Why Billionaires Won’t Save Us

In 2018 Americans donated over $428 billion dollars, but the number of donors has reached an all-time low. This is due to the 1% of Americans who are extremely wealthy and give away huge amounts of money each year. On paper, big philanthropy seems great, but the way billionaires give away money is never scrutinized and if it is investigated, its problems are revealed.

Big philanthropy in the USA has become a system of tools and products to help billionaires give away money in ways that only benefit them. Due to various rules and regulations passed the by government, billionaires have been able to influence political structures and can shape the world in a way they see fit, while paying less taxes. This is done through many different laws, and one such law is DAFs or Donor Advised funds. This law states that a wealthy person can put a certain sum of money in the DAF, and then that person gets a tax write off for the full amount that they donated. The law states that money that the person puts in the fund has to be donated to an actual charity later, but it can stay in the fund indefinitely. This allows billionaires to take the tax break, but pay the charity years later, saving them millions of dollars. Over the past 5 years the number of DAFs has tripled, and the number is only increasing. For example, Nick woodman- the CEO of GoPro was worth over $3 billion in 2014 as he made his company public. He ended facing taxes in 10s of millions, so when GoPro stock was at its peak, he donated $500 million dollars in stocks to a DAF. After the stock fell Nick still got tax write off of $500 million dollars even though the stock’s value was no longer $500 million.

Alongside DAFs there is another law billionaires use to their advantage: the 501(c)(4). This law promotes organizations

educating the public about current affairs and controversial issues and then giving funding to these causes. This law helps billionaires change the world in ways they see fit as it allows them to create organizations that promote ideas they believe, without hearing the opinions of the public. Additionally, the law exempts these nonprofit organizations from paying income tax but are eligible to pay tax if they fund political campaigns or spend on any sort of political activity.

Lastly, big philanthropy has become a powerful tool to cleanse and enhance one’s reputation. For example, the Sacklers fuelled the opioid crisis in the USA for the past 5 years, but to save their reputation, they bought dozens of museums and donated to various art galleries. This led people to believe that the Sacklers were respectable people as they had great taste in art and owned multiple museums, distracting people from the harm that they were creating.

In conclusion, the taxing system in United States is extremely flawed as it allows the super-rich to remain rich through loopholes and legally evading taxes, while taking taxes from the poor and using the money for drone strikes or building walls. The tax system needs to be scrutinized, reviewed and changed so that these laws benefit everybody, not just the rich. Warren Buffet famously once said that he pays less taxes than his secretary, in percentage terms, as most of his wealth was in the form of stocks and not his salary.

Ishan Kapur, M, 3 rd