Why would it be bad for billionaires to be forced to donate money to charity?

Question

I am writing a speech about this topic. We are making up a resolution that American citizens with net assets valued at over 1 billion dollars should be required to donate at least 2.5 percent of their assets annually to charitable causes. I am speaking against this resolution. I would like to hear anyones opinions against this resolution to help me write a more through speech. Thanks!

This was the side I was given to speak on. Of Course billionaires get a tax deductible, but if all billionaires are getting a tax deductible wouldn't that decrease the amount of taxes going into our government immensely?

Answer 1

Such a resolution could backfire. The starting point is I think billionaires give way more than 2.5%. Bill Gates, the richest American gave 1/3 of his wealth. Warren Buffet, second richest, just pledge a donation that is over 1/2 his wealth. So at best passing a law is just a waste of time. But say some give less, say they give 3% or 5%. Those people are likely to drop their donations to the donation tax amount as the new expected standard, 2.5%. Also it can hurt the economy if people are approaching assets of $1 Billion will realize they are close to hitting your new 2.5% donation tax. It would be better for them to not work than make over your limit.

You also have to ask why people give. It makes them feel good, it makes them feel like they are making a difference, and it builds goodwill and prestige in other people's view. Now if it is a tax, you make them feel angry about donations, you make them feel it is going to the taxman, and other people just think they are doing it because the have to. All this is also likely to bring their total donations down to the amount they have to give instead of the amount they would give freely.

Answer 2

Here are several key points against forcing billionaires to donate money.

1. Forcing what is essentially another tax will drive money out of the US economy. Meaning if someone is a billionaire, and they are given extra taxes, don't you think that they could move ALL of their money to another tax friendly country. That would prohibit growth in this country because most jobs come from private industry and services. Now NO taxes will be collected from this billionaire.

2. This would also prohibit foreign investment into the US. Companies like Toyota and BMW for example would not want to come here and produce their vehicles here, which provide jobs for Americans. They are establishing jobs here because it is more cost effective for them than in their native countries. Why would we want to dissuade them or any other foreign country from investing in this country?

3. How do you tax a billionaire when most of them don't actually have money? Most of that money is tied up in corporate entities. Corporate entities such as LLCs, S Corporations, etc. provide a tax shelter which protects people from liability and excessive taxation. Therefore, the government won't be able to get that money anyways.

4. Potential for fraud. Where would this money go to? How would this be regulated? That same company could create a "charity" and give very little money to their cause, citing 90% for overhead costs. Also, unscrupulous lobbyists could divert funds dishonestly to a charity.

5. I personally believe most billionaires feel a sense of moral obligation to donate to charity on their own. (Warren Buffet gave $37 billion dollars to Bill Gates charity.) If people are forced to donate to a charity, it's not a donation. Its another tax.

Answer 3

1 better tax them directly, the government elected by the people will make a much better use of the money than those billionaires who will use their pseudo charities to promote indirectly their own business to corrupt elected officials etc. Witness Microsoft

2 THose billionaires should not be allowed to happen in the first place, if they are so rich it is because they stole the money on the back of the workers, so the best solution is not charity but mandatory unionisation or mandatory fair sharing of profits etc.

3 who knows what charities do. They may be dangerous religious sects.

4 it s always bad for someones morale to depend on patronising, it s better that they get the same amount of support by taking it back from the billionaires who stole it from them

5 let s remember that seeking wealth is a bad thing, jesus warned us about being rich, rich people always become wary of the poors, afraid, they lose interest in inner development, no amount of donation may help the rich people, the best thing that can happen to them is to be less rich. THe problem is revenue and wealth inequality, let s solve it at the root.

Answer 4

I would find it very difficult to reason against. Thats just my personal opinion.
However,that does not help you in the least!
To force some one to make a preassessed payment of a designated amount.Changes it from the context of a donation.
A donation being a freely offered gift,by definition.
So turning it, into a form of taxation which is an assessed amount taken to be used for public purposes.
It would therefore, be likely liable for some form of rebate from the Government Taxation Department. Negating the original intention,of all being required to forfit an equal amount per $1 billion.
Assests can cover so many things,including projected income.
In some cases it may have the effect of covering any actual monies being taken or "lost" at all by the scheme,and become yet another form of taxation loophole.
The definition of the term by law appear to be a word that could easily be twisted to suit the clients purpose.Achievable by any good taxation or business laywer.
It would appear to very closely verge on the point of becoming a form of socialist law.
Where those who have, are required to share their wealth for the common good of the society involved.
When you speak of the rich and powerful and compare their wealth against those who have so little, then it becomes a very emotive issue.
I wish you good luck with your speech in the debate, and hope I may have given at least a tiny bit of assistance,or ideas to work on.
Economics far from being in my field of knowledge.

Answer 5

Billionaires probably donate over 2.5% of their annual income to the charities of their choice already. If this resolution was passed, you might wind up with less going to charity then you have now. Secondly the resolution sounds a lot like income redistribution which sounds like socialism or worse communism.

Answer 6

you do not want to force them to give to charity. charity is not just giving money, it is putting use to that money. most billionaires that give to charity gives it to them because of a reason (maybe they know someone or they had a run in with the past). they put the money somewhere that they feel helps the most. if the government forces people to put money where it won't have the same effeicency, then what is the point of giving? it won't help much dollar for dollar.

Take Oprah's school for example. it is not a secret that American Kids do not value education as much as south Africans. so money for education there will greatly help the kids there who cannot seem to go to school, whereas in the U.S. most kids can go to school, but don't value the ability to go to school. if the U.S government forced Oprah to open the school in America, there would not be as great of a value of Oprah's school in America as it would in Africa.

so esensially, charity should come from a person, not forced from a person, because the money would not have as good of an effect

Answer 7

Simple. It will go against the very nature of a "Donation". Donation is more of a gratuity or flow out from the liberallity of one person or entity. It we will forced a person (or entity) to donate, then we are encroaching upon his own liberallity and it will be more of an obligation rather than an act of grace.

If it is an obligation, then why not call it a tax or an exaction rather than a donation.

Answer 8

Yes, it would actually upset the balance of earnings.

Take for example, Bill Gates. He is a billionaire and each year he chooses to give to charities, because it is tax deductible and he can allocate money to whom he wants.

If he were forced to give to charity, he would not be as interested in giving to charities or making as much money through innovation.

Here is how is works. For Example. Bill Gates may give $3B today to charity because he makes $50B.

If he were forced to give 10% of his money to charity, he would have to give $5B and thus it would be a disincentive to make money.

Answer 9

I believe that billionares already carry a 36% burden on income and probably pay property taxes at 1% or higher.

So lets say Mr. Billionare makes a cool billion one year. You mean to tell me 360-million dollars is'nt enough.

In fact why don't we allow everyone that pays more or a higher percentage tax vote on it.

In fact why don't we vote that he gives everyone in the class 1-million each (all in favor raise your hands)?

Well some thoughts.

Answer 10

If the billionaires are not going to give freely (meaning they are greedy, etc) and be forced to give money, then they will just get will attempt to get their money back by cutting peoples jobs, lowering wages, etc. If anything has to be done, then the government needs to put a leash on the big corporations.