Elon Musk Has a Giant Charity. Its Money Stays Close to Home
nytimes.com
nytimes.com
> 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.
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.
The problem is how can you protect honest charities and prevent these shenanigans?
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.
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...
Really, 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.