8 ms·

After reading Winners Take All my level of cynicism is through the roof with headlines like this. $10b of his own personal fortune? That won't results in tax b

by inerte 7y ago

After reading Winners Take All my level of cynicism is through the roof with headlines like this. $10b of his own personal fortune? That won't results in tax breaks / deduction because can be considered a donation? Or does that include money Amazon-the-company is spending on "climate change" efforts, such as buying electric delivery trucks instead of gas ones? Investments in "green datacenters"? Is any of this new investment that's needed anyway for Amazon-the-company to operate, but now it's green so it gets added up to the $10b? Is Bezos, worth $130b today be worth $120b tomorrow because of this? Or do we have to add up a hundred different things with some creative accounting and lots of goodwill?

Will_Do 7y ago
He will definitely save a bit of money on taxes. I suspect his marginal tax rate is ~24% (20% Cap Gains + 4% Medicare). So this donation will lower his net worth by ~7.6B. In any case, this is a giant amount of money by philanthropic standards. I doubt more than 4-5 people have ever given as much for all of the things they support.
- ocschwar 7y ago
  Normally I'd resent the $2.4 billion tax dodge, but given who receives the money right now, I'm okay with.
  - deleted 7y ago
    [deleted]
  - Znafon 7y ago
    I'm not sure it's a "tax dodge", he just won't pay income tax on the money he donated.
    - tomp 7y ago
      Finally someone that gets it. Feel free to complain about "tax loss" as in the government getting less money than they would otherwise, but it's definitely not a "tax dodge" - tax dodging only makes sense if you actually end up with more money than you would otherwise - i.e. you "earn" $100m but then you "dodge tax" to pay only $10m tax instead of $20m, and end up with $90m after-tax income rather than $80m. Multiple ways of doing that - the obvious one is moving your tax residence to a 0% tax haven, the less obvious one is to artificially inflate the value of an asset (e.g. a work of art) and then "donate it" and write off that from tax (e.g. buy it for $10k, donate it when it's "worth" $10m, write that off as a "loss" and pay only $10m tax instead of $20m).
planetzero 7y ago
Why does this matter? If he truly is pledging $10B, it can only be a win for society and the future of humanity. It shouldn't really matter if he gets a tax break or not.
- monadic2 7y ago
  I wouldn’t call relying on consensual handouts from rich people a win for society.
  - bcrosby95 7y ago
    Maybe governments are good sometimes, but sometimes individuals unilaterally deciding something is a problem can be good too. We can have it both ways, and we currently do.
    - maest 7y ago
      > sometimes individuals unilaterally deciding something is a problem can be good too This view is mostly true if you agree with that thing being a problem. What if the billionaire unilaterally decides to spend 10B to combat the pro-choice/pro-life movement (whichere you agree with)?
      - bcrosby95 7y ago
        I think individuals that answer to no one is important for the 'random walk' aspect of solutions to problems. If someone fails then oh well. If they succeed it perhaps provides a model for less risk averse agencies to pursue, perhaps even governmental bodies. Politicians are too risk adverse to approve something that might turn out to be a waste of money. Organizations like these oftentimes even work with government on some level doing stuff government isn't really able to do for various reasons. And 10 billion is a drop in the bucket for the US government. I think in the long run it tends to work out better. You're focusing on a single issue I might disagree with. I'm looking at all issues this can affect - those I agree with, those I disagree with, and those that everyone agrees with but doesn't really give enough of a crap about so they don't push to have their governments allocate a budget for it. Looking at just rabidly disagree/agree is a very thin slice of things opposing this sort of action affects. So to answer your question, yeah, I wouldn't oppose it for an issue I disagree with, because even if they exist I think the system as a whole nets out towards the positive end of things.
legitster 7y ago
We're pretty light on details. I take it as he will probably gift $10 billion dollars worth of stock from his personal portfolio to a 501(c), which they will use as an endowment. I think this would bypass capital gains altogether? But 'pledge' could mean any number of things, like selling stock slowly over time.
- m-watson 7y ago
  For sure light on details but it seems like he (or a family office) will be grant making and it is coming from him not his foundation or Amazon. https://techcrunch.com/2020/02/17/jeff-bezos-announced-a-10-billion-fund-to-fight-climate-change/ https://techcrunch.com/2020/02/17/jeff-bezos-announced-a-10-...
  - inerte 7y ago
    Thanks, that's useful information in the context of this thread. Looks like the money will come straight from him and not any foundation - something unusual these days, but it does show his level of commitment.
humbledrone 7y ago
I frequently see the "they're just doing this for the tax breaks" sentiment for these kinds of donations (especially when the donor is a corporation or hyper-wealthy individual) but I don't understand the reasoning. From what I understand of tax deductions, a donation of $X basically means that the donor can skip paying taxes on $X of income. This results in a savings of tax% * $X, which is always < $X. Since tax% is always < 100%, it seems that the donation is always negative-sum for the donor. The tax deduction also seems like a boon for the beneficiary, since they receive $X instead of (1 - tax%) * $X. Can you help me understand the cynicism? How does the donor benefit here (aside from PR etc)? It seems like they do not come out ahead financially, and the tax breaks benefit the recipient of the donation.
- klipt 7y ago
  Yeah the donation deduction is just a form of leverage. You effectively pay X but the charity gets 2X (actual multiplier depends on your marginal tax rate). One way of looking at it is that the government is "matching" part of your donation with tax money. But you never make money that way.
  - entangledqubit 7y ago
    You can't make money this way but you can still argue that money that would have gone to taxes has now been redirected by an individual to a cause they solely decided is worthwhile.
    - chki 7y ago
      But actually the state (society) decides which donations are tax deductible.
      - loeg 7y ago
        Well, elected officials decided that very early in the US's history of personal income tax. It's not like we have direct democracy and 2020 society has voted to approve this policy. We didn't have a federal income tax before 1913, and the government added the charitable deduction during the 1917 WWI revenue act, which also raised the personal income tax rates. As far as I know it's simply never been touched since 1917. Some folks just object to that policy.
s1artibartfast 7y ago
As others said, why should it matter? I would be happy even if he got an 100% tax credit. what percent of tax revenue would have gone to climate change vs bombing some civilians in Afghanistan.
- rapind 7y ago
  We shouldn't care because it's better that a billionaire chooses where that money goes instead of a democratically elected government? I'm not poking fun either. That's really what you seem to be saying. Does this still work if he puts this money towards a cause you're not keen of?
  - 0xCMP 7y ago
    You're right, but also what are we doing in the meantime? What's the point of having that kind of money except to do huge initiatives like this?
    - rapind 7y ago
      Hey I don't care what he does with his money as long as it's legal. I'm not going to give him a big huge tax break so he can decide where my taxes go though.
  - chongli 7y ago
    Because the government is doing a terrible job with the trillions it already spends? What difference would 10 billion make to the US government? Basically nothing. This sort of knee-jerk antagonism against billionaires spending their money on philanthropic causes is so common these days. I think Scott over at Slate Star Codex has a very good piece on this [1]. [1] https://slatestarcodex.com/2019/07/29/against-against-billionaire-philanthropy/ https://slatestarcodex.com/2019/07/29/against-against-billio...
    - rapind 7y ago
      Nonsense. Parent stated Bezo's should get a 100% tax rebate. I never voted to subsidize Bezo's philanthropy to the tune of 100% of tax revenue, and I like to think I live in a democracy. Nothing I said was knee-jerk antagonism. I gave $100 to the Girl Guides last week without any expectation of a 100% tax rebate. Who am I to decide that tax payer revenue should 100% go towards the Girl Guides? Maybe other tax payers would prefer it went towards something else? As far as $10 billion being basically nothing... we wouldn't be talking about it if it was $100, but my opinion wouldn't change.
carimura 7y ago
don't forget the necessity for major public relations efforts when your company is under fire for tax evasion, dangerous (sometimes lethal) work environments, not properly governing its platform leading to rampant fraud, and on and on. But hey. Always two ways to look at any situation.
deleted 7y ago
[deleted]
KoftaBob 7y ago
The people who make the "they're just doing it for tax deductions" argument give me the feeling that they don't understand what a tax deduction is. All it means is that his taxable income will be whatever his income is minus that $10B. He's not getting a net benefit from doing this. To make the math easier, consider someone making $100k and paying a 30% tax rate. If they donate $10k to charity, rather than pay 30k in taxes, they're paying 27k in taxes. They saved 3k in taxes, but they still donated $10k, so they're out 7k. If his entire objective was to pay less in taxes, stashing it in the Cayman Islands would make way more sense than donating it.
radicalbyte 7y ago
He's going to find a way to make those tax savings either way so it's great to see him doing something positive.
loeg 7y ago
Income tax deductions are limited to a fraction of income. I don't think that's a meaningful complaint there. The perhaps more interesting complaint is that the fund is still ultimately controlled by Bezos; he can only spend it on some vaguely charitable things, but ultimately he can hire and pay cronies, choose to fund his choice of projects, etc, etc. It's both not his and still his money.
oarabbus_ 7y ago
>Is Bezos, worth $130b today be worth $120b tomorrow because of this? Or do we have to add up a hundred different things with some creative accounting and lots of goodwill? If ($10B to address climate change) is true, then why should anyone care if Bezos' $130b today becomes $120b tomorrow, or $200b tomorrow? I care about whether the $10B will be spent effectively and efficiently to combat climate change, and that's it. Full stop.
moneytide1 7y ago
> Is Bezos, worth $130b today be worth $120b tomorrow because of this? I would think so with this sort of investment. It depends on what you mean by tomorrow. I like the 18 year cycle because that is how long it takes to produce a crop of tax paying voters. Years 0-5 atmosphere and nutrition quality carry more weight during that physical development term. If he wants a "trillion human Solar system with a thousand Mozart and Einstein minds", then citizen factory Earth is a good first step?

by inerte 7y ago

Will_Do 7y ago

He will definitely save a bit of money on taxes. I suspect his marginal tax rate is ~24% (20% Cap Gains + 4% Medicare). So this donation will lower his net worth by ~7.6B. In any case, this is a giant amount of money by philanthropic standards. I doubt more than 4-5 people have ever given as much for all of the things they support.

ocschwar 7y ago
Normally I'd resent the $2.4 billion tax dodge, but given who receives the money right now, I'm okay with.
- deleted 7y ago
  [deleted]
- Znafon 7y ago
  I'm not sure it's a "tax dodge", he just won't pay income tax on the money he donated.
  - tomp 7y ago
    Finally someone that gets it. Feel free to complain about "tax loss" as in the government getting less money than they would otherwise, but it's definitely not a "tax dodge" - tax dodging only makes sense if you actually end up with more money than you would otherwise - i.e. you "earn" $100m but then you "dodge tax" to pay only $10m tax instead of $20m, and end up with $90m after-tax income rather than $80m. Multiple ways of doing that - the obvious one is moving your tax residence to a 0% tax haven, the less obvious one is to artificially inflate the value of an asset (e.g. a work of art) and then "donate it" and write off that from tax (e.g. buy it for $10k, donate it when it's "worth" $10m, write that off as a "loss" and pay only $10m tax instead of $20m).

planetzero 7y ago

Why does this matter? If he truly is pledging $10B, it can only be a win for society and the future of humanity. It shouldn't really matter if he gets a tax break or not.

monadic2 7y ago
I wouldn’t call relying on consensual handouts from rich people a win for society.
- bcrosby95 7y ago
  Maybe governments are good sometimes, but sometimes individuals unilaterally deciding something is a problem can be good too. We can have it both ways, and we currently do.
  - maest 7y ago
    > sometimes individuals unilaterally deciding something is a problem can be good too This view is mostly true if you agree with that thing being a problem. What if the billionaire unilaterally decides to spend 10B to combat the pro-choice/pro-life movement (whichere you agree with)?
    - bcrosby95 7y ago
      I think individuals that answer to no one is important for the 'random walk' aspect of solutions to problems. If someone fails then oh well. If they succeed it perhaps provides a model for less risk averse agencies to pursue, perhaps even governmental bodies. Politicians are too risk adverse to approve something that might turn out to be a waste of money. Organizations like these oftentimes even work with government on some level doing stuff government isn't really able to do for various reasons. And 10 billion is a drop in the bucket for the US government. I think in the long run it tends to work out better. You're focusing on a single issue I might disagree with. I'm looking at all issues this can affect - those I agree with, those I disagree with, and those that everyone agrees with but doesn't really give enough of a crap about so they don't push to have their governments allocate a budget for it. Looking at just rabidly disagree/agree is a very thin slice of things opposing this sort of action affects. So to answer your question, yeah, I wouldn't oppose it for an issue I disagree with, because even if they exist I think the system as a whole nets out towards the positive end of things.

legitster 7y ago

We're pretty light on details. I take it as he will probably gift $10 billion dollars worth of stock from his personal portfolio to a 501(c), which they will use as an endowment. I think this would bypass capital gains altogether? But 'pledge' could mean any number of things, like selling stock slowly over time.

m-watson 7y ago
For sure light on details but it seems like he (or a family office) will be grant making and it is coming from him not his foundation or Amazon. https://techcrunch.com/2020/02/17/jeff-bezos-announced-a-10-billion-fund-to-fight-climate-change/ https://techcrunch.com/2020/02/17/jeff-bezos-announced-a-10-...
- inerte 7y ago
  Thanks, that's useful information in the context of this thread. Looks like the money will come straight from him and not any foundation - something unusual these days, but it does show his level of commitment.

humbledrone 7y ago

I frequently see the "they're just doing this for the tax breaks" sentiment for these kinds of donations (especially when the donor is a corporation or hyper-wealthy individual) but I don't understand the reasoning. From what I understand of tax deductions, a donation of $X basically means that the donor can skip paying taxes on $X of income. This results in a savings of tax% * $X, which is always < $X. Since tax% is always < 100%, it seems that the donation is always negative-sum for the donor. The tax deduction also seems like a boon for the beneficiary, since they receive $X instead of (1 - tax%) * $X. Can you help me understand the cynicism? How does the donor benefit here (aside from PR etc)? It seems like they do not come out ahead financially, and the tax breaks benefit the recipient of the donation.

klipt 7y ago
Yeah the donation deduction is just a form of leverage. You effectively pay X but the charity gets 2X (actual multiplier depends on your marginal tax rate). One way of looking at it is that the government is "matching" part of your donation with tax money. But you never make money that way.
- entangledqubit 7y ago
  You can't make money this way but you can still argue that money that would have gone to taxes has now been redirected by an individual to a cause they solely decided is worthwhile.
  - chki 7y ago
    But actually the state (society) decides which donations are tax deductible.
    - loeg 7y ago
      Well, elected officials decided that very early in the US's history of personal income tax. It's not like we have direct democracy and 2020 society has voted to approve this policy. We didn't have a federal income tax before 1913, and the government added the charitable deduction during the 1917 WWI revenue act, which also raised the personal income tax rates. As far as I know it's simply never been touched since 1917. Some folks just object to that policy.

s1artibartfast 7y ago

As others said, why should it matter? I would be happy even if he got an 100% tax credit. what percent of tax revenue would have gone to climate change vs bombing some civilians in Afghanistan.

rapind 7y ago
We shouldn't care because it's better that a billionaire chooses where that money goes instead of a democratically elected government? I'm not poking fun either. That's really what you seem to be saying. Does this still work if he puts this money towards a cause you're not keen of?
- 0xCMP 7y ago
  You're right, but also what are we doing in the meantime? What's the point of having that kind of money except to do huge initiatives like this?
  - rapind 7y ago
    Hey I don't care what he does with his money as long as it's legal. I'm not going to give him a big huge tax break so he can decide where my taxes go though.
- chongli 7y ago
  Because the government is doing a terrible job with the trillions it already spends? What difference would 10 billion make to the US government? Basically nothing. This sort of knee-jerk antagonism against billionaires spending their money on philanthropic causes is so common these days. I think Scott over at Slate Star Codex has a very good piece on this [1]. [1] https://slatestarcodex.com/2019/07/29/against-against-billionaire-philanthropy/ https://slatestarcodex.com/2019/07/29/against-against-billio...
  - rapind 7y ago
    Nonsense. Parent stated Bezo's should get a 100% tax rebate. I never voted to subsidize Bezo's philanthropy to the tune of 100% of tax revenue, and I like to think I live in a democracy. Nothing I said was knee-jerk antagonism. I gave $100 to the Girl Guides last week without any expectation of a 100% tax rebate. Who am I to decide that tax payer revenue should 100% go towards the Girl Guides? Maybe other tax payers would prefer it went towards something else? As far as $10 billion being basically nothing... we wouldn't be talking about it if it was $100, but my opinion wouldn't change.

carimura 7y ago

don't forget the necessity for major public relations efforts when your company is under fire for tax evasion, dangerous (sometimes lethal) work environments, not properly governing its platform leading to rampant fraud, and on and on. But hey. Always two ways to look at any situation.

deleted 7y ago

[deleted]

KoftaBob 7y ago

The people who make the "they're just doing it for tax deductions" argument give me the feeling that they don't understand what a tax deduction is. All it means is that his taxable income will be whatever his income is minus that $10B. He's not getting a net benefit from doing this. To make the math easier, consider someone making $100k and paying a 30% tax rate. If they donate $10k to charity, rather than pay 30k in taxes, they're paying 27k in taxes. They saved 3k in taxes, but they still donated $10k, so they're out 7k. If his entire objective was to pay less in taxes, stashing it in the Cayman Islands would make way more sense than donating it.

radicalbyte 7y ago

He's going to find a way to make those tax savings either way so it's great to see him doing something positive.

loeg 7y ago

Income tax deductions are limited to a fraction of income. I don't think that's a meaningful complaint there. The perhaps more interesting complaint is that the fund is still ultimately controlled by Bezos; he can only spend it on some vaguely charitable things, but ultimately he can hire and pay cronies, choose to fund his choice of projects, etc, etc. It's both not his and still his money.

oarabbus_ 7y ago

>Is Bezos, worth $130b today be worth $120b tomorrow because of this? Or do we have to add up a hundred different things with some creative accounting and lots of goodwill? If ($10B to address climate change) is true, then why should anyone care if Bezos' $130b today becomes $120b tomorrow, or $200b tomorrow? I care about whether the $10B will be spent effectively and efficiently to combat climate change, and that's it. Full stop.

moneytide1 7y ago

> Is Bezos, worth $130b today be worth $120b tomorrow because of this? I would think so with this sort of investment. It depends on what you mean by tomorrow. I like the 18 year cycle because that is how long it takes to produce a crop of tax paying voters. Years 0-5 atmosphere and nutrition quality carry more weight during that physical development term. If he wants a "trillion human Solar system with a thousand Mozart and Einstein minds", then citizen factory Earth is a good first step?