101–110 of 343 posts
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Musk derangement syndrome is now an epidemic.
There was a poll that showed that people worried about Elon syndrome epidemic are actually the most likely responders to be biased in their decision making. I'll post a link to it when I get out of the shower
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All true and a perfectly valid model. But also try: If I were incredibly wealthy and obsessed with running the score up, I’d see any taxes or other loss of wealth as a threat to my ego. If my tax accountants came to me and said I could have a greater net worth by founding a charity optimized for my personal benefit, I’d happily shuffle money there rather than paying taxes. I think that’s also a valid model. I don’t h…
I think he's probably optimizing for both. Don't hate the player, hate the game.
If I had money to donate I'd donate it to the charity I thought would be most effective at helping the cause I cared most about. If I had enough money to create my own charity it would be focused on the cause I cared most about. My giant ego and hubris would make it hard for me to come to the conclusion that a charity I created wasn't the most effective at its goals, even if that didn't happen to be the case.
Billionaire's 501(c)(3)s aren't charities in the typical sense. They're tax-exempt piles of money that are controlled exclusively by billionaire and their families (in this case Musk and his brother). The Musk Foundation in particular has donated less than 1% of the "charities" assets (most donations less than $500K, most years less than $1M) and these "charities" can pay out to their owners from tax-exempt gains on…
That is how almost all endowments work -- they give away their interest income or other income, not the principal, this way they can theoretically last forever. In the past, this was easier since you could earn 5% or 7% interest on a 1-yr Certificate of Deposit. Now, rates have been 0% so charities have to either dig into principal and risk their longevity or give out very little.
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Let’s say I make $100 at an effective income tax rate of 35%. I pay $35 in taxes and keep $65. Now say I make the same $100 but I give $20 to a qualifying nonprofit. I have $80 left, on which I pay 35% ($28), leaving me with $52. I have $13 less than I would have without the contribution. But if I own the nonprofit, funds under my control go from $65 to $72.
The important distinction is that you cant spend those non-profit funds the same way you could cash in your pocket. It is under your control, but you can't use it to buy a Hawaiian island vacation home.
The classic billionaire tax move. Donate money to your own foundation to work on things you want while getting a big tax break.
Just because someone is a billionaire or not shouldn't determine whether their charitable contributions are self-serving or not. Millions of people donate to their churches on a weekly basis and directly benefit from those contributions as well.
[0] https://www.irs.gov/charities-non-profits/charitable-organiz...
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Let’s say I make $100 at an effective income tax rate of 35%. I pay $35 in taxes and keep $65. Now say I make the same $100 but I give $20 to a qualifying nonprofit. I have $80 left, on which I pay 35% ($28), leaving me with $52. I have $13 less than I would have without the contribution. But if I own the nonprofit, funds under my control go from $65 to $72.
The important distinction is that you cant spend those non-profit funds the same way you could cash in your pocket. It is under your control, but you can't use it to buy a Hawaiian island vacation home.
At that point it comes down to regulators’ appetite and ability to enforce, and of course the worst cast is some fines. As long as the EV of fines for inappropriate spending that is caught is less than the tax savings from both caught and uncaught abuses, I’m still ahead.
But really I don’t think the abuses are that overt anyway; Elon can buy his own Hawaii property. These things are usually more funds to hire friends and family and engage in political/social spending at lower effective costs.
So in the same way that Bill Gates donates to his own foundation? https://www.cnbc.com/2022/07/13/bill-gates-donates-20-billio...
Yes. Billionaires do this all the time and many of the Musk rent-free brigade on HN are realising and admitting that this isn't the 'gotcha' many of them had hoped for.
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They seem pretty good at getting their taxes down to zero, while us mere mortals have to be happy with deductions.
Mere mortals are often paying 0 tax on their investments(ie deferred). Same as the ultra wealthy do. The issue is being a W2 wage slave, err i mean employee