The newspaper that says government should be bigger and that rich people should pay their fair share to fund that bigger government celebrates a billionaire who will pay essentially nothing at all in tax… “Billionaire No More: Patagonia Founder Gives Away the Company” (nytimes):
Rather than selling the company or taking it public, Mr. Chouinard, his wife and two adult children have transferred their ownership of Patagonia, valued at about $3 billion, to a specially designed trust and a nonprofit organization. They were created to preserve the company’s independence and ensure that all of its profits — some $100 million a year — are used to combat climate change and protect undeveloped land around the globe. … The trust, which will be overseen by members of the family and their closest advisers,
(“overseen by members of the family” mean that the trust can pay for almost everything that the family members might want, e.g., Gulfstream charter to Switzerland to hang out at Davos, rent a luxury apartment for a month in Paris to meet with others who are interested in climate change, etc.)
If he and his family members had sold $3 billion in shares while living in California, for example, they would have paid Federal income tax of 20%, Obamacare tax of 3.8%, and California state income tax of 13.3%. The 37.1% total rate would have yielded $1.11 billion in funding for all of the great things that Joe Biden is doing (e.g., paid for 1/500th of the student loan forgiveness scheme).
Instead, the government will get almost nothing and the money will be spent in ways over which citizens of the U.S. have no influence.
Even journalists who claim that they are experts on money seem to have some blind spots. “Patagonia Billionaire Who Gave Up Company Skirts $700 Million Tax Hit” (Bloomberg) does not consider the Obamacare and state income tax liabilities:
Still, the moves mean Chouinard won’t have to pay the federal capital gains taxes he would have owed had he sold the company, an option he said was under consideration. On a $3 billion sale, that bill could be more than $700 million. It also helps Chouinard avoid the US estate and gift tax, which is a 40% levy on large fortunes when they’re transferred to heirs.
From my 2019 Denver post, Patagonia uses backlit sidewalk billboards to inform downtown pedestrians that young good-looking American humans are facing extinction (which is why we need to bring in migrants?):
A Democrat-voting aircraft-owning friend, with the carbon footprint of an Argentinosaurus, responded to the Patagonia tax-avoidance scheme with “Loved reading that. Hurray for Chouinard”. Unless he assumes that government spending is going to be reduced, he loves that he will be paying the tax that Chouinard isn’t paying? He loves that none of the Chouinard fortune will ever be used to build a road that he can drive on to get to his airplane, a runway that he can use to take off in his airplane, or an air traffic control center that he can talk to? (admittedly much of the aviation infrastructure in the U.S. is funded separately via user fee taxes on aviation fuel and airline tickets)
What’s the alternative? If he gave control of the trust to the usual self-serving welfare-industrial complex apparatchiks rather than trusted family members, the money would be completely embezzzled in a matter of years. Just look at the IRS Form 990 for many major US charities for an illustration.
The alternative is eliminating deductions for charitable contributions. So Bill Gates, Warren Buffett, this guy, etc., could give away as many appreciated assets as they wanted, but either the donor or the non-profit org would have to pay taxes on the appreciation, just as Joe Q. Schlubly would. The vanity projects of rich people shouldn’t be subsidized by the working class. He wants to “combat climate change and protect undeveloped land around the globe”? Why can’t he do this with post-tax money? Sell Patagonia shares, pay capital gains tax, and use whatever the government doesn’t take to buy forests in Brazil and Sweden.
In terms of “eliminating deductions for charitable contributions”:
Charities do a better job of helping people than the government overall, even if some of course are a waste of money. People are less likely to research which charity is the best to donate to than they are to research which product to buy for their own use. However: at least there is *some* competition among charities, unlike bloated governments that operate as monopolies and force you to give them money no matter how bad a job they do. There needs to be some way to force government to compete, ala the idea of vouchers for school choice or tax credits.
Ideally (though not likely to happen) charity should be a tax *credit* rather than a deduction, so you can give $X to a charity that works instead of giving that $X to the government. The idea would be to categorize charities and take the $X directly out of the budget for the corresponding government program that competes with the charity. So $X for a charity to help cause C would reduce the budget given to the government program to help cause C. That would essentially force government to compete with charities. Of course in reality the government would likely find some way to game the system to raise taxes so the overall government budget doesn’t go down and they merely spend the money elsewhere.
RE: This new Patagonia charity, devoted to fighting climate change, is going to do more good than government? In addition to providing training on critical race theory and gender studies, our public schools do sometimes teach children to read. And the government-built roads are useful for getting around. And the government-funded local fire department is helpful if you’ve invited Philip over to cook. The Palm Beach County recreational facilities, from playgrounds to clay tennis courts, are magnificent assets. I would be much happier to give money to Palm Beach County and the State of Florida than to the Gates Foundation or this new Patagonia thing!
RE: if you live in a trailer park in Tampa right now you’re going to be a lot more grateful to the county and state for running a shelter than you will be to the billionaires who meet via Gulfstream at Davos to talk about climate change.
The same thing goes for tax deductions for the symphony, the theater, universities (academic or athletic), soup kitchens, immigrant legal funds, and (gulp) religious activities. I am a religious person of the conservative Chrisitian variety. Our churches have been corrupted by careerists and charlatans who love money and do not fear God. Defund them.