Let's see, he's 30 so maybe he has 50 years to live. If he got $3.84 billion and got a conservative 5% interest on that my back of the envelope calculation says he could spend $115 million a year for the rest of his life. Now spending $115 mill per year doesn't count buying assets like mansions or fancy art, those are investments. It would be $115 million on apparel or personal employees or the depreciation of cars, yachts and private jets. It would actually be hard to do and take a lot of work to spend it all every year.
If he paid the american taxes, which are 15% for cap gains but let's say he loses a third so he's left with $2.56 billion. He would be able to spend $77 million per year.
A $38 million per year difference seems like a lot of money, but is their any difference between a $115 million a year lifestyle and a $77 million a year lifestyle? In both cases you have more money than you can spend year in and year out. You're really getting diminishing lifestyle returns the more money you make. Maybe at the $115 mill level you'd feel more comfortable buying another private jet or having an extra 100 personal employees to take care of your stuff, but it really wouldn't be that much of a difference. I bet if he had a talk with some older billionaires they would tell him that it's not worth the hassle.
It is a huge difference, however, if you think: I could give that money to the government, without any control over it, or I could donate it to specific charities, or even fund my own charitable organization, and have complete control over how it was used.
I'm not necessarily saying that one is better than the other (private charity might have the potential to be more effective, but is certainly less democratic). But the choice is not merely between private hedonism and government coffers. You can do good with money outside of taxes.
Plus, if it's invested in other companies (as one would assume it will be), then it helps grow those companies, which if successful, will presumably pay taxes themselves. I'm not arguing against capital-gains taxes in general, but the question of where taxes are collected along the chain is purely practical, not moral. If Saverin isn't paying additional taxes now, it's not like that money is disappearing forever.
It's not the same thing at all. If you pay 20% in taxes, and we're considering $1,000 of earnings, then I'm talking about paying $200 to charity instead of paying $200 in taxes.
You're talking about paying the full $1,000 to charity to avoid $200 in taxes. Totally different thing, and vastly more expensive.
Plus, his taxes are all in one year. To spend that kind of money effectively on charity would take many, many years, so it's still not a viable alternative.
You could donate it to a charity, but they wouldnt have to spend it. This is what gates and soros do. Its basically a charity that funds other charities as they see fit.
A charitable trust with pretax dollars would be an even better idea however.
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Let's see, he's 30 so maybe he has 50 years to live. If he got $3.84 billion and got a conservative 5% interest on that my back of the envelope calculation says he could spend $115 million a year for the rest of his life. Now spending $115 mill per year doesn't count buying assets like mansions or fancy art, those are investments. It would be $115 million on apparel or personal employees or the depreciation of cars, yachts and private jets. It would actually be hard to do and take a lot of work to spend it all every year.
If he paid the american taxes, which are 15% for cap gains but let's say he loses a third so he's left with $2.56 billion. He would be able to spend $77 million per year.
A $38 million per year difference seems like a lot of money, but is their any difference between a $115 million a year lifestyle and a $77 million a year lifestyle? In both cases you have more money than you can spend year in and year out. You're really getting diminishing lifestyle returns the more money you make. Maybe at the $115 mill level you'd feel more comfortable buying another private jet or having an extra 100 personal employees to take care of your stuff, but it really wouldn't be that much of a difference. I bet if he had a talk with some older billionaires they would tell him that it's not worth the hassle.
It is a huge difference, however, if you think: I could give that money to the government, without any control over it, or I could donate it to specific charities, or even fund my own charitable organization, and have complete control over how it was used.
I'm not necessarily saying that one is better than the other (private charity might have the potential to be more effective, but is certainly less democratic). But the choice is not merely between private hedonism and government coffers. You can do good with money outside of taxes.
Plus, if it's invested in other companies (as one would assume it will be), then it helps grow those companies, which if successful, will presumably pay taxes themselves. I'm not arguing against capital-gains taxes in general, but the question of where taxes are collected along the chain is purely practical, not moral. If Saverin isn't paying additional taxes now, it's not like that money is disappearing forever.
If you give it to charity, you get to deduct that amount from the taxable total, so that's an invalid point.
It's not the same thing at all. If you pay 20% in taxes, and we're considering $1,000 of earnings, then I'm talking about paying $200 to charity instead of paying $200 in taxes.
You're talking about paying the full $1,000 to charity to avoid $200 in taxes. Totally different thing, and vastly more expensive.
Plus, his taxes are all in one year. To spend that kind of money effectively on charity would take many, many years, so it's still not a viable alternative.
You could donate it to a charity, but they wouldnt have to spend it. This is what gates and soros do. Its basically a charity that funds other charities as they see fit.
A charitable trust with pretax dollars would be an even better idea however.
Maybe he just has the crazy notion that he can make the world better if he spends the money than if the US government does.
Maybe he'd prefer to allocate $38 Million per year to charities of his own choosing rather than to a transparency-devoid government?