Which is weird because I thought that’s how rich people used foundations named after themselves? I thought it was mostly self-funded and a way to lower their tax burden
You lower your tax burden by as much as the taxes you would have otherwise paid on the money you gave to charity.
If you give 100$ that would have been taxed at 30%, you get a 30$ tax deduction, you're still down 70$.
Yeah, but if you control said foundation, you can then have it spent on things that you care about. It isn't the get out of tax free card that some people make it out to be, but it can probably be beneficial in some situations.
Is what I, someone who hasn't got the slightest clue about U.S. law, thinks.
Sure, but in theory the charity can be audited and it shouldn't be buying you stuff you would have spent that money on otherwise... Like, you can't give money to a charity and have it buy you a yacht.
I mean, sure. I was more thinking about "I care about deforestation/child poverty/outlawing abortion/etc, so I'm gonna make sure my money goes there, and I won't even have to pay taxes on (that part of) it", with maybe a bit of "I own (many shares of) a company that does X, so why not suggest that the foundation prefers them as a supplier".
Like, that doesn't allow you to buy yachts with it, but if you're working with that kind of money, you probably have a yacht, or don't want one/another, and exerting influence is the most interesting thing you can use it for. The particular objective doesn't have to be harmful, but I feel that it gives very few people another way to excert outsized control on our world, and take revenue away from the state, which might also waste it, but over which the people should, theoretically, be able to excert more influence than on a very wealthy individual.
But that's a tax advantage anyone can have access to by giving money to the charity of their choice.
The tax advantage, yes, the control, no. I like giving to doctors without borders, but I can't control their objectives, nor their leadership.
In the end, my problem is with giving power to individuals who can't be held accountable. The tax part was mostly an excuse to rant about that.
I can’t hire my friends to run my charity and pick their salary
But then your friend would pay taxes on that income so your money ends up being taxed.
Not really how percentages work my dude, still less going to the govt
It's still exactly the same as contributing to any other charity that has paid employees and everyone has access to the tax deduction that comes with doing this kind of contribution.
If I donate to a charity, I can’t hire my friend and pay them a 6 figure salary. No idea how it’s even similar.
It's the same thing because your money goes somewhere, you get a tax rebate, someone gets a salary, they pay taxes on that money.
You can create a non profit charity, hire your friend and pay their salary if you want, you're 100% free to do that.
You can pay yourself as admin of said charity. Give me $100, I pay $20 tax or stick it in charity to reduce my tax burden. I have $80. I get 100 other people to give my charity $100 each, it has $10k, I take 50% for admin costs, the rest is disbursed. I still make more money than lost to any tax. That’s how a rich person makes money by running a charity. Make even more family money by putting your kids on the BoD.
And then you pay taxes on that salary.
Of course. Still making $, though.
You're not making more than if you had just kept that money in the first place.
Apparently your math is different than mine. I suggest you re-read what I wrote. How is collecting money as a charity admin not making more?
You take your regular job's wage, send 100$ to your own charity so you collect 30$ back in tax deduction.
The charity gets 100$, you're out 70$.
The charity then pays you 100$ in salary.
You're up 30$ but you have to pay 30$ in taxes on that 100$, in the end you're back to square one.
Taxes are paid on your total income no matter the source.
You skipped the entire part where I run the charity.
They actually are just making shit up, just ignore them (or read all their comments for shits and giggles, but they have no idea what they are talking about)
No, that's the exact scenario I covered.
The tax rebate you get is equal to the taxes you paid when the money was paid to you by your employer, you don't get 100k back from the government by sending 100k to a charity!
Ok, let me do it again real slow.
Your employer pays you 200k/year, you pay 50k in taxes total, it's deducted on every paycheck you get. At the end of the year there's 150k left in your pockets.
Over the year you donate 100k to a charity, that reduces your total income from 200k to 100k, so what you owe in taxes is 20k instead (taxation isn't a fixed %, it increases with your income so in NY you pay about 20k for 100k in total income and about 50k for 200k in total income) but you still paid taxes every two weeks based on your 200k salary, so you have 50k in your pockets at the end of the year (200k - 50k taxes - 100k donation).
Come tax season the government sends you a 30k check to compensate for the extra taxes that you paid, you have 80k left in your pockets after tax season (200k - 50k taxes - 100k donation + 30k tax rebate to compensate for the donation).
If the charity is yours and it pays you 100k the government adds it to your total income. So now you have 300k in total gross income and 100k in donations, so you're taxed based on having made 200k in total that year after adjusting for tax deductible spendings (200k in base salary - 100k for the donation + 100k in extra salary from the donation coming back to you).
That's 50k in taxes, you have 150k in your pockets, you just went the long way round to end up with the same thing.
Except you claim every dollar of your donation, not 30%?
You get back what you paid in taxes on that dollar, the government doesn't give you back one dollar for every dollar you send to charity, that would be completely idiotic.
Try giving 100% of your income to charity and see how that goes. Hell, with the way you think it works why wouldn't you just send all your savings to charity? You're saying you'll get the money back anyway, why not go a good thing while you're at it? Heck, why not make it an infinite loop, give money charity, get it back, and it again, do it over and over again, infinite money glitch for the charity of your choice!
Technically you can as long as the yacht is used exclusively for the charity. This was the case when the rightwing tried to say a BLM charity foundation misused funds to buy a mansion, but it turns out the mansion stayed in the hands of the charity even after those administrators left the foundation. AFAIK the mansion was only ever used for meetings, fundraisers, and celebrations.
Foundations aren't deductible though. You have to give it away to an honest-to-God charity approved by the IRS for it to do anything. And even then, you can never get more money by donating it than you would just keeping the money.
Foundations are typically 501c3s
My bad, that's true. I guess it's that private foundations are more limited in how much you can deduct. To qualify as a public charity, a foundation needs to get at least a third of its funding from the public and have other board members, so they can't just be self-funded and self-directed. A private foundation still has to be for a qualified charitable purpose but only lets you deduct half as much of contributions.
They put their money into other people's charities so it doesn't look so obvious. Scratching each other's backs.
doesn’t look so obvious
So what doesn't look so obvious? You know that donations can be claimed on your taxes too, right?
They don't get the same kind of social debts between each other when they donate to their own charities. You know, the back scratching thing that I mentioned.
There is a lot more to it than just the charitable donation deduction. They are all getting a tax deduction for exchanging money with other wealthy people through their charities and the charities spend money on each other's businesses.
Maybe they could donate their own money.
Which is weird because I thought that’s how rich people used foundations named after themselves? I thought it was mostly self-funded and a way to lower their tax burden
You lower your tax burden by as much as the taxes you would have otherwise paid on the money you gave to charity.
If you give 100$ that would have been taxed at 30%, you get a 30$ tax deduction, you're still down 70$.
Yeah, but if you control said foundation, you can then have it spent on things that you care about. It isn't the get out of tax free card that some people make it out to be, but it can probably be beneficial in some situations.
Is what I, someone who hasn't got the slightest clue about U.S. law, thinks.
Sure, but in theory the charity can be audited and it shouldn't be buying you stuff you would have spent that money on otherwise... Like, you can't give money to a charity and have it buy you a yacht.
I mean, sure. I was more thinking about "I care about deforestation/child poverty/outlawing abortion/etc, so I'm gonna make sure my money goes there, and I won't even have to pay taxes on (that part of) it", with maybe a bit of "I own (many shares of) a company that does X, so why not suggest that the foundation prefers them as a supplier".
Like, that doesn't allow you to buy yachts with it, but if you're working with that kind of money, you probably have a yacht, or don't want one/another, and exerting influence is the most interesting thing you can use it for. The particular objective doesn't have to be harmful, but I feel that it gives very few people another way to excert outsized control on our world, and take revenue away from the state, which might also waste it, but over which the people should, theoretically, be able to excert more influence than on a very wealthy individual.
But that's a tax advantage anyone can have access to by giving money to the charity of their choice.
The tax advantage, yes, the control, no. I like giving to doctors without borders, but I can't control their objectives, nor their leadership.
In the end, my problem is with giving power to individuals who can't be held accountable. The tax part was mostly an excuse to rant about that.
I can’t hire my friends to run my charity and pick their salary
But then your friend would pay taxes on that income so your money ends up being taxed.
Not really how percentages work my dude, still less going to the govt
It's still exactly the same as contributing to any other charity that has paid employees and everyone has access to the tax deduction that comes with doing this kind of contribution.
If I donate to a charity, I can’t hire my friend and pay them a 6 figure salary. No idea how it’s even similar.
It's the same thing because your money goes somewhere, you get a tax rebate, someone gets a salary, they pay taxes on that money.
You can create a non profit charity, hire your friend and pay their salary if you want, you're 100% free to do that.
You can pay yourself as admin of said charity. Give me $100, I pay $20 tax or stick it in charity to reduce my tax burden. I have $80. I get 100 other people to give my charity $100 each, it has $10k, I take 50% for admin costs, the rest is disbursed. I still make more money than lost to any tax. That’s how a rich person makes money by running a charity. Make even more family money by putting your kids on the BoD.
And then you pay taxes on that salary.
Of course. Still making $, though.
You're not making more than if you had just kept that money in the first place.
Apparently your math is different than mine. I suggest you re-read what I wrote. How is collecting money as a charity admin not making more?
You take your regular job's wage, send 100$ to your own charity so you collect 30$ back in tax deduction.
The charity gets 100$, you're out 70$.
The charity then pays you 100$ in salary.
You're up 30$ but you have to pay 30$ in taxes on that 100$, in the end you're back to square one.
Taxes are paid on your total income no matter the source.
You skipped the entire part where I run the charity.
They actually are just making shit up, just ignore them (or read all their comments for shits and giggles, but they have no idea what they are talking about)
No, that's the exact scenario I covered.
The tax rebate you get is equal to the taxes you paid when the money was paid to you by your employer, you don't get 100k back from the government by sending 100k to a charity!
Ok, let me do it again real slow.
Your employer pays you 200k/year, you pay 50k in taxes total, it's deducted on every paycheck you get. At the end of the year there's 150k left in your pockets.
Over the year you donate 100k to a charity, that reduces your total income from 200k to 100k, so what you owe in taxes is 20k instead (taxation isn't a fixed %, it increases with your income so in NY you pay about 20k for 100k in total income and about 50k for 200k in total income) but you still paid taxes every two weeks based on your 200k salary, so you have 50k in your pockets at the end of the year (200k - 50k taxes - 100k donation).
Come tax season the government sends you a 30k check to compensate for the extra taxes that you paid, you have 80k left in your pockets after tax season (200k - 50k taxes - 100k donation + 30k tax rebate to compensate for the donation).
If the charity is yours and it pays you 100k the government adds it to your total income. So now you have 300k in total gross income and 100k in donations, so you're taxed based on having made 200k in total that year after adjusting for tax deductible spendings (200k in base salary - 100k for the donation + 100k in extra salary from the donation coming back to you).
That's 50k in taxes, you have 150k in your pockets, you just went the long way round to end up with the same thing.
Except you claim every dollar of your donation, not 30%?
You get back what you paid in taxes on that dollar, the government doesn't give you back one dollar for every dollar you send to charity, that would be completely idiotic.
Try giving 100% of your income to charity and see how that goes. Hell, with the way you think it works why wouldn't you just send all your savings to charity? You're saying you'll get the money back anyway, why not go a good thing while you're at it? Heck, why not make it an infinite loop, give money charity, get it back, and it again, do it over and over again, infinite money glitch for the charity of your choice!
Technically you can as long as the yacht is used exclusively for the charity. This was the case when the rightwing tried to say a BLM charity foundation misused funds to buy a mansion, but it turns out the mansion stayed in the hands of the charity even after those administrators left the foundation. AFAIK the mansion was only ever used for meetings, fundraisers, and celebrations.
Foundations aren't deductible though. You have to give it away to an honest-to-God charity approved by the IRS for it to do anything. And even then, you can never get more money by donating it than you would just keeping the money.
Foundations are typically 501c3s
My bad, that's true. I guess it's that private foundations are more limited in how much you can deduct. To qualify as a public charity, a foundation needs to get at least a third of its funding from the public and have other board members, so they can't just be self-funded and self-directed. A private foundation still has to be for a qualified charitable purpose but only lets you deduct half as much of contributions.
They put their money into other people's charities so it doesn't look so obvious. Scratching each other's backs.
So what doesn't look so obvious? You know that donations can be claimed on your taxes too, right?
They don't get the same kind of social debts between each other when they donate to their own charities. You know, the back scratching thing that I mentioned.
There is a lot more to it than just the charitable donation deduction. They are all getting a tax deduction for exchanging money with other wealthy people through their charities and the charities spend money on each other's businesses.