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 the back-end.
It is a super common tax avoidance scheme. It is legal. Pretending it has anything to do with good-cause charity isn't based in reality however.
PS - And to confuse matters further there are billionaires who are donating a lot to charity, like the Gates Foundation.
> and these "charities" can pay out to their owners from tax-exempt gains on the back-end.
I pretty certain that legally these charities can only give to causes that furthers their exempt purpose. [1]
E.g. a charity claiming to be devoted to saving children's lives in Africa can only spend money on exactly that, governance costs and fundraising.
The charity may be paying the owners as employees, and/or the owners may twist the spending to pretend it is in line with the purpose, but I don't think they can literally give the owners the tax-exempt gains.
What's your take on these newer "economic development" 501c3's? Example: https://archgrants.org/
I've talked with the founder of Arch Grants, and I don't doubt their intentions are pure (there's others I'm more skeptical of), but either way it's difficult for me to wrap my head around the concept of a non profit that is by most metrics operating as a startup accelerator giving seed funding to for-profit businesses.
Even if they did take equity, I'm not sure that would be a problem. Charities and non-profits can make investments. For example, foundations have huge market investments.
The distinction is that the owners can never cash out and put the money in their pocket.
At most, they can take a salary with justification.
If you can't cash out of equity it makes a deeply insecure situation for everyone involved. It basically becomes a weird way to perform stock buy backs and would almost certainly be immediately exploited
I dont think I understand what you are saying. Companies can already do stock buybacks with pretax money, and non-profits can already invest and hold equity.
I don't understand why a company would want to use a non-profit to buy back stock.
The point of a buyback is to destroy the stock, driving up the price. If a non-profit holds the stock, then it doesnt work.
But there's few restrictions on fundraising and administrations. So if the billionaire wants to throw a party, the charity throws the party. There's all sorts of shady bullshit billionaires do with their charities. So long as they turn in receipts and don't funnel the money directly into their pockets it's typically completely legal.
Plenty of normal folks go to parties to which they contributed via a 501c3. Go to the orchestra or the ballet to see it in action. This isn't billionaire-only stuff.
You have just enough information about foundations to completely misunderstand them.
It's true that a major reason for the popularity of foundations is legal tax avoidance: you can donate to a foundation in a year when you have lots of income, get the tax benefit in that year, and not have to make a charitable donation in the same year. The foundations is allowed to sit on most of the money for a long time. However, crucially, when the money leaves the foundation it must go to an approved charity. There have been some high-profile abuses of foundations, but that's simply illegal, the same way it would be illegal to not make a donation in the first place and claim a tax exemption.
You are mistaken, it is very possible and legal to extract money from a 501(c)(3).
“If the organization engages in an excess benefit transaction with a person having substantial influence over the organization, an excise tax may be imposed on the person and any organization managers agreeing to the transaction.” https://www.irs.gov/charities-non-profits/charitable-organiz...
One example would be putting staff members up at a hotel you own.
“However, crucially, when the money leaves the foundation it must go to an approved charity.”
They can spend money on expenses and those expenses can benefit you. Having family members work for and be generously paid by such an orientation is a common example. Anytime you control a cash flow you can benefit from that cash flow.
Any salary paid by the organization would be taxable income for the recipient, closing the loop.
Also, you dont need the pretext of non-profit to do this. There are plenty of ways to simply pay family a pre-tax salary and deduct the cost against your income.
You can do this with any corporation and dont need to do it through a charity.
The point is you can recuperate some money after donating it.
The optimal approach is roughly donating appreciated assets such as stock so you not only get to avoid paying taxes on the sale but also reduce your income taxes elsewhere by the full amount. Aka if a stock is nominally worth 10 million but you would only get 9 million after tax if you sell it you still get to deduct the full 10 million from income taxes. Which beats the obvious idea of using a corporation to directly pay them.
For the full tax implications you need to consider the benefits of avoiding income tax and gift/inheritance tax for the donors as well as the recipient receiving benefits tax free as well as a portion of their salary at much lower tax brackets plus the impact of payroll taxes.
(Not a tax professional and loopholes change over time.)
It's not unreasonable for a family member to want to spend their days working at a charity, using the family funds and time for good. But then it gets spun as nepotism by haters.
Because it is nepotism. They're drawing a salary, not volunteering to "do good". Why were they qualified for that position? It's obviously because they're a family member.
So you want to ban family businesses? Grandma needs to interview for her job making perogies? The daughter needs to do a coding test to prove that she's qualified run the cashier over other candidates?
> Anytime you control a cash flow you can benefit from that cash flow.
Interesting point. One wonders if, hypothetically, I had $1B to donate to a charity, what those charities might offer up (under the table?) to be a recipient of that money.
Not fully taxed, you have the next level of legal tax avoidance in the gap between company and person.
The key to getting low single digit % tax burdens is adding in steps that allow you to add lots of % reductions and obfuscations because more overt methods tend to not be sustainable and in some jurisdictions (as in the UK) csn lead to the method being retrospectively classed as tax evasion and you end up paying the outstanding balance with interest.
You avoid both income and gift taxes and they don’t pay taxes on benefits like health insurance so it’s a significant tax savings over just handing out money. More importantly is the social benefits as working at a charity is seen more positively than living on a trust fund.
I agree, but its also less valuable (money today is worth more than money tomorrow). It's a tax management strategy, I just don't find it "evil" and find the arguments that taxes aren't paid to be a bit false (less taxes in the end, but not no taxes, so perhaps my phrasing of "fully taxed" is also a bit off, not fully taxed at the level of the giver). The only way to get around it would be to hurt charities in general (which perhaps the more socialist amongst us would have zero problem with, but I personally think would be bad for society).
I also think expenses, even salaries don't really amount to that much of a tax avoidance when the sums are in the billions. Hotels every night of the year for your staff would still be under $1M per staff member.
I think (I don't know as i'm a UK citizen) that these are similar to trusts. It's fair to say that rich people avoid a lot of income tax when they fund these trusts, but the trusts themselves still then pay tax on income and expenditures. The main thing it allows is for wealth to remain in a family for longer periods of time with one big tax avoidance at the beginning (the recoup on income taxes)
You are probably thinking of donor advised funds. A DAF lives in a broader 501c3 (typically setup by a financial institution) and you can put money in it for tax purposes. The money sits (and grows) while you decide where/when it will ultimately go. Crucially, with a DAF, because you took the deduction when you gave to the DAF the outflow from the DAF must go to another 501c3.
If money leaving a foundation must go to another 501c3 how does the 501c3 loop ever break? It breaks because foundations can (and do all the time) pay individuals, contractors, for-profit companies, etc.
Imagine the United Way trying to build an office. How could they possibly do that if their funds could only go to other 501c3s?
To that parent's point, < 1% has gone to charities which means the foundation is just spending money on the people that work in and own the foundation. I wouldn't need to get paid directly if I had a foundation that paid for everything I need or want.
If you have $1B you can already pay for everything you need or want. Donating it to your own non-profit, only to pay for your own expenses, is an extremely expensive way to "launder" that $1B into a tax deduction.
If I understand you right you're saying that a 501c3 is a net gain in money?
Would you mind walking me through that?
You start off with $1B net. Presumably these are capital gains. You donate it to your own 501c3, and get 125M back on your taxes. Now you take out salary (taxed at what, 37%?), and get a total of $755M (including the $125M). No, that was a losing bet.
Ok, so you also spend it on other things. But to net gain on this you still have to actually spend less than $125M not only on actual charity, but also on overhead.
Basically can you launder this money at less than 12.5%? Keeping in mind that once laundered it's still not really yours. Sure, you control it. But it'll always be just mostly assets under your control.
You can't use that money to buy Twitter.
Also keep in mind that real money laundering can cost about 20-30%.
Is it even worth 12.5% if the billion comes with these huge restrictions?
Donations have to go to a qualified charity. Salaries don't. They do have to be disclosed, however, at least for a foundation. Churches don't even have to disclose, which is why they were so convenient for money laundering in The Wire (can accept arbitrarily large cash donations and don't have to tell anyone what they do with the money).
>> The Musk Foundation in particular has donated less than 1% of the "charities" assets
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.
Oh but most people think how it works is you give away all your money and if you don't do that you aren't very charitable.
However the smart way to donate is keep principal alive and any money that money makes it goes to the charity therefore ensuring money in perpetuity. You bring up the challenge in the current environment.
>> "smart"? I'm not so sure. That assumes doing good deeds later (forever later really) is more valuable than doing them now/soon.
I can see both sides of the argument here. I think we can at least appreciate many instances of endowments. A great example might be universities...some of which have been around for hundreds of years c/o endowments.
It also allows individual programs and facilities to be funded forever so they do not need to fight yearly for budgets.
Id say being able to fund people to work on a problem over a long haul has a lot of value. Theres obvious short term needs and funding that is also important.
I guess it also depends on how that money is making money
Right, I first learned about this when being forced to watch some of the "Housewives of ..." shows by my wife. I couldn't figure out why all these objectively terrible people all had their own personal charities (many of the episodes revolve around the social group of the show going to each other's charity events).
It turns out it's a common, but legal, "scam". Take in funds from fundraisers, give away a little, then pay yourself a ridiculous salary for running the organization with the rest of the money. You can also have the charity "buy" things for future fundraisers like trips on private jets, or fundraising events in the Bahamas, etc.
I have no idea how it has stayed even remotely legal other than it seems a great many people above a certain wealth level all seem to be involved in it.
Donating capitol that has gained value to a non-profit to then use to pay yourself a salary with causes you to pay more taxes than if you had just realized the gains and skipped the non-profit as cap gains taxes are lower than income taxes for the top bracket.
It may happen, but it’s not legal, it’s called inurement and the IRS can hammer you or strip the organization of its tax exempt status if it finds out. This applies not only to ridiculous salaries but also use of the charity’s assets for private benefit.
If I start a charity, make myself chairperson and CEO or President or whatever, I "deserve" a reasonable salary. If my fundraising events bring in my salary + event expenses + what I can use for charitable activities, what does it matter if what actually goes out the door is 5% of all donations? I have to pay staff salaries and I have to pay event hosting fees.
In other words, for most of these things the difference between an A-grade charity like the American Red Cross (which puts out something like 90% of its charitable donations to actual charitable activities and the CEO makes over $700k/yr) and a charity with a CEO who makes $200k, but that's 50% of their overall donation income, but still moves their money forward towards their stated goal, the legal difference is imperceptible. The second charity may just be small, or not good at raising funds, or has limited reach, or has a charitable focus nobody cares about, or could just be a way for some socialite to make an extra $200k a year while hosting fundraising "parties" every quarter...it's just not possible to really tell.
Even in this example, the charity looks more legitimate than what the original posting is about, and there are tens of thousands of these.
You'll see a lot of giant yachts that are in "research" foundations. They get tax breaks for supporting "research" and have a few jaunts with scientist in popular vacation areas.
Right. I mean 501c3's rules around politics are notoriously lax. You basically just can't donate to a candidate of a party. But there's plenty of 501c3's that simply don't explicitly represent a certain party go to pains to reach out to areas that are very reliably a certain party.
A lot of these "charities" being donated to out of DAFs are for political influence like this. They can push for laws and regulations that will benefit, in this case, Tesla or Twitter or whatever, and Musk now can play politics without having to pay taxes on that money
>these "charities" can pay out to their owners from tax-exempt gains on the back-end.
Even if this were true, that back-end would be taxable, so who cares?
That said, why would this make sense from the donor perspective? Why would I want to donate $1M to a charity to avoid taxes, just so that it can pay me $1M which I would then have to pay taxes on again?
Because the charity can expense things you can use without anyone paying taxes on anything.
Charity holds a conference at a resort, that's an operating expense. Present are the officers of the company, which is you and your friends and family. All expenses for the charity, paid from the million, and therefore untaxed.
Still seems like a pretty crappy deal to me and negative expected value. More so if you have your own Corporation that can do all those things. I feel like there is a n
Physical limit on the number of tax deductible meals and vacations someone and their family can consume
Your own corporation pays corporate taxes that a non-profit does not, and you cannot transfer personal wealth to a corporation without paying taxes on it as you can with a non-profit.
It does have something to do with good-cause charity if you believe Forbe's reporting. Before this they estimated he gave $280 million to charities which about 20% came from this DAF.
> 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
Ah, so basically the exact same as every other billionaire family's charity.
What's your point? Pointing out other billionaires doesn't make the billionaire we're discussing less horrible. Most billionaires are horrible in my opinion.
This is due to the idea that you cannot get that rich without exploiting people, taking money from government (while simultaneously talking against people receiving help), and this charity scheme is yet another loophole that needs to be closed.
My point is that the other billionaires are just as bad. The OP was framed in a way as though Musk was doing something novel, when it's the oldest trick in the book.
While you may love/hate certain classes of people it would probably be helpful for you to refresh how economies work and, not just modern day economies, all economies. There will always be some level of exploitation in every single type of government/economy and there will always be government there to support interest of its people.
You might finesse your argument to the fact that you deem the level of exploitation and gains accrued to "billionaires" is too great for your tastes and that there needs to be a better balance struck.
If not it just reads as thoughtless criticism without understanding how are human systems work.
You’re standing up for the equality of billionaires? Sure, they’re a minority by definition, but I think we can all agree they’re not a disadvantaged class.
Standing up for billionaire? Nope. Pointing out that the complaint is poorly structured in how the world works with a goal is to help strengthen arguments and promote better conversation on here.
You’re saying that drawing a line at billionaire wealth doesn’t make sense. I don’t understand that logic, we draw lines for everything - why is this is such a messy limit according to you?
>This is due to the idea that you cannot get that rich without exploiting people, taking money from government (while simultaneously talking against people receiving help),
I'm ripping this part of OP commentary apart since it essentially describes everyone and not billionaires. It's a lazy argument.
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 have enough info to have a strong opinion, but my priors on Musk make me at least question what he’s optimizing for.
I want to lower my tax liability by donating to charity > as long as I'm doing that I want to make sure I'm supporting something I agree with > I'll start my own charity to ensure that's the case.
Frankly I'm much more concerned about the billion dollar roth IRAs and 529 plans which seem to have a much lower chance of helping anyone else.
yeah, I'm aware of that. They are designed with no cap, but clearly this type of growth was not expected.
Seems like it is an easy fix if it is determined to be a problem worth fixing. Just add a IRA cap at something like 50 million before you have to withdraw.
Or convert Roths back into regular IRAs after a point. I agree it's fixable and I think it ought to be fixed. I'm not so concerned about tax shenanigans that produce beneficial charity as a byproduct.
One could argue that he wants the charity to be good just because of the "prestige" of having a top charity, and that would be helping personally I guess.
Not sure how putting money in a charity would make him more money even with tax breaks than just investing that money somewhere else, although I got no clue how charity tax breaks work in the US,
The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erection or maintenance of public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency.
Easy to see how a charity could line up with what Musk is interested in and/or his companies are doing.
Advancement of space travel, advancing rocket science, reducing rocket launch cost for government, communications connectivity for people, electric vehicles and batteries, self-driving cars, reducing government costs for tunnels and transport infrastructure, relief for conservatives who were distressed about being banned from Twitter, advancing the Gospel of Musk, etc.
I'm playing the same game everyone else is and so far I've found moderate success. I have some small say in the rules, just like I hope you do and I agree that in a lot of cases the rules are completely whack.
Rather than "simping for billionaires" the intent of my comment was to cause the reader to introspect upon the part they play in crafting the rules and allowing the game to exist as it's currently played.
First, you can't actually "own" a 501c3, you can control it. Second, a 501c3 can be beneficial to its donors or controllers, but:
"The organization must not be organized or operated for the benefit of private interests, and no part of a section 501(c)(3) organization's net earnings may inure to the benefit of any private shareholder or individual. If the organization engages in an excess benefit transaction with a person having substantial influence over the organization, an excise tax may be imposed on the person and any organization managers agreeing to the transaction."
A charity that promotes peace on earth may be beneficial to the donors to the charity... but if "optimized for my personal benefit" it is likely to be non-tax-exempt... but I suppose we could debate the exact words used and what they really mean in theory. I think in the above tobacco scenario, the IRS and courts would likely find that the tobacco promotion was merely advertising, and therefore subject to taxation.
Honest question, what would make it illegal? Charities pushing for social change is 100% a thing and I don't think it's limited to such a vague concept as "positive" social change.
It's limited to charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals.
I guess you could argue promoting cigarette use is "educational" or perhaps "religious" if a cigarette-smoking cult existed a la The Leftovers, but I suspect it would be a hard sell in today's environment, given the scientific and social consensus on the dangers of smoking, especially if your day job is selling the things.
Maybe you could make it fly by using the funds to buy cigarettes and gift them to the homeless?
tbh it's even more of a non-story than that, because his "own charity" is a donor advised foundation that openly dispenses money to a wide range of completely independent charities and charitable causes he and his brother pick (many of them quite well known and well regarded), not some secretive organization with some obscure purpose that might just be an arm of one of his corporations or a place to hide wealth from the IRS and invest it in private jets. That's pretty common way for rich people to give money
> completely independent charities and charitable causes he and his brother pick
The money can go to any 501c3 they pick. So if there's a 501c3 that's pushing for regulation that will benefit Tesla or SpaceX or some "raising awareness" campaign that's a glorified marketing campaign or some org that influences research, etc... those are all easy pickings
Sure, but it can't go on megayachts or personal world domination initiatives, and Elon (or anyone else) could make tax deductible donations to those registered charities without a foundation in place.
Since the foundation publishes accounts, it's actually relatively transparent what he has and the eclectic selection of causes Elon donated to has been fairly widely reported on. It looks considerably more like a man chucking money at a lot of pretty standard causes than say, the obscure nonprofit "to promote interior design" that is the tax-free beneficial owner of Ikea...
OK, this isn't a fair assessment, but does match appearances. Some details are important -- I'm adjacent to major donor fundraising and see this kind of thing happen all the time.
He donated to his foundation, which in turn re-donates and reinvests the money based on merit and priorities set by Musk to other charities. Of course, Elon being Elon, he probably has a huge hand in where it ultimately ends up, but this money is now out of his hands and into a "clearing house" where it can be bid / won by any charitable / non-profit that cares to submit.
This is extremely common with donors of huge wealth -- they pseudo-delegate the decision of what program to fund to a board of intelligent people sitting on their foundation, each member of which cultivates relationships with major programs for the wealthy person so that the money can be ultimately effectively invested without taking all the wealthy person's time.
See Bill & Melinda Gates foundation, or Warren Buffet foundation, etc.
I have a better idea. No tax exceptions for anything over 1 billion. 100% tax.
No human on this planet needs this kind of money. Even 100 million is too much already.
The money was made on the backs of the working class and they as in their elected government should be the one deciding where the money goes. If your government is corrupt then that is an entirely different issue.
This is a tax move to stash the cash so it does not got hit by big tax bill immediatelly. That money can be then invested in twitter (thru charity), buy twitter bonds, or whatever. Or give payouts in smaller amounts to friends and family which will work for the charity. My bet is that they will buy twitter bonds thru the charity.
There is nothing wrong here and it is not illegal.
Correct, after you give billions to a charity the incentive is to extract that by the owners. It suck, but humans are assholes when you dangle large sums of money money infront of them. The route is administrative fees.
this is no different from Gates and Buffet "giving away" all their money. Their kids are all in charge of their charities and it's just a way to get around taxes that is spun into positive PR because the media doesn't call them out. The whole Giving Pledge thing is a joke
It's a perfectly valid thing to do and can be done for the right reasons, but for a counterpoint you can look at the Trump Foundation. Trump and his family gave money to the foundation and the foundation bought things from Trump (ie hosting events at Trump properties). There's loads of small foundations like this that exist for self-dealing, nepotism and tax evasion. That's also not really unique to self-funded foundations. Something like the Gates Foundation is a huge operation that is doing a lot of big, expensive and highly visible projects. What Musk is doing with his foundation is less clear. Could be real charity, could be fraud.
Agreed, my point is there is nothing unusual, it's a common practice everywhere, so I don't get why Bloomberg needs a big report, not sure if it did for all other big guys in the past, otherwise it seems it has an interest to target Elon.
As far as fraud goes, I hope the system will work out when bad things went too far there. We're all innocent with good intention until proven otherwise, Elon should be treated the same, like him or not.
It was $5.7B. That's an enormous gift and one that was not disclosed at the time it happened last year. The Musk Foundation now has an enormous endowment and a hazy mission.
Instead of giving directly to charities like St. Judes - he funds his foundation which gives to charities like St. Judes. When you give away $5B, wouldn't it be irresponsible to not give it to a foundation? And if you have your own foundation, wouldn't it be dumb to not give it to your own foundation? This seems like a nothing story; except that it's in vogue to hate Musk right now.
While I agree that this is ordinary for very rich people, it's good reporting and context for us to know where and how the 2nd richest man in the world takes a tax deduction that we publicly fund.
And since he is narcist, he wants to be in the news all the time.
However negative news sell more. And somehow he made more enemies than Trump: Trump will not be booed in Oklahoma but Elon will be booed both in Oklahoma and San Franscisco.
What makes Musk more of a narcissist than any number of other celebrities and influencers who spend all their time online and post provocative tweets, videos, Tiktoks, etc.? What's your definition of a narcissist?
I'm also curious why Elon Musk would be "booed" in Oklahoma (where I'm from, by the way). Is it because of his industrial achievements, or his libertarian and free speech leanings, or because he hails from South Africa, or...?
I saw a comment that was without irony posting how Musk is the new Trump. And I think there is so much truth to that it’s painful, but not in the way some people may think.
Only insofar that they are anti-establishment and the media uses them for ragebait, and they troll the media.
Trump is a rent seeker celebrity. Elon is one of the most productive humans.
They are radically different but both break people's brains because they are supposed to be pro-establishment refined elites. Instead they are uncouth and align more with the working poors and dissidents. That's the biggest sin and it's what drives TDS and EDS respectively.
If he's not, he's certainly close. The point is he produces more than he consumes and does so at high scale. You can measure the impact of Tesla and SpaceX with the number of cars and rockets produced. Payload to orbit and so on. That would not have happened if he hadn't spent most of his time and money there for the past 20 years.
> That would not have happened if he hadn't spent most of his time and money there for the past 20 years.
It would have happened just like that, only the person doing the signing off (because that's what CEO do, they sign off stuff built by others) on those projects would have been called say "Mlon Eusk" a Swedish entrepreneur who moved to California, and right now you'd be worshipping him instead.
It's the same for everything, if Albert Einstein didn't come up with relativity it would have been Elbert Ainstain .
It's really bizzarre how any knowledge of statistics goes out of the window when disucussing people, celebrities and historical figures.
I guess it's a protection mechanism of the human brain so each and everyone of us can still believe that everyone could be a Powerball winner as long as they work hard enough or want it bad enough, whereas in reality it's just the luck of the draw, only the draw is only visible by people who manage to override that protection mechanism in their brain and look at reality as it is.
You don't luck into the theory of relativity or into building a rocket company. Both took serious effort way beyond the norm combined with a higher than average IQ and determination, those parts you can attribute to luck of birth. They shouldn't be worshiped. No, but encouraged and recognized, yes.
Einstein could have just done his 9-5 at the patent office. Elon could be hanging out on a yacht.
I don't think those are achievements you attain through luck, but any field involves many studying it. Jules Henri Poincaré and Hendrik Lorentz were so involved with the effort that some have accused Einstein of plagiarizing their work. While that is certainly of dubious claim, it illustrates that he was far from alone in his field.
As far as building a rocket company goes, yes, SpaceX has certainly achieved much, not least with reusable rockets. But again, Musk is hardly the only one in that space. Richard Branson has been at it since 2004, for instance, and at this point it's very trendy. Even Steve Wozniak started one.
If output is your KPI, you should certainly define it precisely.
If purely net worth, Musk isn't the 'most productive' because he simply isn't the richest person in the world, and has been loosing billions in months. But I presume you have a different 'productivity' in mind than just worth.
If it's purely numbers of products, someone from the Tata family is probably producing way more cars, rockets and social media platforms. Or else someone in Ali group. Or someone at Aramco, idk. Tesla sells way, way, way fewer (electrical) vehicles than most other large car manufacturers indivually do.
If it's relatively to where they started, Musk comes from a (very) wealthy South African family. He certainly increased his wealth incredibly, but I'm certain you'll find a Nigerian, Bangladeshi or even European person who, relatively, increased their wealth much more. Simply by being born with a debt, or nothing, and becoming reasonably rich, will make such a KPI higher.
OP didn't say "the", they said "one of the". Don't manipulate.
Not a fan of Musk myself, but yeah, he actually seems to be an extremely productive person. Whether this productivity is applied in the right place is another discussion.
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.
"With the support and guidance of our board, we plan to increase our spending from nearly $6 billion per year today to $9 billion per year by 2026. To help make this spending increase possible, I am transferring $20 billion to the foundation’s endowment this month." Jul 13, 2022 [1]
Bill Gates is on the good guys team now, since he's not actively and aggressively running a company. Musk is still a bad guy. You'd have to wait at least a decade or two for Musk to get old enough to stop being interested in actively running one or more companies and thus be on the good guys team.
I'm not sure I see the big problem here. Our government has decided that if you want to dedicate your resources to an approved cause that it won't hinder that cause by taxing those contributed resources. We don't place limitations on who is allowed to run a charity, and the range of valid exempt purposes[0] leaves a lot of potential for those resources to be used.
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.
I'm aware of that. I'm adding on that just because Musk has a lot of money shouldn't have anything to do with the laws. In my opinion, if he's not allowed to benefit indirectly from his charitable contributions then neither should the average churchgoer.
“rules are different for you because you have a lot of money” is a concept we can’t get rid of. Trying to make it irrelevant is exactly why people throw money at ethical issues and socially disruptive behaviors, and get away with it unscathed.
When street parking laws have nothing to do with wether you’re rich or not, that becomes an issue. Charitable contributions having nothing to do with it is (to me) an issue.
TBH I’m atheist, so my sympathy for churgoer tax breaks is limited, but I’d argue donation to orgs that benefit yourself shouldn’t be tax free in general. To take a silly example: if my street looked like a garbage slum and I made a non profit to make it look gorgeous, while there might be wider communal impacts, it’s something I and the street residents should have been doing anyway, and with no tax break involved.
As a Christian, I feel the same way about tithing (I'd do it whether there was a tax break or not). As a pragmatist, I'll take whatever tax break I can get. I do think it becomes difficult to draw a line. What I mean is, one reason why one might donate to a charity like Ronald McDonald House (as a very prominent example of a thing I've personally been on both ends of) is because when you're the one in need you want it to be there for you. At some point this conversation comes down to assuming the worst motives in people, and I don't think you can write policy from that.
Just because the government is looking out for a billionaire's interests doesn't mean it is necessarily in the public interest. Governments are not flawless. This is quite possibly an area that could use improvement.
Are you suggesting that the concept of a charitable contribution is only for rich people? My understanding and personal experience is that many people benefit from this mechanism, most of them not rich by any local standard.
Donating $5.7B to save an absolute max (37% tax bracket; he's probably much lower with most income via capital gains) of about $2.1B in taxes doesn't make financial sense, unless you've got a plan to siphon off at least $3.6B tax-free out of the charity. Why do people think a $1B donation saves $1B in tax?
He doesn’t need to shiphon anything. All the “donated” money is still in his control. In order to be effective at tax deference you need to separate the concept of who ownes the money and who controls it. As long as you still control it, it doesn’t matter who ownes it. That’s why a donner advised funds and similar concepts are used to reduce taxes or defer them.
In addition it’s also great for asset protection. For example if he gave a personal guarantee on some of the Twitter debt, then moving money into the foundation (as long as his Twitter stint was not fraud) will remove that out of his name and make it untouchable to the banks.
He can now use those funds to support trips to Mars and other projects. For those projects the charity might pay his expenses - for example a flight to attend a meeting in Hawaii. He can even use the money to hire his kids. The kids would have a much lower (w2) tax rate so effectively he reduced tax but kept the money in the family.
Exactly. It's not some hack that magically makes income tax liability just disappear, as many commenters are thinking it could be. Rather there are marginal tax benefits combined with strong asset protection, that make sense when you've got an obscene amount of money to manage so the administrative overhead becomes negligible - the question goes from "why" to "why not".
Another thing people are missing is that it's not an income tax dodge, but rather an estate tax dodge. The money will remain in control of his heirs, assuring they'll never go hungry or want for a place in the world.
It also creates more opportunities to play with asset valuations to evade taxes (eg separate the financial and voting interest of some stock in a closely held company, then claim the financial interest is worth very little without the control interest). But it's impossible to know if this is actually being done without seeing tax filings, including his (eventual) estate tax filing.
It is possible to donate appreciated stocks. And the tax rate can be higher than 37%, if it's short-term gains in California since there's state tax as well.
To run the numbers on the 37%:
Charity: 5.7B deduction * 0.37 rate = 2.109B value of the tax deduction
Selling: 5.7B deduction * (1-0.37) = 3.5B value of the stock sale
In addition, the shares were at an inflated value - if he dumps 5.7B onto the market, it's going to drop the value of the remaining 100B of shares. Whereas by donating to the charity, you get the 5.7B deduction, and the fund you donated to does not even have to sell the stock. Even if the stock drops shortly after, such as in this case, he still gets to keep the large deduction. See https://dlj.law.duke.edu/article/insider-giving-avci-vol71-i..., illegal but unenforced.
Also, he can use the charity money anyway to pay for various things he feels like spending money on - other billionaires have used personal charities to settle lawsuits, employ their children / cousins, invest in businesses of friends, etc.
it only doesn't make sense if you plan to individually spend that money on yourself. However once you have billions of dollars it becomes relatively difficult to spend that much on yourself. Therefore it becomes a place to spend money enacting the change on society that you want to see.
Yes, but the charity can pay for things for him. He needs to go to Europe and do "charity business", the charity can charter a jet for him, pay for his expenses, etc. Even better if he owns the jet, then he can essentially charter his own jet and have the charity cover the fuel and maintenance for that trip.
> Why do people think a $1B donation saves $1B in tax?
A distressingly large slice of eligible voters don't even understand how marginal tax rates work. Which is, like, the absolute minimum to have any clue whatsoever how US income taxes are applied, what tax bills will actually do if they become law, and so on. I'd be surprised if understanding of how deductions work is any more widespread.
[EDIT] Not a great source, but it's in-line with the results I've seen from better ones in the past:
Can't edit anymore: not mad about the downvotes, but I also don't understand them, at all. What about this rubbed people the wrong way? The answer to the question is that lots and lots of people don't understand how income taxes work, even a little. So many that one may expect to regularly encounter such people. I'll grant the results are from the social science side of things, which HN doesn't much care for, but that's just... where the answers to that question happen to come from.
How does the tax break work? Don't you still have to pay income and/or capital gains tax on everything that goes into the fund minus a pretty small amount?
Well, sort of. I can use it to buy a Hawaiian compound and retreat that my nonprofit will use, and it might have living space and my taste in art on the walls, and the people invited for conferences might be my friends.
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.
I totally agree that there are some corrupt Charities out there and bad practices. However, I don't think that's a condemnation of the concept of Charity as a whole.
That person was me.
I agree that non-profits can buy real estate.
Maybe I wasn't clear, but my point what that charities cant legally operate for the sole benefit of the donor.
I used buying a vacation home as example of this. A charity cant do that legally. A shady charity might buy a headquarters as a pretext an use it as a vacation home.
Exactly. It's more about control, where the money goes and how it is spent. It's not their money anymore and can't spent it as they wish. Rich people are obsessed with that (and I don't blame them. I wish rest of the world is concerned more to where their tax dollars or charity they give go). Huge percentage of charity money is spent on corrupt activities, bribe etc. People who give more tend to care more about where the money goes.
I know for my self, I don't really care when I donate 1-2 $/eur. I don't think that in "value" terms because amount is so small and often I don't question too much (or investigate) where the money goes. But if I donate $500 then I try to gather as much information as I can about the organization, people involved, previous projects etc. I can imagine this feeling (having control) would only be amplified if I tried to donate millions of dollars.
You can absolutely borrow money from the charity. I worked at a non-profit and high-value donors would donate without actually needing to send money. It was all paperwork. The charity only really was paid when the donor died.
true, but it is possible to use it in ways that benefit you or your priorities. I'm not saying that is what Musk is doing, but the ability to spend a billion dollars or potentially charitable endeavours can have direct benefits to the giver.
Sure, but there is nothing inherently wrong about that.
If I'm gay and donate to an LGBT rights charity, I would love to see direct benefit.
If I play sports and donate to my nonprofit Club, I also hope to see direct benefits.
Charitable donation by definition is donating to things that Advance your priorities. Those might be a world with less hunger, saving lives, or whatever. Nobody donates to charities that work against their priorities.
Let's say you give $50 to your charity from your $100. Then you "borrow" it back from the same charity to invest. You chose a high dividend investment strategy and make $10 in dividends alone. You pay $17.50 on your taxable income ($50) and $1.5 on taxable gains ($10). You can donate, borrow, and spend through that charity until the day you die. And you would still pay less in (19%) than your average working stiff.
I don't have experience donating to a charity that I created, so rules may be different, but in general no you don't pay any tax on donated in-kind securities and the amount of the deduction you take is generally the market value of the securities on the day they were transferred.
This reads like a hit piece, and a poorly executed attempt if so. This is standard practice and not uncommon. If we’re going to excoriate billionaires for putting their name on a foundation, shouldn’t Gates, DeVos, and others also be held to the same scrutiny? The article throws in an SBF comparison simply because both parties support the same brand of altruism.
>If we’re going to excoriate billionaires for putting their name on a foundation, shouldn’t Gates, DeVos, and others also be held to the same scrutiny?
I actually agree with you here- my point being that I’d be far more compelled by research into overpaid administrators, short-sighted donations, etc.
Would be keen to read an article where the $500k yearly salary of the charity’s CEO is examined (this is the case for most major charities looking for “the cure”)
When we’re talking about billionaires and nonprofits and taxes, I’m having a hard time seeing how one’s opinions could hinge on public statements rather than the money and impact.
Regular mortals maximize their 401k contributions, use Backdoor Roth IRA, FSA, optimize for long-term capital gains, etc. Is this all legal? Absolutely. The point is - nobody likes paying taxes - people try to minimize whatever it takes. Billionaires do the same. Instead of opening Flexible Spending Account, they start a charity. Instead of using Roth IRA loophole, they start off-shore corporations. Basically, they do pretty much the same what you do, but on a different scale.
A quarter of Americans don't have a 401k, and most of those who do aren't maxing it out. If you're doing all of the things you've listed you're not really a "regular" anything any more. You're rich. Which is fine, but you should really recognize the fact.
Yeah it's basically impossible to max out 401k contributions unless you're rich or at least nibbling at the bottom edge of rich. For one thing, you probably need to own the company that pays you in order to make it happen. Like, sure, I expect some very successful general contractors and such manage to do that, it's not just the stereotypical richie-rich sorts who can, but even a fairly high-paid W2 worker drone cannot, even if they have the money to, because of how the rules work. The bare minimum level of success to play that game is to have a business income—not W2 income from a company someone else owns—that's, oh, IDK, let's say about 3x household median in the US, and you'll likely need more than that unless you're also quite frugal. Which means not many can do it.
The median wage in the U.S. is under $55,000; anyone making $80,000 or more can max out his 401(k) contributions and still live an above-median lifestyle.
Actually, mere mortals pay tax eventually when they cash out their investments to pay for the things they want. The wealthy get to take low-interest loans against their investments to pay for the things that they want, without ever having to cash out. They never have to pay those taxes, and their inheritors don't either due to the truly insane cost basis step-up benefit you get when assets are transferred to next of kin upon death.
The cost basis step-up is not insane, IMO. It's partly practical ("how am I going to find out the date purchase and basis of some shares my grandfather bought in an account that was doing dividend reinvesting?!"), and partly to avoid unexpected outcomes ("grandpa gave the house to Alice and the rest of his estate to Bob"; if capital gains were due on the house, would Alice have to pay them or would Bob?).
IMO, the basis should be as of the date of death, with any taxes due owed from the estate, not the heirs.
(It's also fairly difficult to repeatedly exploit this as a loophole, as you have to die to take advantage of it. If we're looking to close loopholes, ones that can be repeatedly applied might be more fruitful places to start.)
Stepped up basis came out of the idea that one was already paying estate tax. Now that estate tax has disappeared for many, it seems ridiculous.
The IRS has no problem requiring you to maintain paperwork across generations. For example I've got some series EE savings bonds I inherited from my grandmother, where income taxes were partially paid (you can effectively switch just your savings bonds to an "accrual" accounting method with a specific election). I've got to keep track of this aspect until they mature, so I can subtract the already-taxed income on my own taxes. Same thing.
The answer to your hypothetical is that Alice would have to pay the capital gains, but only when she sold the house. Which is the same thing that would happen currently if grandpa gave away his stuff to Alice/Bob in his lifetime.
For an unsophisticated Grandpa George, he may have intended a roughly even split based on the notional value of the paid off house being the same as the rest of the estate, while the net result would be different after paying CG.
I guess I’m just not too fussed about the government not getting a lick when someone dies and would rather the family and other heirs receive whatever they’re able at what amounts to a sad time.
not trying to say blockchain is the answer to everything, but an asset ownership chain (keyed by the asset, so a tree if you think of it as all assets) . Would be a fantastic system of record for keeping cost basis of assets history.
Eg my home has a linked list of ownership w/ cost basis details back to it's inception/root.
Couldn't disagree more. Buy, borrow, die, is an insidious loophole that is costing the government billions in lost taxes.
> grandpa gave the house to Alice and the rest of his estate to Bob"; if capital gains were due on the house, would Alice have to pay them or would Bob?
Capital gains taxes are paid when the asset is sold. When the house is sold the owner should have to pay the full capital gain tax, not the amount that has accrued since grandpa's death. If alice doesn't want to sell the house that's up to her.
An hour before he died, Grandpa George could have sold the house and excluded $500K of capital gains (if his spouse died within the prior two years) or $250K otherwise. He could then pass his estate tax-free to heirs (assuming it was a typical "normal person sized" estate). In that case, the value of the house is now in [stepped-up/not taxed] dollar bills.
Why should the fact that he transferred a minute after he died rather than 60 minutes before make a difference to the taxes owed? Sell it for a fair market price to Alice a minute before you die, then transfer the proceeds of the sale to her as part of your estate. Same effect.
I don't care about excluding up to $500k. I care that billionaires entire fortune is excluded when they die. We can go round and round about which loopholes make sense. But in the end I don't think there is any reason that billions of dollars of equities should be excluded from paying capital gains taxes just because their owner died. You shouldn't get a tax advantage for dying. Selling everything you own the day after you die should have the same tax implications as selling everything the day before you die.
I care more about what happens to the estates and heirs of the 3M less than millionaire regular Americans that die every year and what happens to their estates than I do about the ~15 billionaires that die each year.
> Selling everything you own the day after you die should have the same tax implications as selling everything the day before you die.
I agree with that . That's exactly why the vast majority of family homes would be passed along tax-free, with stepped-up basis (as was my point above: "the basis should be as of the date of death, with any taxes due owed from the estate, not the heirs" [which I thought earlier you "Couldn't disagree more"]).
No they don't. Mere mortals don't receive enough income from their tax-deferred investments (lol), social security, and elderly side-hustle (part time cashier at Ross?) to incur a tax liability. Even taking full advantage of the senior discount at Denny's they won't leave behind much to their kin.
There is no world in which a billionaire can donate billions of dollars and come ahead financially. The only reason to do this is the legitimate intention to use that money for reasons that aren't self serving. Conversations about "hiring his kids" and treating it like a slush fund are ridiculous. If he had a dozen kids each getting the maximum allowed salary (~$300k) for 30 years, that's still only 1.8% of the total contribution.
>Regular mortals maximize their 401k contributions, use Backdoor Roth IRA, FSA, optimize for long-term capital gains, etc.
The only thing I would consider to be 'tax avoidance' in there is the Backdoor Roth, which is only used by a small subset of Americans because the majority don't make enough to need it. And even then the Backdoor Roth is a loophole/oversight that Congress is too cowardly to close.
The rest all serve different purposes, primarily to make necessary aspects of life (Retirement, Healthcare, etc) more affordable in our unaffordable country.
> Gates foundation actually does charitable work from what I can tell ?
Than your purview of 'charitable' work includes coaxing Oxford to not open source vaccines to the developing World in order or profit from the largess that big pharama reaped during the pandemic [0] and subsequently caused a lot of unnecessary deaths? That isn't even including their aggressive consolidation of arable farm land in the US with clear ties to large pharma and chemical corps under the auspices of their foundation and ties to the WHO.
And I'm not even going to delve into the Epstein relationship Bill had which included trips to pedophile island.
If so, you should really look into what you deem as 'charitable work' tbh.
PS: most foundations are probably required by law to do a little bit of actual charitable work, but I believe these foundations are mainly tax exempt investment vehicles and a way to peddle influence with governments.
Invests in vaccine companies (Bill Gates stating it was his most profitable investment ever) & major funder for WHO (who’ve been pushing COVID vaccines).
How on earth is this a tax avoidance scheme? Complete nonsense. Sure, he doesn't pay tax on that money, he also loses that money. This is not a net gain for Musk personally. He can't directly send money from the charity to himself, to him personally the money is more or less gone. This is less greedy then simply paying tax on the money and spending it.
Money is just something you trade for something you need or want. For most of us, we exchange money for stuff (food, clothing, shelter, transportation, toys, etc).
At some point, if you earn enough, you exchange money for time. You no longer need a job, and can spend your days as you wish because the stuff that you need is covered.
And then beyond that, when you are free and have no risk, what do you spend money on? There comes a point where ultra wealthy people spend it on power, control, and influence. If the money is taxed, it is no longer available to you to spend. But, if there were a way to shift it to a place where you could direct it in ways that you want for causes, power, or influence, then it remains effectively in your control. He didn't lose the money. He may lost his ability to use it to buy himself stuff, but he doesn't want stuff at this point.
If I gave you complete control over a billion dollars in a "charity", don't you think (if you were so inclined) you would be able to find plenty of ways to spend that money in a way that would benefit you?
I.E.- I might buy a house, and then have my charity buy a huge amount of land around it as an investment, to effectively turn my 1 acre homesite into a 100 acre estate
Maybe I'd have my charity teach at-risk children to ride horses, so I could build some nice pastures and have horses in my front yard.
Of course- the professional landscapers who my charity hires to maintain the grounds would probably cut me a pretty good deal on doing my personal estate as well, while they're out there
And maybe my executive assistant who runs my horse charity would pick up my dry cleaning now and again
It does nothing to preserve your own wealth even if it goes to a charity you control. It's no longer your wealth and unless you want to do something illegal its not coming back to you and can't benefit you.
Past a certain point the goal of having money is the ability to wield influence. If you donate money to charity you control you can still use that charity to wield influence.
> It's no longer your wealth and unless you want to do something illegal its not coming back to you and can't benefit you.
This is peak naivity - you are totally wrong.
Exanple one - charity can make political donations. Example two - can hire lobbyists. Example three - it can buy voting shares in companies you want to control. Example four - it can hire your family members or friends and pay them salaries.
You're calling somebody naive but your statement is nothing but lies.
> Exanple one - charity can make political donations
Under the Internal Revenue Code, all section 501(c)(3) organizations are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office. Contributions to political campaign funds or public statements of position (verbal or written) made on behalf of the organization in favor of or in opposition to any candidate for public office clearly violate the prohibition against political campaign activity. Violating this prohibition may result in denial or revocation of tax-exempt status and the imposition of certain excise taxes.
> Example two - can hire lobbyists
In general, no organization may qualify for section 501(c)(3) status if a substantial part of its activities is attempting to influence legislation (commonly known as lobbying). A 501(c)(3) organization may engage in some lobbying, but too much lobbying activity risks loss of tax-exempt status.
> Example three - it can buy voting shares in companies you want to control
Which will lead to your tax-exempt status being revoked if it looks like you're doing business.
> Example four - it can hire your family members or friends and pay them salaries.
Which you can already do with your existing companies.
> Incorporated charitable organizations—like other corporations—are prohibited from making contributions in connection with federal elections. Unlike most other corporations, charities face additional restrictions on political activity under provisions of the Internal Revenue Code.
> Example three - it can buy voting shares in companies you want to contro
> to avoid violating U.S. Securities and Exchange Commission (SEC) regulations, your investments should not benefit your nonprofit’s employees or board members.
You can be employed by your own charity. Your own charity can provide you housing, cars, etc. even your vacation and travel can be paid for by your charity.
> You can be employed by your own charity. Your own charity can provide you housing, cars, etc. even your vacation and travel can be paid for by your charity
is this really true?
Your own charity can pay for your personal vacations and travel?
It’s not a vacation. It’s a mission trip. It’s not a plane ticket to Vegas. It’s a ticket to a charity summit. It’s not a club table fee, it’s a team building event.
Lots of ways to get what you want through qualified, albeit non frugal, business expenses.
Yes good point. I do admire that he has given some of it to charity. But the bulk of the money he claimed to pledge didn't go to charity - it went to a foundation he controls, purely for tax benefit.
Off topic but it's funny you called me a kid. I've been around long enough to see this game played for decades by the wealthy class.
Villain of last two months was Trump, now the the villain of the month is Musk.
There is a new villain that the media are always baiting readers every month. It's quite predictable to see as they are desperate and hungry for your clicks.
I have no problems with this, legit things can be done under charitable umbrella, and we should be thankful for the donations.
(Massive paintings of oneself on oil canvas notwithstanding ... ahem ... Mr. 'President')
But it's the insufferable populist hypocrisy of it all!
Please let's just talk and report about it for what it is. The press might even want to use the term 'NGO' where applicable, irrespective of the PR spin of the non-profit 'charity'.
Avoiding paying taxes by spending even more money that he can no longer use for himself? There is no way to financially come out ahead by donating to charity.
You didn't think this through. There is little charity in a private foundation: besides the immediate tax breaks the billionaires receive, the foundation is required to spend only 5% of its endowment on things that are remotely related to charity. The rest of the money is used like always: to buy assets, like stocks. These assets are in practice still controlled by the owner of the foundation. For example, Gates has for decades used his billions to invest in biotech that will ultimately benefit his personal investments. And I'm not event talking about the political power you can buy with your "charity giveaways".
Let me get this straight. Elon donated $6 billion in Tesla shares to his non-profit... so that his non-profit could buy Tesla shares to prop up his stock price? This makes zero sense.
He will get a tax break and he doesn't even need to sell the shares immediately. And he still controls the shares through the foundation, just for starters. Don't you think this is a sweet deal? Every aspect of the "charity foundation" created by billionaires is designed to benefit them the most.
If I told you that you can control your wealth, diversify your holdings, and pay only 5% of assets per year (in the way you personally decide) instead of 15%, 20%, or 25% in taxes, would you think it is a good or bad deal?
Controlling the shares through the non-profit means nothing. He has control even without those shares, and the only difference is that they're now permanently gone as an option to sell and profit off of. You still call this "controlling your wealth" but it's literally the opposite - that $6 billion is now extremely limited in what it can do now in terms of selfish goals.
Incorrect. Elon still controls everything he puts on his foundation, and when he's gone he will appoint people to control it. That is a fact. He can still sell those shares (without paying taxes) and diversify his holdings if necessary. He can invest in other companies using that money to help him achieve his goals. It is just a bunch of money that he can control in several ways. You just don't have great imagination, but Elon and his lawyers know what is possible.
Highly recommend the book "Dark Money" by Jane Mayer to understand the charity-to-PAC pipeline that exists in the US .01%'ers. Billionaires hate paying their taxes, so when they're forced to they divert their money into a 501(c)(3) or (4) that they're in control of, and use the 95% of non-charitable funds to do their dirty work, and the 5% of charitable funds to create academic environments that support their goals.
If you have appreciated stock, transfer it into a DAF, realize a large tax deduction to offset a high income year, and take the standard deduction other years.
Bill and Melinda Gates Foundation would also be "my charity", would it not? Or are you distinguishing between foundations and direct recipients of charitable donations?
However, when the Gates' donations are disclosed they tend to say "$xB was given to the Gates Foundation" while Musk's was apparently "donated to a charity". (Note: I do not follow this topic regularly, this conclusion was based on some basic searches.)
To dig a bit deeper, it could be argued that the contributions and outcomes of the Gates' foundation are relatively well known at this point while Musk's outcomes are less so.
> while Musk's was apparently "donated to a charity".
Musk made no public announcement about this and declined to comment when asked about it. He wasn't trying to score social media points by suggesting he was about to cure cancer. This became public knowledge when he was legally required to report it to the SEC.
Gates on the other hand loudly announces all of his contributions.
What I personally don't understand is why everyone is still trying to draw moral conclusions about how this man's words align with his actions. It's a complete waste of time.
Bill Gates - Bill & Melinda Gates Foundation = Good
Mark Zuckerberg - Chan Zuckerberg Foundation = Good
Warren Buffet - Buffet Foundation = Good
ELON MUSK SATAN'S ACOLYTE WHO WROUGHT UPON THE WORLD THE REMOVAL OF HEAVENLY DAUGHTER VIJAYA GADDE NOBLE DEFENDER AGAINST THE LIES OF THE DRUMPF = Mystery foundation = EVIL
The overall zeitgest is just reaching because he is saying heterodox things.
> Hillary Clinton - Clinton Foundation = Good
Barack Obama - Obama Foundation = Good
> Bill Gates - Bill & Melinda Gates Foundation = Good
> Mark Zuckerberg - Chan Zuckerberg Foundation = Good
> Warren Buffet - Buffet Foundation = Good
> ELON MUSK SATAN'S ACOLYTE WHO WROUGHT UPON THE WORLD THE REMOVAL OF HEAVENLY DAUGHTER VIJAYA GADDE NOBLE DEFENDER AGAINST THE LIES OF THE DRUMPF = Mystery foundation = EVIL
> The overall zeitgest is just reaching because he is saying heterodox things.
This is a vapid comment. Other billionaires' charitable foundations and ventures are regularly scrutinized and criticized — hell, there's a rather large subset of Americans that believe the Clinton Foundation is a cover for clandestine operations.
It's amazing how many coordinated attacks there are against Elon Musk. He's clearly changing minds in ways that many media people don't like. Losing control of the narrative must feel existential.
People should research how the Bill Gates foundation has given nearly $400, million to media organizations, organizations that will never say a bad word about gates. The man is literally bribing media companies, but go ahead and believe that it’s Elon who is the evil one
He gets to donate money to "charity" and still controls who benefits from it. The donation reduces their tax burden and they still benefit from the power of wielding said money, with some additional strings.
You really think the richest man on the planet is doing weird little non-profit loopholes to wield power? You think having $6 billion in his non-profit has any impact whatsoever on his ability to influence things with his money? None of this puts him ahead financially and there is zero benefit to him doing this for "tax avoidance" if his main motive is maintaining as much money (and resulting power) as possible.
I find it god damn hilarious that Elon setting aside billions of dollars for non-profit work still manages to rile people up enough to suggest he's just being an asshole and doing it for selfish reasons
my dude why do you think he bought twitter? had a video of him being boo’d removed? had the guy posting public jet info banned? he’s as thin skinned as any other mortal, the guy offered a flight attendant a horse in exchange for sex
every billionaire has a non-profit like this, trump was so stupid he actually used his for real fraud instead of the typical wankery
Its interesting how Elon Musk became a target of large media outlets' attacks since he de-facto entered US and world politics. The way he entered it is novel and technological. Fascinating to see how this story unfolds further.
That's his preferred narrative. The truth is that Elon Musk has been subject to negative attention for years because of market manipulation[0], abhorrent labour practices and safety record[1], and obsession with inserting himself into the limelight via poor behaviour[2] or over-promising things he can't deliver[3][4] — to name a few reasons why he's viewed unfavorably.
Where's the equal or louder negative attention for billionaires who profit off death and destruction? That use actual slave labor for their projects that result in tens of thousands of deaths? That wreck the environment without consequence? That promote harm and violence to disadvantaged groups? That exploit child labor?
The issue is clearly not that Musk says dumb shit on Twitter and missed a deadline for his pickup truck. The issue is that society has a rage boner against him and people like you are perpetuating it while missing the wealth inequality forest for the Elon trees.
> Where's the equal or louder negative attention for billionaires who profit off death and destruction? That use actual slave labor for their projects that result in tens of thousands of deaths? That wreck the environment without consequence? That promote harm and violence to disadvantaged groups? That exploit child labor?
The sad reality is that these egregious human rights violations often fly under the radar because their perpetrators know how to keep their mouths shut. Elon is constantly in the limelight because he intentionally inserts himself there and is openly flaunting his wealth and disrespect for others. It's no surprise that a high-profile person constantly acting belligerent, lying, and antagonizing people receives so much attention from the media.
It's the same reason why Martin Shkreli went to jail and not any of the pharmaceutical executives who've ruined or ended millions of lives.
> The issue is clearly not that Musk says dumb shit on Twitter and missed a deadline for his pickup truck.
This is an inaccurate and dishonest summary of what I linked in my comment.
> The issue is that society has a rage boner against him and people like you are perpetuating it while missing the wealth inequality forest for the Elon trees.
You are creating a false dichotomy to simp for a billionaire who treats his employees and other people around him as disposable means to an end. The sins of other people does not make it okay for Elon to sexually harrasses and abuses his employees, report a fake shooting threat to spite someone for whistleblowing[0], abuse and kill countless animals in rushed and botched testing... I could go on.
Literally everything you're saying is wildly biased hyperbole or just outright unsubstantiated. I can't take this back and forth seriously if you're going to come it in such bad faith
> Literally everything you're saying is wildly biased hyperbole or just outright unsubstantiated. I can't take this back and forth seriously if you're going to come it in such bad faith
It's "wildly biased hyperbole" to point out Elon's unsavoury behavior?
The fact you're claiming I'm wildly biased but won't so much as acknowledge anything I've mentioned that paints him in a bad light is laughable.
An epidemic you say? We should do nothing about it then. I'm healthy, it won't hurt me.
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
Tesla's premise is that they can balance not having large revenues in manufacturing for a period of time to build out the EV industry as Tesla's major revenue is in fact carbon tax credits. The problem is the competition is far greater in resources than Elon has guessed and that will tend to blind-side soon.
Or in short words, Elon is spending stuff he no longer in the future has.
> Tesla's major revenue is in fact carbon tax credits
Why are you outright lying and spreading misinformation? It's very easy to search online and see that their sale of carbon credits is, at most, a few percent of their total revenue over the past 5 years. I actually did the math and it was 2.4%
The material improvements he could have gotten for this money...
He could have created tens of thousands of homes in apartments and gifted them to municipalities to be social housing, putting a massive dent in homelessness.
He could have built and furnished schools. He could have bought public transit vehicles. There's countless things that would have real, immediate, material impact on thousands of lives.
If you were to do any of those things it would make the most sense to do them through your own charitable foundation... I'm not saying that's what he's going to do with the money, just that reading this story and then responding how you did makes no sense. Half the people in this thread seem to have absolutely zero understanding of what's going on here.
I'm aware of how trusts and foundations work. Elon Musk has done nothing to suggest he's got charitable intent. The dude is barely one step above a con man, egomaniac, and compulsive liar.
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.