You hear a lot about how “the rich” are using charities to effectively reduce their tax to minimal amounts, among other methods.
On the face of it without digging, it obviously makes people angry and detest the rich. But scratching beneath the surface, I’m not quite sure how exactly they would achieve this? In order to claim the tax back from money donated, you still have to… donate money? Which would still equal more than the money claimed back from tax.
So unless they are actually doing something illegal and funneling money through a charity, claiming tax, and then using that money from the charity to fund purchases not related to the charities mission, how exactly is it benefiting the donor (financially)?
In: Economics
Plenty of people pointing out how the tax deductions work and how it doesn’t really result in the rich people keeping their money just them paying less taxes, but there’s another important note when the rich person also controls the charity they’re donating to.
Elon Musk is a great example here. He donates a significant amount of money to the Musk Foundation to cut down on the amount he pays in taxes, but he’s on the Board of Directors for it so he still controls that money and the Musk Foundation doesn’t really give out that much. They gave a chunk of money to Cameron County to help their schools and revitalize the downtown core… Right after one of his rockets exploded over the place sending shrapnel all over. He also likes to talk about how the Musk Foundation builds schools, but those schools are all being built near worker communities for his factories, and having access to a school is kind of important to get families to move out to these communities. He’s getting tax breaks for donating to charity, but none of the charity work is being done for actual charity. It’s just another branch of his company.
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