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What more is it, exactly? He and his family have billions fewer dollars. Avoiding the $700M tax doesn't suddenly net them billions. The money is still gone fro

by smt88 4y ago

What more is it, exactly? He and his family have billions fewer dollars. Avoiding the $700M tax doesn't suddenly net them billions. The money is still gone from their family. It was an altruistic move that was also done in a way that avoided taxes.

refurb 4y ago
"Still, the moves mean Chouinard won’t have to pay the federal capital gains taxes he would have owed had he sold the company, an option he said was under consideration. On a $3 billion sale, that bill could be more than $700 million. It also helps Chouinard avoid the US estate and gift tax, which is a 40% levy on large fortunes when they’re transferred to heirs." Rather than an altruistic play, it was an attempt to avoid taxes and keep the company under control of the family. Seems like others use this channel too.
- deleted 4y ago
  [deleted]
- sixo 4y ago
  Why do people keep saying this. They keep some control but they don't keep ownership. It's not like they sold the company and saved 700M on the deal... they still gave away their stake in the company. Why are people trying to spin this as a tax scheme?
  - barry-cotter 4y ago
    Some people hate the idea that other people are both more accomplished than them and morally better than them. Others hate those individually but the combination of accomplishment, moral worth and wealth really drives a lot of people to hatred.
    - elevaet 4y ago
      People are so brainwashed into thinking that money is the only thing that matters that they get suspicious when others behave as if it isn't.
    - jbuhbjlnjbn 4y ago
      - barry-cotter 4y ago
        If you want to communicate some message I suggest trying to be clearer. All I can get from that is that you’re probably trying to be insulting.
        deleted 4y ago
        [deleted]
        deleted 4y ago
        [deleted]
  - cavisne 4y ago
    Because it’s the same hypocritical behavior from all rich people who push socialism (for thee but not for me). They will all whine about billionaires not paying their share and how we need to tax carbon to fix the planet. But given the chance to make a 700m donation to the government of course he used a structure to avoid making that donation.
  - e9 4y ago
    Ownership is just equity. Sure they won’t be able to sell shares for themselves but if they have control then it means they can divert profits to themselves in a way of salaries. Which is fine I guess.
  - refurb 4y ago
    The article lays this out pretty well I thought? They avoided a ton of tax if they had sold the company or even passed it to their heirs. Instead, they created a couple non-profits, special ones that can make unlimited political donations, then put their family in charge of the non-profits. So while they don't retain ownership, they retain control and are able to direct the company's money to their own political causes, all while saving on a $700M tax bill. I mean, that doesn't seem that "altruistic" to me? HN seems to be the first to say "paying your taxes is the right thing to do for society". But these guys get a pass when they avoid a $700M tax bill and get to continue to use their billions in wealth to influence politicians?
    - Rebelgecko 4y ago
      I thought the money going to the 501(c)(4) isn't deductible? edit: ah nvm, this is focused more on them not paying cap gains since they didn't sell anything
    - Pearse 4y ago
      Would it be legal for them to influence political bodies with money from a non profit? https://www.irs.gov/charities-non-profits/charitable-organizations/the-restriction-of-political-campaign-intervention-by-section-501c3-tax-exempt-organizations#:~:text=Under%20the%20Internal%20Revenue%20Code,candidate%20for%20elective%20public%20office https://www.irs.gov/charities-non-profits/charitable-organiz.... From what I understood, the reason people are supporting this move is not because he's giving up money but because he is ensuring that the company doesn't have stake holders that will push for profit above all else.. Because that could lead to bad outcomes for the environment. So he gave the company to a non profit to run. Because itvs a... Non profit.
    - smt88 4y ago
      The choice for them was between: A. Sell the company for multiple billions, pay $700M+ in taxes, and end up with multiple billions B. Keep the company (don't sell or donate) and have billions in assets C. Donate the company and lose billions in assets They were never considering option A, so the choice was between B and C. So their total tax evasion was negligible. They had no tax obligation to avoid because they were never selling the company.
toast0 4y ago
I can't find details about the 501(c)(4) organization the 98% of shares were transferred to, but it feels unlikely that there's no family control of that? Yes, that's no longer family money, but it's also not like it's independent of the family. The transfer to the 2% trust passed through estate/gift taxation (apparently), but also skipped capital gains tax. It's all within the scope of the rules, but this is clearly tax avoidance as well as whatever else.
- Gimpei 4y ago
  If they really just wanted to avoid taxes, there are ways to do it where they’d keep way more than 2% of the company. And with all that saved, money they’d still have plenty of political power. Is this the best of all possible outcome? Maybe not. But it’s a lot better than the estate planning of basically every other rich family. You’d think we’d try to encourage more people to do it.
- jhugo 4y ago
  If not selling the company and therefore not having to pay tax on the sale proceeds that you would have made is tax avoidance, then so is sitting on the couch instead of getting a job.
throwawaymaths 4y ago
Moreover if those 700m went to the federal government, would it be as efficiently allocated to environmental programmes? It would just as soon be used to build depleted uranium munitions.

by smt88 4y ago

refurb 4y ago

"Still, the moves mean Chouinard won’t have to pay the federal capital gains taxes he would have owed had he sold the company, an option he said was under consideration. On a $3 billion sale, that bill could be more than $700 million. It also helps Chouinard avoid the US estate and gift tax, which is a 40% levy on large fortunes when they’re transferred to heirs." Rather than an altruistic play, it was an attempt to avoid taxes and keep the company under control of the family. Seems like others use this channel too.

deleted 4y ago
[deleted]
sixo 4y ago
Why do people keep saying this. They keep some control but they don't keep ownership. It's not like they sold the company and saved 700M on the deal... they still gave away their stake in the company. Why are people trying to spin this as a tax scheme?
- barry-cotter 4y ago
  Some people hate the idea that other people are both more accomplished than them and morally better than them. Others hate those individually but the combination of accomplishment, moral worth and wealth really drives a lot of people to hatred.
  - elevaet 4y ago
    People are so brainwashed into thinking that money is the only thing that matters that they get suspicious when others behave as if it isn't.
  - jbuhbjlnjbn 4y ago
    - barry-cotter 4y ago
      If you want to communicate some message I suggest trying to be clearer. All I can get from that is that you’re probably trying to be insulting.
      - deleted 4y ago
        [deleted]
      - deleted 4y ago
        [deleted]
- cavisne 4y ago
  Because it’s the same hypocritical behavior from all rich people who push socialism (for thee but not for me). They will all whine about billionaires not paying their share and how we need to tax carbon to fix the planet. But given the chance to make a 700m donation to the government of course he used a structure to avoid making that donation.
- e9 4y ago
  Ownership is just equity. Sure they won’t be able to sell shares for themselves but if they have control then it means they can divert profits to themselves in a way of salaries. Which is fine I guess.
- refurb 4y ago
  The article lays this out pretty well I thought? They avoided a ton of tax if they had sold the company or even passed it to their heirs. Instead, they created a couple non-profits, special ones that can make unlimited political donations, then put their family in charge of the non-profits. So while they don't retain ownership, they retain control and are able to direct the company's money to their own political causes, all while saving on a $700M tax bill. I mean, that doesn't seem that "altruistic" to me? HN seems to be the first to say "paying your taxes is the right thing to do for society". But these guys get a pass when they avoid a $700M tax bill and get to continue to use their billions in wealth to influence politicians?
  - Rebelgecko 4y ago
    I thought the money going to the 501(c)(4) isn't deductible? edit: ah nvm, this is focused more on them not paying cap gains since they didn't sell anything
  - Pearse 4y ago
    Would it be legal for them to influence political bodies with money from a non profit? https://www.irs.gov/charities-non-profits/charitable-organizations/the-restriction-of-political-campaign-intervention-by-section-501c3-tax-exempt-organizations#:~:text=Under%20the%20Internal%20Revenue%20Code,candidate%20for%20elective%20public%20office https://www.irs.gov/charities-non-profits/charitable-organiz.... From what I understood, the reason people are supporting this move is not because he's giving up money but because he is ensuring that the company doesn't have stake holders that will push for profit above all else.. Because that could lead to bad outcomes for the environment. So he gave the company to a non profit to run. Because itvs a... Non profit.
  - smt88 4y ago
    The choice for them was between: A. Sell the company for multiple billions, pay $700M+ in taxes, and end up with multiple billions B. Keep the company (don't sell or donate) and have billions in assets C. Donate the company and lose billions in assets They were never considering option A, so the choice was between B and C. So their total tax evasion was negligible. They had no tax obligation to avoid because they were never selling the company.

toast0 4y ago

I can't find details about the 501(c)(4) organization the 98% of shares were transferred to, but it feels unlikely that there's no family control of that? Yes, that's no longer family money, but it's also not like it's independent of the family. The transfer to the 2% trust passed through estate/gift taxation (apparently), but also skipped capital gains tax. It's all within the scope of the rules, but this is clearly tax avoidance as well as whatever else.

Gimpei 4y ago
If they really just wanted to avoid taxes, there are ways to do it where they’d keep way more than 2% of the company. And with all that saved, money they’d still have plenty of political power. Is this the best of all possible outcome? Maybe not. But it’s a lot better than the estate planning of basically every other rich family. You’d think we’d try to encourage more people to do it.
jhugo 4y ago
If not selling the company and therefore not having to pay tax on the sale proceeds that you would have made is tax avoidance, then so is sitting on the couch instead of getting a job.

throwawaymaths 4y ago

Moreover if those 700m went to the federal government, would it be as efficiently allocated to environmental programmes? It would just as soon be used to build depleted uranium munitions.