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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 d

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.
  - wmf 7y ago
    The IRS still makes case-by-case decisions about which organizations are legally charities so there is oversight.
    - loeg 7y ago
      You're not wrong, but I don't think this is responsive to my comment. Maybe replying to the wrong one on accident? (Also: any organization can claim religious status and becomes essentially exempt from IRS review of charitable status. See: Scientology. Not that I expect Bezos' fund to do that.)
      - wmf 7y ago
        You make it sound like "decides which donations are tax deductible" was done 100 years ago and never changed which isn't the case. Now if you'll excuse me I have to file some paperwork for the Church of the V8...
        loeg 7y ago
        I didn't say that and I'm sorry it was unclear. I said: > the government added the charitable deduction during the 1917 WWI revenue act The distinction I was trying to draw was that prior to 1917, charitable giving could not be deducted at all, and what changed was that the legislature of the time decided to make it so. It's 100 years ago, but really not that long compared to the history of this country. If you want to say the IRS represents the will of society, I think I would mildly disagree. They're not elected. That said, they are largely governed by rules set forth by the legislature, who are at least elected, if not always representative.
nck4222 7y ago
Which is the point of the tax deduction in the first place.
ukoki 7y ago
> You can't make money this way Are you sure? What about something like this: 1. Buy art for $1M 2. Get your friends to bid up the price of the art by selling other works from the artist to each other at inflated valuations 3. Donate art to art gallery with a valuation of $10M 4. Deduct $10M donation from your taxes
- humbledrone 7y ago
  That's simply tax fraud.
- chki 7y ago
  I've seen this (exactly this, actually) line of reasoning regarding taxes and art before. While I think that it is somewhat relevant it's still not legal to do that, at least not where I live.
- gok 7y ago
  A) that's fraud B) you still need $10 million of income to deduct C) this isn't making money. You can't directly deduct a collectible or security you donate. You can give it away without realizing any capital gains however.
  - loeg 7y ago
    (A) Yes. (B) Replace $10 mill with any figure up to 30% of your actual income. The figures are illustrative, not binding. (C) Consider not doing the fraud vs the fraud. If you and your buddy both do the fraud, you only expend the purchase price but deduct the higher price. As a result you have generated a deduction from thin air. As long as the higher price multiplied by your marginal tax rate is greater than the lower purchase price, you've made money. So at, say, a hypothetical 50% bracket, you need to inflate it by 100% to break even. At a 25% bracket, you'd need to inflate it by 300% to break even. It's a profit, but it's definitely fraud and seems pretty obvious. It's essentially a pump and dump scheme, but instead of selling the inflated asset, you donate it while it's still inflated and deduct the difference against income.
    - 7y ago
hndamien 7y ago
The objective is to make wealth, not money.

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.
- wmf 7y ago
  The IRS still makes case-by-case decisions about which organizations are legally charities so there is oversight.
  - loeg 7y ago
    You're not wrong, but I don't think this is responsive to my comment. Maybe replying to the wrong one on accident? (Also: any organization can claim religious status and becomes essentially exempt from IRS review of charitable status. See: Scientology. Not that I expect Bezos' fund to do that.)
    - wmf 7y ago
      You make it sound like "decides which donations are tax deductible" was done 100 years ago and never changed which isn't the case. Now if you'll excuse me I have to file some paperwork for the Church of the V8...
      - loeg 7y ago
        I didn't say that and I'm sorry it was unclear. I said: > the government added the charitable deduction during the 1917 WWI revenue act The distinction I was trying to draw was that prior to 1917, charitable giving could not be deducted at all, and what changed was that the legislature of the time decided to make it so. It's 100 years ago, but really not that long compared to the history of this country. If you want to say the IRS represents the will of society, I think I would mildly disagree. They're not elected. That said, they are largely governed by rules set forth by the legislature, who are at least elected, if not always representative.

nck4222 7y ago

Which is the point of the tax deduction in the first place.

ukoki 7y ago

> You can't make money this way Are you sure? What about something like this: 1. Buy art for $1M 2. Get your friends to bid up the price of the art by selling other works from the artist to each other at inflated valuations 3. Donate art to art gallery with a valuation of $10M 4. Deduct $10M donation from your taxes

humbledrone 7y ago
That's simply tax fraud.
chki 7y ago
I've seen this (exactly this, actually) line of reasoning regarding taxes and art before. While I think that it is somewhat relevant it's still not legal to do that, at least not where I live.
gok 7y ago
A) that's fraud B) you still need $10 million of income to deduct C) this isn't making money. You can't directly deduct a collectible or security you donate. You can give it away without realizing any capital gains however.
- loeg 7y ago
  (A) Yes. (B) Replace $10 mill with any figure up to 30% of your actual income. The figures are illustrative, not binding. (C) Consider not doing the fraud vs the fraud. If you and your buddy both do the fraud, you only expend the purchase price but deduct the higher price. As a result you have generated a deduction from thin air. As long as the higher price multiplied by your marginal tax rate is greater than the lower purchase price, you've made money. So at, say, a hypothetical 50% bracket, you need to inflate it by 100% to break even. At a 25% bracket, you'd need to inflate it by 300% to break even. It's a profit, but it's definitely fraud and seems pretty obvious. It's essentially a pump and dump scheme, but instead of selling the inflated asset, you donate it while it's still inflated and deduct the difference against income.
  - 7y ago

hndamien 7y ago

The objective is to make wealth, not money.