[KMag]

There are some loopholes with donations, mostly regarding difficult-to-value benefits and also around donating dificult-to-value things rather than cash, stocks, and/or bonds.

But, if you donate $1.1 billion to an eligible charity (and claim to have gotten nothing in return), then the US government basically pretends that you never made that money, and your tax bill goes down by roughly your marginal tax rate times the size of the donation. There are limits and caveats, but in general, it's a pretty fair treatment. I'm pretty sure big donors generally under-report the value of having their name on a building, etc. However, I believe it's nearly impossible to wind up with more money in your pocket post-tax by donating cash instead of keeping the cash. (I'm not an accountant. This isn't tax advice.)

I'm not saying you in particular are claiming people are donating cash out of greed, but the way I hear some people talk about tax write-offs is very misleading. It seems many Americans believe that donating $1.1 billion in cash can result in a $1.1 billion reduction in tax owed (assuming a marginal tax rate under 100%). Presumably, someone that wealthy gets their marginal tax rate down around the long-term capital gains rate, so they're probably getting about $165 million in tax reduction in exchange for that $1.1 billion donation. (Again, I'm not an accountant. This isn't tax advice.)

(Now, one could buy $1 million in art, get it appraised for $4 million, and if your marginal tax rate is under 25%, get more than $1 million knocked off your tax bill. Like I said, there are some loopholes in valuation, but not for cash and marketable securities.)

That being said, it would be nice to see something where getting your name on a building or an event in your honor would come with some automatic accounting assumption that the value of the publicity is worth at least 25% of the donation. If you want the full write-off, take your name off the building.

[wolverine876]

> But, if you donate $1.1 billion to an eligible charity (and claim to have gotten nothing in return), then the US government basically pretends that you never made that money, and your tax bill goes down by roughly your marginal tax rate times the size of the donation. There are limits and caveats, but in general, it's a pretty fair treatment.

I think it's highly unfair in that it shifts decisions on social spending from the democratically made decisions of the people to a few wealthy individuals.

[whack]

The US government gets $0.16B less that it can control in social spending. But in return, a regulated non-profit institution gets $1.1B more in its budget. That's a pretty good tradeoff for the social good.

For an alternative way of looking at things - almost any economist would tell you that it is wise to tax negative externalities and subsidize positive externalities. This is one of the most foundational insights from microeconomics. And charitable giving is the closest to an ideal positive externality that you will find. Person spends money to a cause because it makes him feel good to do so. That transaction ends up helping other 3rd parties as well. Textbook positive externality.

https://www.economicshelp.org/micro-economic-essays/marketfa...

[wolverine876]

> The US government gets $0.16B less that it can control in social spending. But in return, a regulated non-profit institution gets $1.1B more in its budget.

There's no reason to think the non-profit accomplishes anything or doesn't accomplish negative things. And there is an opportunity cost to the non-profit getting that money rather than, for example, schools.

[whack]

> There's no reason to think the non-profit accomplishes anything or doesn't accomplish negative things

You could say the exact same thing about how the federal government spends its money.

> And there is an opportunity cost to the non-profit getting that money rather than, for example, schools.

There's also an opportunity cost to the government getting that money, rather than, for example, educational non-profits.

Overall, do I think the federal government would do more good with the same amount of money? Probably. But would the federal government do more good with $0.16B, as opposed to the non-profit sector with $1.1B? I highly doubt it.

[hpkuarg]

> it shifts decisions on social spending from the democratically made decisions of the people to a few wealthy individuals.

To the degree that it's possible to amass wealth in this country without having to coerce people (a la crony capitalism), the money from those few wealthy individuals are a time-delayed, indirect sum of the democratically-made decisions of the people to spend their hard-earned dollars on the products and services those wealth individuals have offered.

Philosophically, it's not all that different from the people's will being indirectly expressed via their elected representatives in government.

[namdnay]

And therefore we should just make the richest person the president, because he’s been elected democratically by our spending! Genius

[vmception]

This is very inaccurate.

I dont really know where to start.

There are circumstances where you cant get your name on a building from a donation, there are circumstances that circumvent that requirement. There are circumstances where there is no tax deduction because the donation already occurred from another non profit.

These wealthy people are going to run circles around the the general understanding for another 100 years. Bite the bullet and pay a nonprofit lawyer to understand whats possible.

There are things you can do with asset valuations it just isnt that relevant

[KMag]

To be clear, you're asserting that by donating $1.1 billion in cash, they're likely getting more than that sum multiplied by their marginal tax rate in tax reduction?

I'm honestly curious what the loopholes would be.

[acchow]

Not a donation to a university.

However, rich people set up their own 501(c)(3) organizations to which they are boards of to get free flights, hotels, meals, etc from. Basically, instead of spending that money directly, they "spend" it via donations to their 501c3, and their 501c3 sends them on trips

[vmception]

much closer!

they donate to their own 501c3, and that 501c3 can donate to the next thing that makes the actual headlines. But the important thing for the conversations had here is that their own 501c3 can also invest and grow money. It can have lots and lots of capital firepower. When it uses that, there is no tax deduction for the owner. And in an article or headline, there is no information to extrapolate whether they were motivated by a tax deduction. thats my main point.

From my perspective, People are so desperate to find an issue with a large money movement that it is clouding their ability to understand what to even look at whether there is an abuse, advantage or not.

[vmception]

To be clear, I'm not asserting that.