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
Donating money removes if from your “taxable income”. The benefit is that you donated to a charity you wanted to donate money to. There is no financial benefit to doing it for the donator EXCEPT That if you donate enough money, you get praised for doing it and people think you’re a great person, which you very well may be.
If people complain that some super rich dude donated money somewhere for “tax purposes”, then they have very little understanding of how taxes work. If a billionaire donates a million bucks to charity, good for them. What they get out of it is that we say “Wow, that guy donated a million bucks!” it’s good PR.
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