaries are taxed just like any other salary.