7 ms·

I went to a graduation a few years ago at Carnegie Mellon. Some hedge fund guy was making his biggest donation yet and gave the commencement speech. It was endl

I went to a graduation a few years ago at Carnegie Mellon. Some hedge fund guy was making his biggest donation yet and gave the commencement speech. It was endlessly about him and the new building to be named after him and how he was about to own an NFL football team. There was a Nobel Prize winner seated next to him on stage. I don't think she got to say anything, but was recognized for her work in cancer research. The juxtaposition felt Kafkaesque and a bit sleazy.

fsckboy 3y ago
to be fair, if she had finished the job and cured cancer, she could buy a Premier League team* (*cuz academics == soccer) There is a natural tendency to diminish money as a measure of anything good, but money really is the yardstick by which we jointly measure all things, trading off time with kids, family, travel, leisure against other priorities, and being rewarded by the rest of society for our contributions to what they want to spend money on, their tradeoffs. Turns out that there are a bunch of very skilled highly educated people who want to spend their time researching cancer (which cure they could sell for a lot of money), compared to those who are most capable of and interested in, financially restructuring companies. That hedge fund guy's donation to CMU is tax-deductible; we do that because everybody loves a philanthropist giving. His tax bracket is let's say 50%, so, where he would have owed $50 million to the government on that $100 million income, by giving it to CMU, they get the full $100 million and the guy owes no tax; of course leaving it to the rest of the tax payers to cover that $50 million in the state and federal budgets... but that's a good deal because a private elite university got more money? (And if hedgie donated appreciated securities rather than income, the bracketed tax savings get amplified that much more...) There are plenty of places where "the market" chooses the wrong winners (by some important measures) but most of the complaints about the market don't go in that direction. Talk about how important money is, instead of socially devaluing it, then it would be easier to focus people's attention on cartel and monopoly pricing, negative externalities, etc.
- audibahnbacks 3y ago
  “His tax bracket is say 50%” Even for HN this level of delusion is rare.
  - fsckboy 3y ago
    Sorry, dude, but am an UHNW individual, my income comes from investments, and year in year out I pay about 50% in tax (don't forget state and city income tax, and alternative minimum wipes out long term capital gain favoritism)
    - wddkcs 3y ago
      You need to get more money, then youll be able to avoid those taxes, seems to be the point. Paradise Papers leak reveals secrets of the world elite's hidden wealth https://amp.theguardian.com/news/2017/nov/05/paradise-papers-leak-reveals-secrets-of-world-elites-hidden-wealth https://amp.theguardian.com/news/2017/nov/05/paradise-papers...
      - fsckboy 3y ago
        I pursue an investment strategy that would make those tricks highly risky, and or inconvenient. The tradeoff is that I believe I make more money the way I'm doing it, including the taxes I pay.
        wddkcs 3y ago
        Yes I'm sure you're too well vested to be caught in the affairs of the world's richest.
      - jimnotgym 3y ago
        It is worth remembering that this doesn't have to be the case. The governments of the world could stop much of this tax avoidance if they had the will.
    - quickthrower2 3y ago
      Surely the most wealthy are not paying 50% income tax on their annual increase in net wealth (see what I did there)? When there are so many ways to avoid it.
- ghaff 3y ago
  Leaving aside the exact numbers, there are also ways in that appreciated assets can be donated, the gains are basically tax shielded, and an annuity based on an actuarial determined portion of the assets can be paid out. The details are more complicated than that of course.
  - Scoundreller 3y ago
    Yeah, in Canada there are relatively huge tax benefits from donating appreciated assets: both foregoing the capital gains on the appreciation and getting a tax credit for the market value. And on a big donation that the charity inevitably sells, the other shareholders pay the price when they get dumped on the market (but you still get the pre-sale valuation). Aaaaand if you arrange to get family naming rights to the whole org, a building or faculty, the taxman still considers it a "no personal benefit" 100% eligible donation. Normies donating employment income could only dream of that degree of escaped taxes. The tax benefits won't even cover the income taxes you paid at 6 figure incomes. Go to a dinner fundraiser and they're sure to exclude the dinner value from your charitable receipt.
    - hgsgm 3y ago
      It's very similar in US.
- darawk 3y ago
  Giving a 50 million dollar donation does not mean you owe zero tax on 100 million of income. It means you owe exactly the same amount of tax on every dime you kept. Deducting charitable donations just means reducing your income by that amount. You still pay tax on all the rest. Secondly, there are annual limits on the amount you can deduct, percentage wise. What the limit is exactly is circumstantially contingent, but you are not allowed (generally) to zero out your income even if you donate 100% of it. That being said, I agree that donating to universities is one of the dumber forms of philanthropy.
  - fsckboy 3y ago
    giving a 100 million dollar donation allows you to subtract 100 million from your income (assuming you had a lot more income, there is a limit) which at a 50% tax rate means you gave $50 million out of your account and the charity received $100 million into theirs, the rest coming from the govt in the form of taxes you would have given them but they didn't get from you. non-profits accepting donations will allow you to structure them as is tax advantageous to you, say $10 million a year for 10 years, is announced as a $100 million donation. but with appreciated assets something trickier happens. Say I paid $10 million for a block of stock, and it appreciates to $110 million. If I sell it, $100 million of that is income, but I donate the income so I don't have to pay tax on it... However, if I don't sell the stock, and just donate $100 million of it as stock, my charitable contribution is $100 million, and there is no tax on the $91 million portion which is income (did I do that arithmetic right?) and therefore I can deduct the $100 million donation from an additional $100 million of income completely unrelated to this block of stock. The US treasury and public will never see any tax for all that income, and will give me a break on the rest of my taxes.
    - Shaanie 3y ago
      Seems a pretty obvious solution to this loophole is to reduce non-cash deductibles by what would have been paid in capital gains, and have the non profit pay capital gains when they sell?
      - 3y ago
- beefield 3y ago
  > we do that because everybody loves a philanthropist giving. Count me out. I have a really unpopular opinion that philanthropy is nothing more nothing less than entertainment for the giver. There is no difference between me buing a movie ticket or giving money to a charity. (Well, other than in the movie case I create jobs, in the charity I foster helplessness) If society thinks there are some things where money should be allocated without getting anything tangible back, it should be funded via taxes, not charity. No need to subsidize private charities. (If your government can't be trusted to manage the money, it would be more efficient to use your money to try to fix the government instead of getting yourswlf some feelgood by giving money out to whatever else) Effective altruism? Go and pay your taxes, that is according to economic theory the most efficient way to be altruistic in all the cases someone may bee freeloading on your charity (see tragedy of commons/prisoners' dilemma)
  - deleted 3y ago
    [deleted]
  - jimnotgym 3y ago
    I for one am with you 100% "Philanthropy" is largely rich people giving your tax dollars to a cause they like
  - kandel 3y ago
    For sure there is a value for the giver. It's good for you to be charitable, so why not win-win?
- metalforever 3y ago
  I don't know, I was pretty poor and CMU let me go there for free.
- josephg 3y ago
  > money really is the yardstick by which we jointly measure all things It’s just not a good measure though. When I contribute to opensource, is my contribution worthless because nobody pays for it? If a company lowers the price for insulin, is that an indication that they are providing less value in the world? I hear what you’re saying. Money moves the world. But there are an awful lot of things that humans value that don’t show up on a balance sheet. We become blind to all of that when we focus too much on monetary rewards.
musicale 3y ago
> The juxtaposition felt Kafkaesque and a bit sleazy How surprising that Carnegie[1] Mellon[2] University would honor a businessman and financier who donated a small fortune to the school! [1] https://en.wikipedia.org/wiki/Andrew_Carnegie https://en.wikipedia.org/wiki/Andrew_Carnegie [2] https://en.wikipedia.org/wiki/Andrew_Mellon https://en.wikipedia.org/wiki/Andrew_Mellon
- tempodox 3y ago
  Those guys were rich and powerful, but were they also self-centered and vain?
  - Loughla 3y ago
    Their names are literally the school name now. So, that's probably strike 1 if I had to guess.
endisneigh 3y ago
Do you know who Carnegie Mellon is named after? This is an amusing take either way.
nraynaud 3y ago
I saw a graduation a few years back, and I had the same feeling, a financial backer got an honoris causa phd and made a speech.
- thwarted 3y ago
  Seems like a pretty good deal for the school. They need to run to kinko's to print out a fake degree (that says right on it that it's fake), and spend 20 minutes listening to a blowhard pontificate. I'd do that for a few million dollars at least once.
  - nraynaud 3y ago
    I would rather send fake PhDs to little guys who did great stuff in their garage. (Or maybe business fake PhDs to rich people if they increased their net worth?)
2Gkashmiri 3y ago
I've been dreaming about georgetown/nyu/nw for a tax LLM but the cost of admission is too darn high. Looks to me unless I already have that kind of money, there is no way I can get admission there. Oh well. That's capitalism for you I guess
- hgsgm 3y ago
  So go somewhere else?
Ekaros 3y ago
I think only wrong thing there is that students are subjected to that bullshit. Now if it was the faculty or other donators it would be perfect.
senkora 3y ago
Tepper is a great building though, really nice.

fsckboy 3y ago

to be fair, if she had finished the job and cured cancer, she could buy a Premier League team* (*cuz academics == soccer) There is a natural tendency to diminish money as a measure of anything good, but money really is the yardstick by which we jointly measure all things, trading off time with kids, family, travel, leisure against other priorities, and being rewarded by the rest of society for our contributions to what they want to spend money on, their tradeoffs. Turns out that there are a bunch of very skilled highly educated people who want to spend their time researching cancer (which cure they could sell for a lot of money), compared to those who are most capable of and interested in, financially restructuring companies. That hedge fund guy's donation to CMU is tax-deductible; we do that because everybody loves a philanthropist giving. His tax bracket is let's say 50%, so, where he would have owed $50 million to the government on that $100 million income, by giving it to CMU, they get the full $100 million and the guy owes no tax; of course leaving it to the rest of the tax payers to cover that $50 million in the state and federal budgets... but that's a good deal because a private elite university got more money? (And if hedgie donated appreciated securities rather than income, the bracketed tax savings get amplified that much more...) There are plenty of places where "the market" chooses the wrong winners (by some important measures) but most of the complaints about the market don't go in that direction. Talk about how important money is, instead of socially devaluing it, then it would be easier to focus people's attention on cartel and monopoly pricing, negative externalities, etc.

audibahnbacks 3y ago
“His tax bracket is say 50%” Even for HN this level of delusion is rare.
- fsckboy 3y ago
  Sorry, dude, but am an UHNW individual, my income comes from investments, and year in year out I pay about 50% in tax (don't forget state and city income tax, and alternative minimum wipes out long term capital gain favoritism)
  - wddkcs 3y ago
    You need to get more money, then youll be able to avoid those taxes, seems to be the point. Paradise Papers leak reveals secrets of the world elite's hidden wealth https://amp.theguardian.com/news/2017/nov/05/paradise-papers-leak-reveals-secrets-of-world-elites-hidden-wealth https://amp.theguardian.com/news/2017/nov/05/paradise-papers...
    - fsckboy 3y ago
      I pursue an investment strategy that would make those tricks highly risky, and or inconvenient. The tradeoff is that I believe I make more money the way I'm doing it, including the taxes I pay.
      - wddkcs 3y ago
        Yes I'm sure you're too well vested to be caught in the affairs of the world's richest.
    - jimnotgym 3y ago
      It is worth remembering that this doesn't have to be the case. The governments of the world could stop much of this tax avoidance if they had the will.
  - quickthrower2 3y ago
    Surely the most wealthy are not paying 50% income tax on their annual increase in net wealth (see what I did there)? When there are so many ways to avoid it.
ghaff 3y ago
Leaving aside the exact numbers, there are also ways in that appreciated assets can be donated, the gains are basically tax shielded, and an annuity based on an actuarial determined portion of the assets can be paid out. The details are more complicated than that of course.
- Scoundreller 3y ago
  Yeah, in Canada there are relatively huge tax benefits from donating appreciated assets: both foregoing the capital gains on the appreciation and getting a tax credit for the market value. And on a big donation that the charity inevitably sells, the other shareholders pay the price when they get dumped on the market (but you still get the pre-sale valuation). Aaaaand if you arrange to get family naming rights to the whole org, a building or faculty, the taxman still considers it a "no personal benefit" 100% eligible donation. Normies donating employment income could only dream of that degree of escaped taxes. The tax benefits won't even cover the income taxes you paid at 6 figure incomes. Go to a dinner fundraiser and they're sure to exclude the dinner value from your charitable receipt.
  - hgsgm 3y ago
    It's very similar in US.
darawk 3y ago
Giving a 50 million dollar donation does not mean you owe zero tax on 100 million of income. It means you owe exactly the same amount of tax on every dime you kept. Deducting charitable donations just means reducing your income by that amount. You still pay tax on all the rest. Secondly, there are annual limits on the amount you can deduct, percentage wise. What the limit is exactly is circumstantially contingent, but you are not allowed (generally) to zero out your income even if you donate 100% of it. That being said, I agree that donating to universities is one of the dumber forms of philanthropy.
- fsckboy 3y ago
  giving a 100 million dollar donation allows you to subtract 100 million from your income (assuming you had a lot more income, there is a limit) which at a 50% tax rate means you gave $50 million out of your account and the charity received $100 million into theirs, the rest coming from the govt in the form of taxes you would have given them but they didn't get from you. non-profits accepting donations will allow you to structure them as is tax advantageous to you, say $10 million a year for 10 years, is announced as a $100 million donation. but with appreciated assets something trickier happens. Say I paid $10 million for a block of stock, and it appreciates to $110 million. If I sell it, $100 million of that is income, but I donate the income so I don't have to pay tax on it... However, if I don't sell the stock, and just donate $100 million of it as stock, my charitable contribution is $100 million, and there is no tax on the $91 million portion which is income (did I do that arithmetic right?) and therefore I can deduct the $100 million donation from an additional $100 million of income completely unrelated to this block of stock. The US treasury and public will never see any tax for all that income, and will give me a break on the rest of my taxes.
  - Shaanie 3y ago
    Seems a pretty obvious solution to this loophole is to reduce non-cash deductibles by what would have been paid in capital gains, and have the non profit pay capital gains when they sell?
    - 3y ago
beefield 3y ago
> we do that because everybody loves a philanthropist giving. Count me out. I have a really unpopular opinion that philanthropy is nothing more nothing less than entertainment for the giver. There is no difference between me buing a movie ticket or giving money to a charity. (Well, other than in the movie case I create jobs, in the charity I foster helplessness) If society thinks there are some things where money should be allocated without getting anything tangible back, it should be funded via taxes, not charity. No need to subsidize private charities. (If your government can't be trusted to manage the money, it would be more efficient to use your money to try to fix the government instead of getting yourswlf some feelgood by giving money out to whatever else) Effective altruism? Go and pay your taxes, that is according to economic theory the most efficient way to be altruistic in all the cases someone may bee freeloading on your charity (see tragedy of commons/prisoners' dilemma)
- deleted 3y ago
  [deleted]
- jimnotgym 3y ago
  I for one am with you 100% "Philanthropy" is largely rich people giving your tax dollars to a cause they like
- kandel 3y ago
  For sure there is a value for the giver. It's good for you to be charitable, so why not win-win?
metalforever 3y ago
I don't know, I was pretty poor and CMU let me go there for free.
josephg 3y ago
> money really is the yardstick by which we jointly measure all things It’s just not a good measure though. When I contribute to opensource, is my contribution worthless because nobody pays for it? If a company lowers the price for insulin, is that an indication that they are providing less value in the world? I hear what you’re saying. Money moves the world. But there are an awful lot of things that humans value that don’t show up on a balance sheet. We become blind to all of that when we focus too much on monetary rewards.

musicale 3y ago

> The juxtaposition felt Kafkaesque and a bit sleazy How surprising that Carnegie[1] Mellon[2] University would honor a businessman and financier who donated a small fortune to the school! [1] https://en.wikipedia.org/wiki/Andrew_Carnegie https://en.wikipedia.org/wiki/Andrew_Carnegie [2] https://en.wikipedia.org/wiki/Andrew_Mellon https://en.wikipedia.org/wiki/Andrew_Mellon

tempodox 3y ago
Those guys were rich and powerful, but were they also self-centered and vain?
- Loughla 3y ago
  Their names are literally the school name now. So, that's probably strike 1 if I had to guess.

endisneigh 3y ago

Do you know who Carnegie Mellon is named after? This is an amusing take either way.

nraynaud 3y ago

I saw a graduation a few years back, and I had the same feeling, a financial backer got an honoris causa phd and made a speech.

thwarted 3y ago
Seems like a pretty good deal for the school. They need to run to kinko's to print out a fake degree (that says right on it that it's fake), and spend 20 minutes listening to a blowhard pontificate. I'd do that for a few million dollars at least once.
- nraynaud 3y ago
  I would rather send fake PhDs to little guys who did great stuff in their garage. (Or maybe business fake PhDs to rich people if they increased their net worth?)

2Gkashmiri 3y ago

I've been dreaming about georgetown/nyu/nw for a tax LLM but the cost of admission is too darn high. Looks to me unless I already have that kind of money, there is no way I can get admission there. Oh well. That's capitalism for you I guess

hgsgm 3y ago
So go somewhere else?

Ekaros 3y ago

I think only wrong thing there is that students are subjected to that bullshit. Now if it was the faculty or other donators it would be perfect.

senkora 3y ago

Tepper is a great building though, really nice.