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If a billionaire avoids taxes by giving the money to charity, in a “net gain, net loss” kind of way, doesn’t that mean the public tax-payers are effectively pay

If a billionaire avoids taxes by giving the money to charity, in a “net gain, net loss” kind of way, doesn’t that mean the public tax-payers are effectively paying the charity? I.e. by missing out on the tax the government would have collected. 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?

ryandrake 3y ago
> If a billionaire avoids taxes by giving the money to charity, in a “net gain, net loss” kind of way, doesn’t that mean the public tax-payers are effectively paying the charity? I.e. by missing out on the tax the government would have collected. 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.
- jdross 3y ago
  The math is that you're donating around 2.5x to 5x what you save in written off income / taxes, so there's a built in multiplier
s1artibartfast 3y ago
Opportunity cost is very different than actual cost, and even further from net loss. It has to do with what the null situation is. 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.
- ryandrake 3y ago
  > 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.
  - s1artibartfast 3y ago
    Yes, at least 20% to break even.
tengbretson 3y ago
That depends on whether you think government expenditures are tethered to tax revenue.
sshine 3y ago
Technically, the billionaire paid himself instead of the public.

ryandrake 3y ago

> If a billionaire avoids taxes by giving the money to charity, in a “net gain, net loss” kind of way, doesn’t that mean the public tax-payers are effectively paying the charity? I.e. by missing out on the tax the government would have collected. 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.

jdross 3y ago
The math is that you're donating around 2.5x to 5x what you save in written off income / taxes, so there's a built in multiplier

s1artibartfast 3y ago

Opportunity cost is very different than actual cost, and even further from net loss. It has to do with what the null situation is. 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.

ryandrake 3y ago
> 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.
- s1artibartfast 3y ago
  Yes, at least 20% to break even.

tengbretson 3y ago

That depends on whether you think government expenditures are tethered to tax revenue.

sshine 3y ago

Technically, the billionaire paid himself instead of the public.