It’s not really a “loophole,” it’s a standard way to give away absurd sums of money.
Have you ever tried to donate billions of dollars? It’s actually extremely difficult.
You have to find causes you’re passionate about/things that society needs, find the correct charities to give the money to, make sure your money actually goes towards the thing they say it will (this is difficult), and then figure out how much you can actually donate (you can’t just give N dollars to company Y. They’ve got zero experience managing that much money, and no way to scale into doing it efficiently.)
What happens then is you have $100b to donate, and mostly only do it $10m at a time or less.
Warren’s kids are old now. They’ve all been donating money for YEARS (it’s a mandatory part of their trust).
So yeah, you receive tax benefits by transferring shares to a foundation you also control, but that money is now earmarked for charity. It doesn’t flow both ways, and the laws on this are very tight (bad actors will find a way, but what’s new?).
Sure that is the typical way to donate your wealth but there are many other ways than giving it with control to your children. I have no judgement but doing it this way is a nice way to move money within your family.
Everyone does it different and I have no judgement but you could just as easily pick a quorum of folks to do the job with a very explicit timeline. Charitable donations are quite broad in the US. So sure lots of wealthy folk don’t this way but not everyone!
Can you just as easily pick a quorum of folks? It seems to me that no matter what, you're going to have to choose people you know and be accused of nepotism because those are the people you can actually assess, and in the case of children, hopefully raise/influence to be on the same page as you.
You could always donate it to the US government, but then it'll be used to go start some wars, so that won't work. You could put it in some weird trust where random people can democratically decide what to do with it, but all you have to do is look at the government to see how good of decisions that leads to. So truly what's the alternative?
Easy is relative but someone in his position with decades of experience working with talented individuals, yes. Nothing is perfect but I have seen other foundations structured where it’s a mixture of descendants and leaders that worked with the individuals. We are going to be picking at hairs though since this is all anecdotal and we don’t know how it will play out. Some of kids foundation work has been a bit self-serving but it’s there money to spend. It could also just as easily be that the 3 kids are different enough that requiring all three to agree prevents most of the opportunity.
If it's so difficult, maybe they could take the easy option and, you know, properly fund the government to build the shared infrastructure on which we all rely by paying tax proportional to their wealth.
You mean fund ICE and build some more concentration camps?
Approximately 1% of the federal budget is infrastructure. There are huge advantages to donating to a charity that actually does something productive instead of the federal waste machine.
Or maybe, just maybe, a system that doesn't create massive concentration of wealth won't try to divert people's focus by pitting people against each other and building concentration camps. Governments aren't fundamentally wasteful. In fact, an effective government is an absolute requirement for functioning healthcare, fair wages, consumer protection, and actual public safety that protects all people equally.
This isn't to diminish all the good things charities have done, but charities are fundamentally band-aid solutions to a dysfunctional society. Leaving welfare at the mercy of wealthy individuals as the wealth gap keeps getting bigger and bigger is a losing strategy. It shouldn't be the state of things people should be aiming for.
Fixing government and taxing the rich is the only solution that addresses the core of the issue. Charities can't close wealth gaps, because they lack the power to enforce laws that ensure fair labor and trade practices. Charities can't stop the healthcare industry from bankrupting sick or injured people, because that too requires enforcing the law. Charities can't stop concentration camps.
Charities do have a place in society and they can do enormous good, but can't compensate for a poor government.
Frankly, the notion that government is fundamentally ineffective and only the private sector can fix things is billionaire propaganda. Billionaires undermine government so they can exploit working-class people with fewer constraints. Then they'd use charity to launder their reputation while pushing their own agenda.
Deriding calls for fair taxes and claiming charities will fix things is wishful thinking at best.
Right, donating your present wealth because you expect to continue receiving an astronomical amount of wealth in perpetuity through your company ownership is not all that grand of a gesture.
Certainly better than many alternatives, but it’s not a gesture that should make the median income person feel like existing as an excessively wealthy person should be okay/legal.
In my opinion, personal wealth/asset control above a certain level deemed excessive (perhaps $100 million then adjusted for inflation moving forward) should be taxed at 100% and put into a special fund intended to help pay for social services, healthcare, housing the homeless, etc. In the case of asset control perhaps a good method would be to distribute excessively valued ownership stakes to employees or random members of the public (e.g., many of Elon Musk’s shares in his companies forfeited and distributed to others).
This makes sense as long as public control makes the outcome of that money better than letting the bazillionare control it. I'm not sure which way the actual truth tilts, but I suspect it's sometimes one and sometimes the other.
Isn’t that the usual loophole though? He definitely continues to donate large amounts but I always question setting up a trust that the kids run.
It’s not really a “loophole,” it’s a standard way to give away absurd sums of money.
Have you ever tried to donate billions of dollars? It’s actually extremely difficult.
You have to find causes you’re passionate about/things that society needs, find the correct charities to give the money to, make sure your money actually goes towards the thing they say it will (this is difficult), and then figure out how much you can actually donate (you can’t just give N dollars to company Y. They’ve got zero experience managing that much money, and no way to scale into doing it efficiently.)
What happens then is you have $100b to donate, and mostly only do it $10m at a time or less.
Warren’s kids are old now. They’ve all been donating money for YEARS (it’s a mandatory part of their trust).
So yeah, you receive tax benefits by transferring shares to a foundation you also control, but that money is now earmarked for charity. It doesn’t flow both ways, and the laws on this are very tight (bad actors will find a way, but what’s new?).
Sure that is the typical way to donate your wealth but there are many other ways than giving it with control to your children. I have no judgement but doing it this way is a nice way to move money within your family.
Everyone does it different and I have no judgement but you could just as easily pick a quorum of folks to do the job with a very explicit timeline. Charitable donations are quite broad in the US. So sure lots of wealthy folk don’t this way but not everyone!
Can you just as easily pick a quorum of folks? It seems to me that no matter what, you're going to have to choose people you know and be accused of nepotism because those are the people you can actually assess, and in the case of children, hopefully raise/influence to be on the same page as you.
You could always donate it to the US government, but then it'll be used to go start some wars, so that won't work. You could put it in some weird trust where random people can democratically decide what to do with it, but all you have to do is look at the government to see how good of decisions that leads to. So truly what's the alternative?
Easy is relative but someone in his position with decades of experience working with talented individuals, yes. Nothing is perfect but I have seen other foundations structured where it’s a mixture of descendants and leaders that worked with the individuals. We are going to be picking at hairs though since this is all anecdotal and we don’t know how it will play out. Some of kids foundation work has been a bit self-serving but it’s there money to spend. It could also just as easily be that the 3 kids are different enough that requiring all three to agree prevents most of the opportunity.
If it's so difficult, maybe they could take the easy option and, you know, properly fund the government to build the shared infrastructure on which we all rely by paying tax proportional to their wealth.
You mean fund ICE and build some more concentration camps?
Approximately 1% of the federal budget is infrastructure. There are huge advantages to donating to a charity that actually does something productive instead of the federal waste machine.
Or maybe, just maybe, a system that doesn't create massive concentration of wealth won't try to divert people's focus by pitting people against each other and building concentration camps. Governments aren't fundamentally wasteful. In fact, an effective government is an absolute requirement for functioning healthcare, fair wages, consumer protection, and actual public safety that protects all people equally.
This isn't to diminish all the good things charities have done, but charities are fundamentally band-aid solutions to a dysfunctional society. Leaving welfare at the mercy of wealthy individuals as the wealth gap keeps getting bigger and bigger is a losing strategy. It shouldn't be the state of things people should be aiming for.
Cool. Give me a call when our government isn't wasteful and destructive, then we can talk about the relative benefits of taxes versus charity.
Until then, I'm going to look at the real world and conclude that charities do massively more good
Pretending that reality is other than it is nothing short of delusion, living in a fantasy.
Fixing government and taxing the rich is the only solution that addresses the core of the issue. Charities can't close wealth gaps, because they lack the power to enforce laws that ensure fair labor and trade practices. Charities can't stop the healthcare industry from bankrupting sick or injured people, because that too requires enforcing the law. Charities can't stop concentration camps.
Charities do have a place in society and they can do enormous good, but can't compensate for a poor government.
Frankly, the notion that government is fundamentally ineffective and only the private sector can fix things is billionaire propaganda. Billionaires undermine government so they can exploit working-class people with fewer constraints. Then they'd use charity to launder their reputation while pushing their own agenda.
Deriding calls for fair taxes and claiming charities will fix things is wishful thinking at best.
Warren Buffet made the largest single tax payment in US history last year. He doesn't play any games.
https://www.investopedia.com/warren-buffett-paid-billions-to...
Right, donating your present wealth because you expect to continue receiving an astronomical amount of wealth in perpetuity through your company ownership is not all that grand of a gesture.
Certainly better than many alternatives, but it’s not a gesture that should make the median income person feel like existing as an excessively wealthy person should be okay/legal.
In my opinion, personal wealth/asset control above a certain level deemed excessive (perhaps $100 million then adjusted for inflation moving forward) should be taxed at 100% and put into a special fund intended to help pay for social services, healthcare, housing the homeless, etc. In the case of asset control perhaps a good method would be to distribute excessively valued ownership stakes to employees or random members of the public (e.g., many of Elon Musk’s shares in his companies forfeited and distributed to others).
This makes sense as long as public control makes the outcome of that money better than letting the bazillionare control it. I'm not sure which way the actual truth tilts, but I suspect it's sometimes one and sometimes the other.