this post was submitted on 13 Mar 2024
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Malaria (fedia.io)
submitted 5 months ago* (last edited 5 months ago) by [email protected] to c/[email protected]
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[–] [email protected] 118 points 5 months ago* (last edited 5 months ago) (10 children)

I consider Gates to be "better" than most billionaires, but, I recognize that he's still a billionaire, and as such, his philanthropic endeavors are as much about him having wealth and maintaining his wealth as they are about him being a "good person".

Let me explain: it's a tax write off. Basically, billionaires often donate to charity, not because they're particularly giving, but because it reduces their taxes. They basically take the money they would otherwise pay in tax, and instead pay it to a charity that then does whatever they do with it.

By establishing a charity for himself, he can personally pay his charity the money that would otherwise go to tax, then as the charity, dictate where those funds are spent. Instead of giving the money to someone else to do with as they will, he basically pays himself, so he can dictate what happens with his money.

In turn, he pays little to no taxes, and only has to ensure the money circles around his charity somehow. That may be in the form of paying himself (or others) as a function of running the charity, or sending the money to places and people who he believes can benefit from it (or indirectly, benefit him).

It becomes a large circle jerk of money that otherwise would have gone to the government for taxes.

EDIT: before this gets any worse: he's not making money with tax write-offs. That's literally impossible. The point is to control where your money goes. Here's an example. In situation A, bill, the individual, wants a thing to happen.... Say, it's research into a new form of energy. So Bill takes $1000 from his gross income and pays someone to research that thing to make it a reality. At the end of the year, bill gets a knock on the door, it's the tax man, looking for his cut off the $1000 bill earned. His cut is 30% or $300. Now let's move to situation B. Bill wants the thing to happen, but Bill owns a charity. So Bill donates the money to his charity and gets a tax write off for it in the form of a receipt that he can submit later. As a representative of the charity, bill then pays that $1000 to people to make the thing. At the end of the year, the tax man comes calling for his $300 of bills income. Instead, bill hands the tax collector the receipt for the charitable donation he made with the $1000 of income. The tax man accepts it and leaves with nothing.

The charity is a tax shelter so that bill has more money available to spend on the things he wants to have happen. So more of his money can go towards those things without being taxed.

I hope that clears it up a bit. Jesus, there's a lot of people here that don't understand tax write-offs. There's more that simply don't understand me, or have literacy issues, and assume far too much about what I'm saying here. Yikes.

[–] [email protected] 53 points 5 months ago* (last edited 5 months ago) (2 children)

I’m convinced no one on Lemmy or Reddit knows what a tax break actually is or that YOU DON’T MAKE MONEY FROM THEM!

[–] HauntedCupcake 40 points 5 months ago* (last edited 5 months ago) (3 children)

The above post seemed to be saying that:

  1. Bill Gates pays less taxes as he donates to a charity

  2. Bill Gates runs that charity

  3. Bill Gates then gets to decide how that charity spends his donated money

This then means that he can use what should have been tax to:

  1. Pay himself with the charities money, as he is an employee of the charity

  2. Lobby politicians using the charity's money

  3. Otherwise direct the charity to work in his best interests

Which part are you disagreeing with? I guess he doesn't "make money" in the strictest sense, but it sure seems like he's exploiting the system to keep more of it

[–] Serinus 25 points 5 months ago* (last edited 5 months ago) (1 children)

Pay himself with the charities money, as he is an employee of the charity

Why does Bill Gates earn nothing through the Bill and Melinda Gates Foundation?

Lobby politicians using the charity’s money

A 501(c)(3) organization is subject to heightened restrictions on lobbying activities, A 501(c)(3) organization may engage in some lobbying, but too much lobbying activity risks loss of tax-exempt status. Lobbying may not constitute a “substantial part” of the activities of the 501(c)(3) organization. ^[source]

Otherwise direct the charity to work in his best interests

I guess you can argue that eliminating malaria is in his best interests, but it's pretty reaching. I guess nobody should do anything good if it might indirectly benefit themselves.

[–] HauntedCupcake -1 points 5 months ago (1 children)

Fair, in this example Bill Gates isn't exactly the best one to pick. And the clarification on the lobbying rules is definitely a valuable bit of information, so thank you for adding that.

I was more trying to point out that the original comment wasn't saying that the tax break "made money". It's all about shuffling it around to avoid taxes.

At the end of the day, it allows Bill Gates (or other billionaires) to spend otherwise taxable income on whatever they deem important. Whether or not you agree with how they're spending their money is irrelevant

[–] Serinus 8 points 5 months ago

to spend otherwise taxable income on whatever they deem important

Yes, that's absolutely true, but the language hides the truth a bit. People don't get the nuance of what "taxable income" is.

If Bill donates a thousand dollars to charity, he saves ~$370 in taxes. That means he's still losing $630 on the deal. The government gets to effectively triple their money by allowing you to decide where it goes.

There may also be a limit of 60% of your AGI? I'm not sure how this works with billionaires.

[–] [email protected] 17 points 5 months ago* (last edited 5 months ago)

Issue is if he's paying himself with the charity's money he'd have to pay tax on that, and if he wrote that off with a donation and paid himself again then it'd reset the loop - there's no loophole there, literally, as it'd be an endless closed loop of transferring money.

Given the best interests of the US government are destabilising other countries and supporting unfair healthcare companies, and given what is known about Bill Gates' charity spending I think a higher proportion actually goes to the betterment of society than would if it went to the US government

[–] [email protected] 11 points 5 months ago

The part where he "gets to keep more of it."

$1 in charitable contributions does not lower your tax burden by $1, and certainly not more than $1.

If that dollar would have been taxed as capital gains, assuming 20% capital gains and 3.8% NII tax, it saves 23.8 cents meaning the $1 donation costs 76.2 cents.

If that dollar would have been taxed as normal income, assuming a marginal tax rate of 37%, it saves 37 cents meaning the $1 donation costs 63 cents.

(These two examples are not intended to be an exhaustive list.)

Charitable contributions cost money, just not as much money as they would if there wasn't a tax deduction.

[–] [email protected] 11 points 5 months ago

I've come to the same conclusion. Every time there's a corporation or billionaire either scrapping something or giving something away, then it's "for the tax breaks".

[–] druidjaidan 34 points 5 months ago (1 children)

None of that makes sense with how taxes actually work. For every $1 donated to charity, the maximum you're getting back is 0.37 from the tax deduction. That's assuming you're in the max tax bracket. The higher your tax bracket, the cheaper it is to give to charity, but it's never better than keeping the money yourself.

There are games that can be played with charitable donations, but cash to a foundation is not really the way. The real games are played around with hard to value assets like art/jewelry where massively inflated values and weird lease terms can lead to some really questionable outcomes. For example "loaning" art to a museum and writing off the "rent" after having it appraised for some insane value.

[–] [email protected] 7 points 5 months ago (1 children)

The 0.37 you get back is the tax you paid on the income. The exercise is more about controlling where your money goes and what it goes to.

Instead of giving the money to the government, who you may not agree with, you're giving it to a cause that either directly or indirectly can benefit you, whether that cause is a direct benefit in the form of helping with a problem that is causing you trouble, or simply as a good PR move.

You spend money to get there, but now often than not you're getting a benefit from the transaction.

Billionaires and their mentality and interests are fairly well known, for the most part. Bill is a co-chair of the foundation and likely recieves many benefits from holding that position, including a salary. He can also, as chair, influence who is hired, providing stable employment for people who are in his favor, while also getting a massive boost to his public image, all while paying himself a salary. He can also direct the funds that would normally go to the government as tax, who may spend it on things he doesn't want to happen, and redirect those funds to something he would like to see happen, such as R&D into technologies (which is a nontrivial part of what the foundation funds).

For Bill, the charitable foundation is a win all the way around, except to his billion dollar bank account, which I'm certain is providing plenty of income on its own.

Quite literally he's taking money out of the hands of the government and making sure money is being funneled into things that he thinks should happen. It looks very selfless on the surface but gates is a business man, this is just his most recent endeavor.

[–] Telodzrum 20 points 5 months ago (1 children)

Bill’s income is near zero, his personal tax burden is probably less than yours. This charitable giving isn’t offsetting his tax liability; it’s a hobby.

[–] Anticorp 14 points 5 months ago

I suppose if you mean traditional income, but he gets tens of billions of dollars per year in capital gains. I remember a few years ago he said "sure, I paid three billion dollars in taxes last year, but I should have paid more". I read about ten years ago that he donated $10 billion dollars to charity and his net worth still went up $9 billion. His financial holdings are so enormous that his net worth still increases regardless of giving away ridiculous sums of money. I remember Chris Rock talking about Gates a couple decades ago and he said "you can't get rid of that much money. You can't give it away fast enough to lose it", and that's a pretty accurate statement.

[–] [email protected] 19 points 5 months ago (3 children)

Let you explain? That's literally not how taxes work. Who falls for this shit?

[–] [email protected] 13 points 5 months ago (1 children)

The number of people who don't understand the difference between a tax deduction and a tax credit is too damn high.

[–] unreasonabro 0 points 5 months ago* (last edited 5 months ago)

It's also an index of the health of society, if you think about it, and as you've noticed, society is pretty near dead.

Sharpen your pitchforks.

[–] [email protected] -3 points 5 months ago (1 children)

I'm not sure what you mean, since money you donate to charity is exempt from income tax. The taxes you would otherwise pay on income that you donate is refunded to you.

[–] Maalus -5 points 5 months ago (2 children)

People who look at a billionaire and think "I need to kill him". Anything anyone with that kind of money does, is treated as the greatest evil in the entire world.

[–] [email protected] 3 points 5 months ago

I would like to kill a billionaire. Just once, as a treat.

[–] [email protected] 1 points 5 months ago

Honestly if it was me and Donald I'd do it.

[–] sunbytes 14 points 5 months ago* (last edited 5 months ago) (1 children)

You're not wrong.

Check out the Behind the Bastards episodes on him to see how his charitable efforts often end up more destructive than not.

[–] [email protected] 7 points 5 months ago* (last edited 5 months ago)

Isn't he the sole reason that the covid vaccine (that was funded by 97% publlic funding) was sold for a profit?

https://www.theguardian.com/science/2021/apr/15/oxfordastrazeneca-covid-vaccine-research-was-97-publicly-funded

[–] unphazed 13 points 5 months ago

Just listened to Behind the Bastards on Gates... Gates Foundation is all about drumming up capitalism in other countries. Worth a listen I assure you.

[–] Cliff 3 points 5 months ago

“Charity is the drowning of justice in the craphole of mercy.”

[–] Anticorp 2 points 5 months ago

He's not doing it for tax write-offs, he's donating billions of dollars per year because he genuinely wants to help. He crushed a lot of people to get to the top, that's indisputable, but he's genuinely trying to offset that destruction now, and he's possibly at a net positive effect on the world now. Actually, I'd say he's probably at a net positive impact on the world.

[–] [email protected] 0 points 5 months ago

nah, he took LSD, quit microsoft and started philanthropy...