I frequently see the "they're just doing this for the tax breaks" sentiment for these kinds of donations (especially when the donor is a corporation or hyper-wealthy individual) but I don't understand the reasoning.

From what I understand of tax deductions, a donation of $X basically means that the donor can skip paying taxes on $X of income. This results in a savings of tax% * $X, which is always < $X. Since tax% is always < 100%, it seems that the donation is always negative-sum for the donor.

The tax deduction also seems like a boon for the beneficiary, since they receive $X instead of (1 - tax%) * $X.

Can you help me understand the cynicism? How does the donor benefit here (aside from PR etc)? It seems like they do not come out ahead financially, and the tax breaks benefit the recipient of the donation.

I think ultimately this cynicism is born out of envy/jealousy for the good will that such a donation engenders.

As you've pointed out, any logical analysis would conclude that, even in the most extreme cases, there's still a sizable positive benefit to society.

People have a problem with "undeserved" good will as if good will is some scarce resource that's limited in supply. I think the reality is they're envious.

Angry. The word you are looking for is angry.

Its just a constant reminder that we live at the mercy of these elites, that our tax dollars don't appear to have any effect in bringing about the change that we want because these scumbags have rewritten the laws in their favour so that the money only concentrates towards them.

What can we do about it? Absolutely nothing, but I'm sure as hell not going to pander to their 'benevolence'

Is there anything Bezos could do at this point that would NOT make you angry?

Somehow use most of his filthy amount of wealth, much of it acquired in filthy ways, to things that are not him?

I'm perpetually baffled at how one person having this much wealth is somehow considered okay. Sure, we can argue about where it goes instead, but jesus christ is this an unfathomable amount of wealth that really shouldn't be in one person's control.

I honestly cannot understand this attitude. It sounds like pure jealousy. You are saying that we should stop people from being too successful.

Bezos earned all of his wealth honestly. He offered products and services for prices that people were willing to pay. He did not steal. He did not force anyone into anything. If he is stupid rich, it is because he was able to provide things people wanted more effectively than anyone else.

How can you possibly justify punishing success? What right do we have to give him money for doing what we want, and then turning around and taking it away. What sort of message does that send to other people?

"Work hard and be successful, but not TOO successful..."

I could go into the broader problem I have with a single person having that much wealth/power.

But really, mostly it's that Bezos is a giant piece of shit. His company has a long history of controversy and anything good he does doesn't erase that. That has nothing to do with all the upstanding people in the world who are trying to be 'successful'.

Personal income tax deductions are additionally capped at 50% of income (and maybe 30% for unearned income? I forget the specifics). So if Bezos' income is $1/year, basically none of this would be deductible if it came from his personal fortune.

That said, I think GP is expressing skepticism that the total $10B figure comes from Bezos' personal fortune rather than being a spending plan for AMZN's business. The article doesn't exactly make this clear.

> That said, I think GP is expressing skepticism that the total $10B figure comes from Bezos' personal fortune rather than being a spending plan for AMZN's business. The article doesn't exactly make this clear.

Yep, more along these lines. Lots of people are latching on the "tax break" but I thought I made a larger point about where the $10b figure is coming from. That's part of my cynicism: Bezos gets to write a great headlines with big rounding number like $10b, but I wonder what kind of creative accounting will be applied here.

It's also quite possible it's not $10b upfront, but rather a non-binding commitment to contribute $10b over some number of years.

I'd bet it will be over a number years -- it'd be next to impossible to spend 10b in year in any reasonably responsible way.

Bezos can avoid that limit by donating his Amazon shares directly

No, he can't. That's exactly what the lower 30% limit is on — gifts of appreciated capital.

If he sold the shares first, he could claim up to the higher 50% limit. But he'd owe capital gains taxes on the sales, which is almost certainly more than the additional deduction.

He can only deduct up to 30% of his AGI, but also by giving the shares to a foundation he does not realize any of those gains. So the entire donation effectively becomes tax free.

This isn't responsive to earlier comments in this thread and doesn't support (or retract) your earlier wrong statement.

You previously stated, "Bezos can avoid that limit," with "that" referring to either OP's or my statement about AGI deductibility limits, which is incorrect.

I think you might now be trying to make a statement about being able to claim capital gains as an AGI deduction without paying taxes on those capital gains? Which is true enough, but not responsive; it's just a fact that was never in dispute.

Yeah the donation deduction is just a form of leverage. You effectively pay X but the charity gets 2X (actual multiplier depends on your marginal tax rate).

One way of looking at it is that the government is "matching" part of your donation with tax money.

But you never make money that way.

You can't make money this way but you can still argue that money that would have gone to taxes has now been redirected by an individual to a cause they solely decided is worthwhile.

But actually the state (society) decides which donations are tax deductible.

Well, elected officials decided that very early in the US's history of personal income tax. It's not like we have direct democracy and 2020 society has voted to approve this policy. We didn't have a federal income tax before 1913, and the government added the charitable deduction during the 1917 WWI revenue act, which also raised the personal income tax rates.

As far as I know it's simply never been touched since 1917.

Some folks just object to that policy.

The IRS still makes case-by-case decisions about which organizations are legally charities so there is oversight.

You're not wrong, but I don't think this is responsive to my comment. Maybe replying to the wrong one on accident? (Also: any organization can claim religious status and becomes essentially exempt from IRS review of charitable status. See: Scientology. Not that I expect Bezos' fund to do that.)

You make it sound like "decides which donations are tax deductible" was done 100 years ago and never changed which isn't the case. Now if you'll excuse me I have to file some paperwork for the Church of the V8...

I didn't say that and I'm sorry it was unclear. I said:

> the government added the charitable deduction during the 1917 WWI revenue act

The distinction I was trying to draw was that prior to 1917, charitable giving could not be deducted at all, and what changed was that the legislature of the time decided to make it so. It's 100 years ago, but really not that long compared to the history of this country.

If you want to say the IRS represents the will of society, I think I would mildly disagree. They're not elected. That said, they are largely governed by rules set forth by the legislature, who are at least elected, if not always representative.

> You can't make money this way

Are you sure? What about something like this:

1. Buy art for $1M

2. Get your friends to bid up the price of the art by selling other works from the artist to each other at inflated valuations

3. Donate art to art gallery with a valuation of $10M

4. Deduct $10M donation from your taxes

I've seen this (exactly this, actually) line of reasoning regarding taxes and art before. While I think that it is somewhat relevant it's still not legal to do that, at least not where I live.

A) that's fraud

B) you still need $10 million of income to deduct

C) this isn't making money. You can't directly deduct a collectible or security you donate. You can give it away without realizing any capital gains however.

(A) Yes.

(B) Replace $10 mill with any figure up to 30% of your actual income. The figures are illustrative, not binding.

(C) Consider not doing the fraud vs the fraud. If you and your buddy both do the fraud, you only expend the purchase price but deduct the higher price. As a result you have generated a deduction from thin air. As long as the higher price multiplied by your marginal tax rate is greater than the lower purchase price, you've made money. So at, say, a hypothetical 50% bracket, you need to inflate it by 100% to break even. At a 25% bracket, you'd need to inflate it by 300% to break even.

It's a profit, but it's definitely fraud and seems pretty obvious. It's essentially a pump and dump scheme, but instead of selling the inflated asset, you donate it while it's still inflated and deduct the difference against income.

Seems like you'd just take the $9M of profit and pay the gains rate on it and at least be on good terms with the IRS if not the FBI/SEC. :)

Yeah, the only reason to charity-wash it would be if you thought it was more likely to go uncaught. I suspect you'd be caught in either version of the fraud. :-)

That's simply tax fraud.

Which is the point of the tax deduction in the first place.

The objective is to make wealth, not money.

The argument seems to be that the donor is not making any actual financial sacrifice, and therefore shouldn't enjoy any publicity or goodwill for their non-sacrifice.

There's also this cynical idea that these donations are made purely for PR purposes, not out of any desire to do good. But that's intangible and unquantifiable.

"donations are made purely for PR purposes, not out of any desire to do good"

I dont understand this sentiment(not saying you agree with it). Let's express this as a contract: in exchange for 3 compliments, 4 pats on the back, and 2 rounds of applause, $WEALTHY_PERSON agrees to donate $LARGE_AMOUNT to a charitable cause. Let's also assume that $WEALTHY_PERSON is proficient in business, and wont continue to contract with parties who do not honor their end of the bargain.

Assuming you want these charitable contributions to continue, would it not be prudent to give them their 3 compliments, 4 pats on the back, and 2 rounds of applause??

Not that I am saying all wealthy people donate for no other reason than for pr. Just that if you think that, you might not want to go out of your way to tell them that they are not getting what they wanted.

But the donor is making an actual financial sacrifice, a large one, as the GP explained.

Maybe. If Amazon buys $10B worth of electric trucks and clean energy (which coincidentally saves them money and increases the stock price) then Bezos hasn't sacrificed anything. But calling it a fund makes me think this is not the case. Anyway, philanthropy shouldn't be measured in terms of sacrifice.

I did _not_ say he's doing this just for tax reasons. I asked if the $10b are really $10b that won't result in any tax breaks? Is Bezos letting go of $10b, or will he get a deduction, perhaps using a similar formula to the one you posted?

We're being duped on headlines such as "Bezos commits to $10b" when his net worth won't be affected by that much.

The cynicism comes from the PR, sure, but also from a preservation perspective. I doubt any of the grants Bezos is giving will result in research that shows in any way what Amazon is doing is bad for the environment. It won't propose an increase in taxes on gas based engines like lawn mowers, shipping plastic from overseas, selling meat based products, or if Amazon moved Prime to 5 days shipping instead of 1, it could bundle deliveries and reduce trucks on the street and the gas it uses.

And for sure, it won't be a critical view of the American consumerism (which is fueled and promoted and enhanced by retailers like Amazon) and how if the world had even 1/10th of the standard of living of the US the planet would be in flames right now.

It will probably be something like investment in renewable energy, electric trucks, drone delivery. All new stuff, investment opportunities, things that coincidentally help Amazon while helping the world. Don't get me wrong, it's all stuff we need, but the cynicism comes from Bezos being committed to fighting climate change as long as it doesn't take his money, and actually, it should probably make him money in the process.

> the cynicism comes from Bezos being committed to fighting climate change as long as it doesn't take his money, and actually, it should probably make him money in the process.

If this is the way it works out, isn't that actually pretty great? I mean, I personally find Amazon to be quite useful, so it if could continue being an economically viable business while also fighting climate change, I'd be very happy.

You should read the book the OP mentioned. Most of the charities these billionaires donate to are also under their control. So the beneficiary and the benefactor are one and the same. Sometimes the moons align and the billionaire, the charity, and the public good are all served. Other times you get the Trumps' version of charity. And in some cases they can be harmful, such as the founder of Mozilla donating to charities that were anti CA Prop 8.

These charities are a way to bypass the democratic method of funding public goods. I don't believe the US military budget should be as big as it is. Yet I pay taxes that fund it whether I agree to it or not. If I was a millionaire I could fund a religious school that taught white Jesus as the one true religion instead of funding secular state schools.

The bigger problem is the people who have created many of these problems now want to be in control of the solutions.

He will definitely save a bit of money on taxes. I suspect his marginal tax rate is ~24% (20% Cap Gains + 4% Medicare). So this donation will lower his net worth by ~7.6B.

In any case, this is a giant amount of money by philanthropic standards. I doubt more than 4-5 people have ever given as much for all of the things they support.

Normally I'd resent the $2.4 billion tax dodge, but given who receives the money right now, I'm okay with.

I'm not sure it's a "tax dodge", he just won't pay income tax on the money he donated.

Finally someone that gets it.

Feel free to complain about "tax loss" as in the government getting less money than they would otherwise, but it's definitely not a "tax dodge" - tax dodging only makes sense if you actually end up with more money than you would otherwise - i.e. you "earn" $100m but then you "dodge tax" to pay only $10m tax instead of $20m, and end up with $90m after-tax income rather than $80m. Multiple ways of doing that - the obvious one is moving your tax residence to a 0% tax haven, the less obvious one is to artificially inflate the value of an asset (e.g. a work of art) and then "donate it" and write off that from tax (e.g. buy it for $10k, donate it when it's "worth" $10m, write that off as a "loss" and pay only $10m tax instead of $20m).

Why does this matter?

If he truly is pledging $10B, it can only be a win for society and the future of humanity. It shouldn't really matter if he gets a tax break or not.

Well, three things.

First of all, I searched and couldn't find he's actually giving $10b. What I mean is that I don't know if the $10b accounts for any Amazon investments / costs.

Second, it's not -$10b if he's getting a tax break for some of this. It's $7.6b as someone else mentioned. I know, still a lot of money! But he's not loosing $10b from his fortune.

Third, in this case you happen to think it's a win for society and the future of humanity. Other billionaires give money for causes they believe, like The Koch family for "advancing liberty and freedom", or Bloomberg advocating for a third term as mayor. The lack of accountability for the influence billionaires have in our society should be a concern. We praise when they give to causes we believe, but the system that allows them to do this has nefarious byproducts. It's like we're watching billionaires shape our society and our culture and think that's alright.

> Second, it's not -$10b if he's getting a tax break for some of this. It's $7.6b as someone else mentioned

No. It's $10 billion. 10 billion that he won't pay tax on. But he gives $10 billion and the cause receives $10 billion. The $2.4 billion is money that the government won't get in taxes.

> The lack of accountability for the influence billionaires have in our society should be a concern

The thing is, a lot of us like that what people do with their own money is not accountable to the government.

I think it's essential that not all of society is under control by a single central power.

EDIT: As someone said on Twitter - "Say what you want about billionaires, I doubt any of them would have decided to give farmers $10 billion to not grow crops."

This "single" central power is actually 250M potential voters, 130M actual voters, 20M workers, 90k, 50 states, and 20k cities / town / villages.

On the other side, 600 billionaires. Which because they figured out how to earn and keep a lot of money somehow makes them capable of fixing women's issues, racial conflicts, climate change, mass incarceration, homelessness, education, hunger, and healthcare problems. Somehow, they will do all that without influencing public policy, in a sustainable, ethical, morally justifiable and rightful way, so as long as we let them keep getting richer.

The US federal government is absolutely a single central power. That its leadership is selected democratically is good, but doesn't change that.

I don't expect billionaires to be perfect, but so far none of them has invaded countries for mistaken reasons, killing hundreds of thousands of people, or locked up millions in a War on Drugs.

I think we can quibble on what central really means, but the fact that they're democratically elected is the important part here. We make the government, and can direct its actions to what should benefit us the most. None gets a saying on what the Koch family or Bezos do with their money other than themselves.

> I don't expect billionaires to be perfect, but so far none of them has invaded countries for mistaken reasons, killing hundreds of thousands of people, or locked up millions in a War on Drugs.

I know a lot of people that would pin the gratuitous invasion of other countries on the industrial-military complex and control of oil and all the money that depends on it.

The War on Drugs is a shame, and harder to blame on rich people, probably with the exception of private prisons, which is a relative recent development. Are there any billionaires trying to solve this problem? Spending money to change policies so drugs get treated as a public health problem? Fighting against police brutality and racism? Curbing sales of opioids?

And inversely, are any billionaires fighting for the police state? Militarizing the police? Putting more and more opioids on the streets? Privatizing prisons? Selling junk food? Cigarettes? Animal factory farming? Massive student debt? Destroying elections? Fighting against unionization? Any of them against climate change?

Is all that we have left the hope that Bezos has more money than someone who owns a coal mining company so we get the climate change efforts we want? Are we betting the future of the planet on a hope that the richest people alive will be on our side?

I just think it's an important realization that while a democratically elected central government is much better than, say, one run by absolute hereditary monarchy, it is still one central government, and it will end up being run by a few people who make the their way to the top.

> I know a lot of people that would pin the gratuitous invasion of other countries on the industrial-military complex and control of oil and all the money that depends on it.

I don't know how you can square that view with the one where the voting public controls the government. Is the voters or the industrial-military complex in charge? Can't be both.

The human ability to hold completely opposite views at the same time truly is something!

> Are there any billionaires trying to solve this problem?

Well, the Koch brothers certainly do/did. A few quickly Google links:

https://www.axios.com/koch-network-opposes-sessions-restart-... https://www.denverpost.com/2017/06/25/koch-network-trump-adm... https://www.theatlantic.com/politics/archive/2015/03/do-the-...

You can whittle those 130M actual voters down into 25M voters in important swing states.

It's always interesting that often those who yell the loudest about private power / monopolies (even when they're not), are always advocating for more power in the monopoly of violence - the government.

I wouldn’t call relying on consensual handouts from rich people a win for society.

Maybe governments are good sometimes, but sometimes individuals unilaterally deciding something is a problem can be good too. We can have it both ways, and we currently do.

> sometimes individuals unilaterally deciding something is a problem can be good too

This view is mostly true if you agree with that thing being a problem. What if the billionaire unilaterally decides to spend 10B to combat the pro-choice/pro-life movement (whichere you agree with)?

I think individuals that answer to no one is important for the 'random walk' aspect of solutions to problems. If someone fails then oh well. If they succeed it perhaps provides a model for less risk averse agencies to pursue, perhaps even governmental bodies.

Politicians are too risk adverse to approve something that might turn out to be a waste of money. Organizations like these oftentimes even work with government on some level doing stuff government isn't really able to do for various reasons. And 10 billion is a drop in the bucket for the US government.

I think in the long run it tends to work out better. You're focusing on a single issue I might disagree with. I'm looking at all issues this can affect - those I agree with, those I disagree with, and those that everyone agrees with but doesn't really give enough of a crap about so they don't push to have their governments allocate a budget for it.

Looking at just rabidly disagree/agree is a very thin slice of things opposing this sort of action affects.

So to answer your question, yeah, I wouldn't oppose it for an issue I disagree with, because even if they exist I think the system as a whole nets out towards the positive end of things.

Depends where it is spent.

The people who make the "they're just doing it for tax deductions" argument give me the feeling that they don't understand what a tax deduction is.

All it means is that his taxable income will be whatever his income is minus that $10B. He's not getting a net benefit from doing this.

To make the math easier, consider someone making $100k and paying a 30% tax rate. If they donate $10k to charity, rather than pay 30k in taxes, they're paying 27k in taxes. They saved 3k in taxes, but they still donated $10k, so they're out 7k.

If his entire objective was to pay less in taxes, stashing it in the Cayman Islands would make way more sense than donating it.

As others said, why should it matter? I would be happy even if he got an 100% tax credit. what percent of tax revenue would have gone to climate change vs bombing some civilians in Afghanistan.

We shouldn't care because it's better that a billionaire chooses where that money goes instead of a democratically elected government?

I'm not poking fun either. That's really what you seem to be saying. Does this still work if he puts this money towards a cause you're not keen of?

So far as 538 can figure out, our democratically-elected government has spent less than $10 billion fighting climate change in the past 25 years put together.

https://fivethirtyeight.com/features/how-much-is-the-governm...

So personally I'm not impressed with our government's ability to allocate funds towards useful causes.

If another billionaire spends their money on a cause I don't care about so much, fine, at least they didn't spend my money on it. And they'd go to prison if they did anything near so offensive as some of the things the government has been up to lately.

Parent was talking about giving a 100% tax break to him because he agrees with the cause.

The post you’re replying to already explained where the democratically elected government is choosing to spend the money. Billionaire seems to be making better decisions.

“Billionaire seems to be making better decisions.”

Don’t buy into that. Otherwise we’ll soon have a dictator who gets things “done”. Part of the problem with democratic governments not working well is that the system gets manipulated by rich guys pushing their personal agenda.

So you suggest taking power away from CEOs, putting into the hands of the government (effectively making it the CEO) which has police, military, and prisons? That is how you get a dictator.

Between CEOs and governments, which has a historically higher body count? Who's jailed more people for not agreeing with them?

You say the problem with democratic governments not working well is that it gets manipulated by rich guys.

What happens when big business and government are the same thing? That makes for even easier corruption.

What you have right now is crony capitalism, where CEOs have a massive influence over government, and use that to enact their agendas (corporate socialism). We're already at big business and government being the same thing.

I don't see anyone in this thread suggesting putting more power into the hands of the government. How about we let the billionaires spend money on the causes they want and just stay out of it (NO tax breaks). That's actually less government.

Because the government is doing a terrible job with the trillions it already spends? What difference would 10 billion make to the US government? Basically nothing.

This sort of knee-jerk antagonism against billionaires spending their money on philanthropic causes is so common these days. I think Scott over at Slate Star Codex has a very good piece on this [1].

[1] https://slatestarcodex.com/2019/07/29/against-against-billio...

Nonsense. Parent stated Bezo's should get a 100% tax rebate. I never voted to subsidize Bezo's philanthropy to the tune of 100% of tax revenue, and I like to think I live in a democracy. Nothing I said was knee-jerk antagonism.

I gave $100 to the Girl Guides last week without any expectation of a 100% tax rebate. Who am I to decide that tax payer revenue should 100% go towards the Girl Guides? Maybe other tax payers would prefer it went towards something else?

As far as $10 billion being basically nothing... we wouldn't be talking about it if it was $100, but my opinion wouldn't change.

You're right, but also what are we doing in the meantime? What's the point of having that kind of money except to do huge initiatives like this?

Hey I don't care what he does with his money as long as it's legal. I'm not going to give him a big huge tax break so he can decide where my taxes go though.

> Does this still work if he puts this money towards a cause you're not keen of?

This also applies in reverse. Here's an interesting article on some of this stuff if you're looking for another opinion - specifically #4 and on: https://slatestarcodex.com/2019/07/29/against-against-billio...

What percentage of tax revenue do you think goes to bombing civilians in Afghanistan?

I think 20% of tax revenue and 50% of discretionary budget goes to the military.

I think this is too much and that there are areas with much better ROI where this money could be spent.

https://en.m.wikipedia.org/wiki/United_States_federal_budget

Ok, let's continue on. What percentage of the military budget do you think goes to bombing civilians in Afghanistan?

I was using the bombing of civilians as a illustrative example and dont know the true cost, as it would depend on how you choose to measure it.

For example, if you divided the appropriated 750 billion for the war in Afghanistan by the 40k civilians killed,you would get around 50 million per civilian. This neglects the time value of money, so in that respect, it would be an underestimate.

However, this is all besides the point I stated in my last post. It seems you have on opinion on the subject, and if you would like to discuss it, I suggest you state it plainly.

We're pretty light on details. I take it as he will probably gift $10 billion dollars worth of stock from his personal portfolio to a 501(c), which they will use as an endowment. I think this would bypass capital gains altogether?

But 'pledge' could mean any number of things, like selling stock slowly over time.

For sure light on details but it seems like he (or a family office) will be grant making and it is coming from him not his foundation or Amazon.

https://techcrunch.com/2020/02/17/jeff-bezos-announced-a-10-...

Thanks, that's useful information in the context of this thread. Looks like the money will come straight from him and not any foundation - something unusual these days, but it does show his level of commitment.

He's going to find a way to make those tax savings either way so it's great to see him doing something positive.

> Is Bezos, worth $130b today be worth $120b tomorrow because of this?

I would think so with this sort of investment. It depends on what you mean by tomorrow. I like the 18 year cycle because that is how long it takes to produce a crop of tax paying voters. Years 0-5 atmosphere and nutrition quality carry more weight during that physical development term.

If he wants a "trillion human Solar system with a thousand Mozart and Einstein minds", then citizen factory Earth is a good first step?

>Is Bezos, worth $130b today be worth $120b tomorrow because of this? Or do we have to add up a hundred different things with some creative accounting and lots of goodwill?

If ($10B to address climate change) is true, then why should anyone care if Bezos' $130b today becomes $120b tomorrow, or $200b tomorrow?

I care about whether the $10B will be spent effectively and efficiently to combat climate change, and that's it. Full stop.

Income tax deductions are limited to a fraction of income. I don't think that's a meaningful complaint there.

The perhaps more interesting complaint is that the fund is still ultimately controlled by Bezos; he can only spend it on some vaguely charitable things, but ultimately he can hire and pay cronies, choose to fund his choice of projects, etc, etc. It's both not his and still his money.

don't forget the necessity for major public relations efforts when your company is under fire for tax evasion, dangerous (sometimes lethal) work environments, not properly governing its platform leading to rampant fraud, and on and on. But hey. Always two ways to look at any situation.