Don't you love to see a story about someone giving back?
Not every wealthy person is a miser. Some of the richest people on Earth recognize how lucky they are and choose to share the wealth.
Just look at Amazon's Jeffy B.—or Jeff Bezos, as his friend's call him—who recently donated $100 million to food banks to help America get through the coronavirus. Wowie! So much money, and he's just giving it away!
It's a lot more than you and I and several large families put together will ever give to charity, because it's more than we are likely to earn in our entire lifetimes! It's more money than you could fit in the trunk of your car in stacks of $100 bills!
If you had that much money in a basic savings account, you and me and those several families could easily live off the interest alone! Actually, it's kind of more money than any one person could ever need or even spend on anything normal.
Sure, if you want to travel the world on a yacht, eating meals off the shaved heads of a series of world leaders, you could spend it all pretty easily. But if you just want to have a happy, comfortable life, $100 million isn't much better than an $80,000 salary.
So why don't people like Bill Gates, Jeffy B., Warren Buffett, Michael Bloomberg, Elon Musk, Charles Koch, or any of the Walmart Waltons just give away their riches and go down in history as the person who ended world hunger? At an estimated cost of $30 billion a year, each of them could feed the world's hungry for between one and five years. Or they could end homelessness in America for between two and eight years.
They could even keep a few hundred million so they could continue hunting supermodels for sport. And imagine how much those millions of people could improve their lives if they weren't constantly struggling to feed themselves or find a place to sleep.
It must not be that simple... Because if private greed was the only thing holding back transformational change, governments could have snatched up all that wealth with some steep taxes and made the world a better place. There has to be some reasonable explanation for why these people don't just give it all away…
In this series we will look at a number of prominent myths around philanthropy, including the notions that billionaires' "wealth" is substantially different than money, that their private foundations do a lot of good, and that they are patrons of the arts.
Previously we debunked the idea that charity is better than "government handouts," but today we'll look at the question of whether it's even possible for a billionaire to be generous.
The billionaires must know something we don't about these issues, because they're clearly smart, and would solve them if it was that easy. Just look at how much they give away! They aren't being stingy!
Why It's Wrong:
They absolutely are being stingy.
Let's look back at that $100 million donation from Jeff Bezos. At an estimated net worth of $165 billion—even after his mega-billion-dollar divorce—that "generous" sum constitutes about 0.06% of his wealth. To put that in perspective, if you had a $15,000 car, another $1,500 sitting in a bank account, and you had zero debt (lucky you), this would be the equivalent of giving $10 to charity.
Why didn't CNN cover your swear jar donation?
It's nice and all, but it's hardly worthy of a flock of journalists rushing to tell the world about your incredible selflessness. And actually, it's much worse than that—because if you lost 99% of what you had, you'd be flat broke. If Jeff Bezos did the same, he'd still have more money than the 10 richest a**holes you've ever met.
Likewise, Bill Gates, Warren Buffett, and other "good" billionaires who have pledged to give away half of their wealth somehow still seem to get richer every year. They give away a tidy sum here and there to earn some fawning PR, all while their investments in companies that underpay their workers and destroy the environment earn them way more money than they hand out.
Everyone knows that large sums of money in a stable economic environment can easily be grown—as Uncle Phil put it on Fresh Prince, "my money makes money." But when your inordinate stacks make you further stacks on stacks on stacks, giving money away in dribs and drabs like this is entirely meaningless.
It may help some people, but it doesn't cost you anything you will even notice. It's like having a hole in your pocket that occasionally drops a few dimes on the street. Whoever is on the receiving end might appreciate those dimes, but you will literally never notice they're gone.
To see through the myth of billionaire generosity, you just need to look at how they reacted when they were worried that their vast fortunes might actually become appreciably less vast.
Last fall, when Elizabeth Warren looked like a contender for the Democratic nomination for president, she boosted her proposed tax on wealth over a billion dollars from 3% to 6%, and that was a bridge too far for Bill Gates who said, "I'm all for super-progressive tax systems," he said:
"I've paid over $10 bilion in taxes. I've paid more than anyone in taxes. If I had to pay $20 billion, it's fine. But when you say I should pay $100 billion, then I'm starting to do a little math about what I have left over … you really want the incentive system to be there and you can go a long ways without threatening that."
Elizabeth Warren tweets an open invitation to Bill Gates to discuss her wealth tax www.youtube.com
To clarify Warren's plan, wealth between $50 million and $1 billion would only be taxed at a 2% rate—barely touching that first billion dollars. At the time, Bill Gates was worth $106 billion. He's gotten richer since then (because that's what billionaires do...even in 2020) and is now estimated to have just shy of $110 billion. If he'd been taxed at Warren's proposed rate, he'd now be down to about $103 billion (poor guy).
Considering the stock market grows an average of around 7% each year, he could pay that 6% tax and still rake in about $1 billion each year with some basic investments. That's enough money to buy about 4400 average American homes...each year...without spending any of your original investment...
If all these numbers are starting to hurt your head, that's because you don't have the brain disease that billionaires suffer from. It's how they got to where they are. All they think about is their money—how they can use it, and how they can make more of it.
Even the ones who support slight increases in their taxes just want to quell the masses and obscure the fact that they are all ripping us off. It's the same motivation that leads them to give away some money here and there—it makes them look like good guys, and it soothes their neglected, battered consciences.
The less cautious among them aren't even interested in going that far. Michael Bloomberg spent over $1 billion not on charity but on trying to buy the Democratic nomination because if Sanders or Warren had gotten elected it would have cost him several billion dollars each year. What's the cost of his public humiliation on a national stage compared to that.
The Ultra-Wealthy Rule Over Us
These people aren't satisfied simply with having more money than anyone could reasonably spend in a hundred lifetimes. They always want more, because more money is more power; power to sway politics to their singular will, manipulate the media, and to be the absolute arbiter of which causes are "worthy," and which will continue to be underfunded and ignored.
That "incentive system" that Gates mentioned has nothing to do with quality of life at the billionaire level. Working hard to earn more money doesn't change how these people eat, where they live, how their children are educated, how often they go to the doctor…
If we taxed wealth over $1 billion at 100%—just took it all away—food banks could just have that $100 million on hand without waiting for a billionaire to be in a good mood, and Jeff Bezos' actual quality of life would be unchanged. He'd still have his last billion dollars to spend on daily baths in endangered animal parts. Yet he clings to his insane level of wealth because it allows him to be an oligarch, and to be worshipped for his generosity (without ever losing a cent).
"Generosity" for billionaires has nothing to do with how much they want to help. It's based entirely on how much they want to be praised.
I’m moving $1B of my Square equity (~28% of my wealth) to #startsmall LLC to fund global COVID-19 relief. After we… https://t.co/TtdU7W4SWk— jack (@jack)1586289859.0
There are possible exceptions of course. Twitter CEO Jack Dorsey recently "donated" $1 billion to COVID-19 relief—which is almost 28% of his net worth. So if he does that a couple more times he won't even be a billionaire anymore… except that he "donated" that money to Start Small Fund—his private, "donor-advised" LLC that doesn't have to disclose its financials.
Surely though, this sort of private "charitable" foundations must do a lot of good for the world, right? We'll take a look at that myth in our third installment.
Isn't it refreshing to see a story about someone giving back?
Not every wealthy person is Ebenezer Scrooge, clutching every penny for himself. Some of the wealthiest people on Earth also realize how fortunate they are to have been so blessed, so they share the wealth. When they open their pocketbooks, they aren't stingy.
Just look at Jeff Bezos, who recently announced he was donating $100 million to food banks to help America get through the coronavirus. Wow! That's so much money, and he's just giving it away! It's way more than you or I or several families put together are likely to earn in our entire lifetimes! It's more money than you could fit in your fridge in stacks of $100 bills—unless you're Nancy Pelosi.
If you had that much money in a bank account with just 1% interest compounding annually, you and me and those several families could easily live off that interest without ever touching the principal! Forever! Come to think of it, it's kind of more money than any one person could ever need or even spend on anything reasonable.
Sure, if you want your own private jet to shuttle you around the world eating dinner off the naked bodies of a series of celebrities, you could spend that much pretty easily, but if you just want to have a good, satisfying life, $100 million in the banks isn't much better than an $80,000 salary—depending on factors like your debt burden and the cost of living where you live.
So why don't any one of these mega-billionaires like Mark Zuckerberg, Bill Gates, Elon Musk, and Michael Bloomberg—if they really are as generous as they seem—just give away their riches and secure a place in history as the person who personally ended world hunger or homelessness in America? They could even keep a few hundred million to continue living like kings (or at least like Warren Buffett).
Surely it must not be that simple? Because if this was just a matter of private greed preventing that kind of transformational change, governments would surely have used their ability to levy taxes for the public good to seize that fallow wealth and make the world a better place. There has to be some reasonable explanation for why they don't just give it all away. Surely...
In this series we'll look at myths around philanthropy, including the notions that it's possible for billionaires to be generous, that their "wealth" is substantially different than money, that their private foundations do a lot of good, and that they are patrons of the arts.
But to start things off, let's look at one of the simplest explanations for this disconnect.
Myth: Charity Is Actually Better Than Taxation
What you'll hear
Government intervention is a blunt instrument, and charity is a scalpel.
The government is okay at helping people, but charity is really the way to go. Private individuals aren't hampered by government bureaucracy and can respond more efficiently and directly to needs as they occur. Over time we should try to shift toward a more voluntary charity-based model of social assistance, rather than relying on big government.
Why It's wrong
Actually the opposite is true.
During economic downturns, when the need is greatest, government assistance like unemployment, food stamps, and welfare kick in automatically to help those in need. They're called automatic stabilizers, and they help to mitigate the impact of these crises and make it easier to shift toward recovery.
Automatic stabilizers | National income and price determination | AP Macroeconomics | Khan Academy www.youtube.com
Meanwhile the wealthy are often anxiously tending to their own floundering finances or businesses amid the tumult and aren't as likely to open their checkbooks for charity. What this means is that charitable giving actually declines when people need it the most.
On top of that, as bad as politicians often are at being responsive to the needs of their constituents, at least they have constituents. By contrast, there's nothing to stop the wealthy from holing up in their gated compounds, beholden to no one and only responsive to the needs of the rarefied elites they know—donating to foundations developing a cure for gout or gene therapy to treat Habsburg Jaw.
To the extent that they are aware of the plight of others, it's often connected to their religious affiliation, which is why religious charities—that often spend money on churches and missionary work and who proselytize to the needy—are among the largest charities in the US.
If you don't mind someone else's idea of God determining which causes are important and who gets helped, then charity is a great way to go. For the rest of us, higher taxes on the wealthy—and reducing the amount they can dodge those taxes through, say "charity"—would be better.
In this sense, a blunt instrument is often exactly what we need—just a flood of money going to everyone who might realistically need it. And while government bureaucracy is annoying and should be cut where possible—particular when it comes to overzealous means testing—the fact that the federal government deals with such massive sums of money actually makes it possible to consolidate administrative overhead.
All this means that the government can actually use its resources for the public good far more efficiently than a bunch of disparate charitable foundations. In other words: Taxation and government handouts are (generally) much better than charity.
Charity: how effective is giving? | The Economist www.youtube.com
While charitable donations have the added value of making rich people feel good and earning them some good PR, they aren't actually better for the world—or even nearly as good—as a robust social safety net. That means we should really limit the amount of taxes that can be written off through charitable donations.
Of course, without that tax incentive a lot of charities might receive substantially less in donations from the ultra-wealthy. But in that case we would have to ask: Are Billionaires really that generous? Check out our next installment to find out.
- Charities You Can Donate to During COVID-19 - Liberty Project ›
- The Most Overlooked Tax Deductions - PayPath ›
- No Good Billionaires—Myth 2: But They're So Generous! - PayPath ›
- How Much Money Do US Politicians Make? - PayPath ›
Today is April 15th, the date usually thought of as "Tax Day."
In a normal year this would mark the deadline for filing your 2019 tax returns, but 2020 is anything but a normal year. As a result of the coronavirus pandemic and resulting quarantine, the deadline for filing taxes has been extended to July 15th.
The hope is that by mid-summer most ordinary business will be allowed to resume so that individuals and companies will be able to prepare their paperwork, and tax preparation services will be back to their usual operation—or will have made necessary adjustments to do their work safely. With record unemployment and the sudden spike in medical expenses, the delay should also make things easier for people who are struggling to manage their rapidly shifting finances.
It remains to be seen if all these hopes will pan out, but in the meantime there are a number of other factors that deserve to be addressed. In particular, the relationship between stimulus checks currently being rolled out and taxes has become particularly fraught and confusing. Sources have variously claimed that the checks—maxing out at $1,200 per adult, with an additional $500 for dependents—will be counted toward recipients' 2020 taxable income, or that they function as advances on a future tax return, and will thus eat into or eliminate the amount people can expect to receive from the IRS later this year.
NO you do not have to pay the stimulus money back, NO it will not be deducted from your 2020 tax refund, NO you wonâ�¦ https://t.co/N4XyQVHIE5— polly watson (@polly watson)1586755532.0
Fortunately, both of these assertions are false. However much you receive in your check—or deposited directly into your account—it will not affect your income for tax purposes, nor will it have any impact on the amount you receive in your refund. That said, that extra money may not be as miraculous as many people are hoping. While the first payments are arriving in people's accounts as we speak, others will see those badly-needed funds delayed for up to five months, and many will not receive as much as they should rightly expect.
People whose are set up to receive direct deposits from the IRS or the Social Security Administration will get their payments quickly, but for those of us waiting on a check in the mail, the first round won't arrive until sometime in May. The issue is that the IRS has a physical limit on the number of checks they can print and ship out—with the added delay of Donald Trump's all-important signature—and with so many people scheduled to receive stimulus money, that capacity becomes a serious drag on the process.
The other major issue is with the way the amounts are calculated. Individuals with incomes over $75,000 will receive smaller amounts, while the threshold is set at $112,500 for the head of a household and $150,000 for joint filers. Every $100 of income over the threshold will reduce your check by $5—so an individual with an income of $80,000 should receive $950 ($250 less than someone who earned $75,000), and an individual with an income of $99,000 won't receive any stimulus money at all.
Woke up this morning to find my stimulus check AND tax refund in my bank account. ð���ð��¾ð���ð��¾ð���ð��¾ https://t.co/PApnZbCHQK— Kirby R. Gibson, M.S. ð��� (@Kirby R. Gibson, M.S. ð���)1586949210.0
The real problem arises from the fact that the income used for these calculations is based on the most recent tax return you filed. So people who earned a lot more in 2019 than they did in 2018 would benefit if they haven't filed yet (although any refund they're entitled to will obviously be delayed), while people whose income dropped in 2019 will receive more stimulus money if they chose to file early. On top of that mess, some may see their checks go straight to debt collectors.
It will take months before we have real a sense of how much the stimulus money and the delay of tax season have actually helped people, but the least we can do in the meantime is try to reduce the noise and confusion around these issues.
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Yesterday the rent was due for millions of Americans for the first time since they were put under quarantine.
We are being told to remain indoors as much as possible and to maintain a safe distance from other people. For some of us, that means working from home. For millions of others, it means they can't work at all. On top of that, the quarantine is causing steep drops in revenue for most sectors of the economy, which means that even a lot of people who can work remotely are being laid off and losing their employer-provided health insurance amid a deadly pandemic. The result is that, for millions of people, paying the rent would require foregoing food or other basic necessities. For others, paying the rent isn't even on the table.
In just the last week, 6.6 million Americans applied for unemployment insurance. That doubled the new record set the week before, making for a total of 10 million newly unemployed Americans in a span of two weeks—and that doesn't even include employees whose hours have been drastically cut or workers removed from the so-called gig economy.
Fortunately, there are some understanding landlords who are offering massively reduced or eliminated rent payments. Others, sadly, are issuing statements threatening tenants with eviction if they don't pay, or insisting that any payments that are deferred will have to be paid in full when the crisis is resolved—despite the obvious fact that the economy is never going to provide back-wages for people who are newly out of work.
My landlord said he sympathized with my roommates and I losing our jobs. He then suggested we move out now since we… https://t.co/esQNvjiZb5— gabi (@gabi)1585271520.0
Meanwhile, the government payments that are supposed to help people through these difficult times are being given out based on 2018 tax returns—so if you made a lot of money that year but are flat broke now, you're out of luck. Worse still, if you aren't already signed up to receive direct deposits from the IRS, your check could take up to four months to arrive. Coupled with a broad lack of necessary protections from eviction and foreclosure, the whole situation is looking grim.
With all this going on, a lot of people are not going to be able to pay their rent. The idea that all those people should face eviction or be buried in debt as a result is absurd—who would move into all those empty apartments at a time like this, anyway? While landlords may want to believe that they can be insulated from the economic effects of quarantine, that's just not how this is going to work.
Obviously, many landlords have mortgages that need to be paid—the fact that a mortgage freeze has not already been implemented throughout the country is shameful. But in the case of rental properties, that kind of relief is not nearly as urgent as the need for all housed people to keep their homes—and for adequate housing to be provided to the homeless. Landlords must be made to see that they have a duty to relieve some of the burden on their tenants. Even those of us who are able to pay rent: Should we?
So the company we pay our rent to sent out a very condescending mass email to all tenants about paying rent and for… https://t.co/5UY367ZXZ9— Nai (@Nai)1585711758.0
Each situation is unique. Are you renting a few rooms in a nice old couple's house and still getting your usual paycheck? If so, you should probably give them rent. But if you are living in a large apartment complex and receiving threatening mass-emails from the management company, then you should talk to your fellow tenants and—even if you're able to pay—consider participating in a rent strike. Likewise, if you are struggling to make payments and feel like you're alone, reach out to your fellow tenants. Find out if they're struggling too, or if they're willing to stand with you.
You may feel it's too late to start this approach, but April 1st was just the beginning. In situations where one person has power over a large group of people—as in employee-employer and tenant-landlord relationships—collective action is necessary to correct that imbalance. Any individual tenant could easily be intimidated by a hard-nosed landlord or a large management company, but if all the tenants are able to communicate—either over the phone, through email, or in person from a safe distance—and coordinate their action, they have the power to negotiate terms. Organizations like the Los Angeles Tenants Union, with the "Food Not Rent" campaign, are helping in that effort, but as individuals we also need to step up.
Landlords, as well as the banks that collect their mortgage payments, must all be made aware that they can't bully working people into giving up more than they can afford right now. This is not business as usual. This is a crisis. Solidarity among renters, workers, and everyone at the bottom of the food chain will be necessary if the people with the power in this country are going to be prevented from pushing all the negative consequences downstream. If that means rent strikes, sick outs, appropriation of empty houses for the homeless, then that's what we'll have to do.
As much as we are isolated in this quarantine, we have to find ways to come together and support one another if we're going to get through this.
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