Wednesday, July 06, 2005

Steve Jobs vs Bill Gates: A Tax Perspective (Why A Recent Gesture From Steve Jobs Is 100% From The Heart)



CNN Money first reported this morning that Steve Jobs called the father of a teen who was slain over the weekend for his iPod.

The true beauty of his gesture is that YOU KNOW 100% it is from the heart. It won't be a tax write off.

Bill Gates & Paul Allen steal just as much or more from taxpayers in Washington than they give by way of incredibly large tax write offs.

A tax write off merely shifts the burden to those in the blue collar away from the white collar.

I'm sure Steve Jobs takes as many tax write offs as possible, but it is a good illustration of recent trends.

I have had my doubts about the Live 8 Concerts around the world. If the musicians and producers that are contributing to this concert to raise awareness for African Financial and Food Assistance truly care about it - they will give of their money freely and not claim any of the event expenses for travel, crew, or accomodation as a tax write off.

This is a very backhanded way for the wealthy to force the government (and the taxpayer) into donating to a certain cause. For, if one is receiving a tax credit and not paying in to the system - there has to be someone who is making up that revenue and is paying in to the system.

In the case of Paul Allen's generosity - taxes are significantly high in Washington state to offset the cost of a stadium he helped build. Bill Gates is sure to take write offs for the computers and copies of Windows given to Washington state school districts.

In the case of Live 8 musicians and producers - I wonder if they are helping to pay for the police patrol, city cleanup from the events, and not taking tax write offs?


Recent Apple homepage snapshot with no "sales or ad" links


Another example of a "non tax write off" effort made by Apple would be for the recent Tsunami Relief Effort. Apple changed the homepage of their website for 2 weeks to allow for a donation page. I don't see how this could have been much of a tax write off. However, it was also publicly announced that Bill Gates gave a lot of money to the effort. While a nice gesture - it would be interesting to know if he took a tax write off for his donation.

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11 comments:

Incognito Milksop said...

If this is the way you feel, and it does make some sense, you should contact your legislative representatives and urge them to change the tax laws so charitable donations aren't tax deductible. There's nothing wrong with people taking advantage of a benefit that the government is currently offering.

Keep in mind that these people are still donating their own money. Lets say they are in a 33% tax bracket, and donate $100. Sure, they save $33 off their taxes, but the $67 is still really coming out of their pockets.

I think the reason governments make tax donations tax deductible is they feel that if a charity is worth the person spending $67 of their own money, they would probably spend the $33 more efficiently as well.

Anonymous said...

I think it's fine that charitable donations are tax deductable - there are two main problems that do need to be dealt with within this process:

a) self created trusts that are "non profit." Rich person creates a charitable trust, pays himself and others in his family salaries or "expenses" to adminster this "trust." A very small portion goes to charity but the bulk of the trust pays for meetings in the Bhamamas or vehicles for "business use." That is problem A.

b) Problem b is when a "reputable" charity spends up to 97% on fundraising and admin fees - that's what some charities were reporting when the gov't forced them to report that - it's like a lot of those celeb fundraisers - it all sounds good but after you deduct expenses, the needy really have access to 5-20% of those funds but of course, it's much more fun to run a show with celebs from the Four Seasons than it is to ask 2,000 people to write a check for $100 and all they get is a thank you note ... though the needy end up with the same amount ...

fixyourthinking said...

I have no problem with tax deductions at all, but trust me - most "charity" by celebrities is agent/accountant advised and politically motivated.

You don't understand the tax system very well either. (Not said in a bad tone)

If you donate $100 you get to take $100 off your taxes - almost line item - your new tax base becomes your adjusted gross income.

Now, I believe that most celebrities (and their accountants) most likely inflate the value of their services.

Also, these celebrities are not staying in Motel 6 hotels either. They are staying posh hotels, ordering room service and taking the appropriate percentages of these inflated costs off their taxes too.

Trust me, I realize that most celebrities appear to be supportive of causes and that most charitable giving is from the heart.

But, as I tried to point out with two examples of Apple - their are ways that don't transfer any tax burden for these charities to others.

But, even if we went with the the 33% you mention - that is STILL 33% that the government does not process and distribute directly.

I think charitable giving SHOULD BE deductible - I just wanted to point out a different perspective about giving what you can and giving what you should!

fixyourthinking said...

If this is the way you feel, and it does make some sense, you should contact your legislative representatives and urge them to change the tax laws so charitable donations aren't tax deductible.

I would also point out that the flat tax system would eliminate that and if it was like this would still be fair to the middle class.

Read this previous entry I made in April 2005:

http://jackwhispers.blogspot.com/2005/04/inevitable-death-macses.html

Anonymous said...

Oh, for Pete's sake...

Look, like it or not, and despite anything bad Microsoft's done in their corporate practices, Gates does a lot for charity, and it has not a thing to do with his tax writeoffs- his dad has been advocating for INCREASES in taxes on the wealthy, along with Gates' friend and fellow zillionaire Warren Buffet. Aid for Africa is something Gates has been doing for years and years (it's hard to see how vaccines sell copies of Windows or get him suites at the Four Seasons), through his charitable foundations. He's not just a newcomer to this so he can be on stage with Bono.

Using something nice and humane Gates and Jobs did to push the tired old "Apple rules/MS drools" argument is lame and so old. Give it a rest, already, and just be happy some CEOs aren't Dennis Koslowski at Tyco and do some good in the world, OK?

Jinx (shade_jinx@mac.com) said...

The Bill & Melinda Gates foundation contributes millions of dollars every year to specifically further education and to provide health care in countries that can't afford the rising costs. I don't see you mention any of the 14 health care "challenges" that they are funding outright or the number of schools that can now afford to teach on computers thanks to the numerous grants. I think the sheer amount of generosity (because there is a cap on the amount of tax breaks one can claim in a year) and being able to specifically categorize the areas that their generosity funds shows an understanding of the problems that needs addressing and a commitment to see them addressed. How much heart is in that? Ask your local celebrity that has their accountant donate money without having any idea where it's going.

I agree that Job's intentions are probably all heart and I'm proud that the CEO of a company that whole heartedly support shows it once in a while, but a more callous cynic might also call it a publicity stunt. You have to admit that there is TONS of free advertising because if it.

You can rag Bill about Microsoft's business practices or their lackluster commitment to security in their products, but I would stop short of ragging him about his generosity. Name anyone else who has given more.

Incognito Milksop said...

Don't worry, I DO understand the abuses brought up in the comments. And there are more besides - for instance, as you mentioned, Microsoft donates its own products to schools. I'm guessing they claim it as pretty close to list price, which is not their actual cost.

Just as a side note, I don't think the celebrities or anyone else can write off the value of their services, if they volunteered them. I think you can only write off money you actually spend.

I was looking at it from the perspective of someone who makes small donations (as I can afford), and has worked for charities at small salaries and as a volunteer.

I deplore abuses of the tax system as much as you and the other poster. REAL giving really is best.

Anonymous said...

Funny, I don't remember hearing anything at all about any philanthropic efforts by Microsoft or Bill Gates(& Melinda foundation) until just after the first rounds of the DOJ trial against Microsoft regarding it's monopoly abuses. Would I be cynical to suspect this was just a public relations campaign to "soften" the image of Microsoft, and it's founder?

Anonymous said...

I live in Japan, and here you could see something very interestingly that happens 3 or 4 times a year: people finding bags of money! What! Yes, about 1~3 million yens (80~250 thousands). And people here know from where this money come from, japanese mafia! I know that these money cannot be compared to $gates money (but hey! they look very identical). $gates did not sell drugs, he sell piece of craps, he didn't do "extortion"?, m$ mobsters don't look like yakuza's but they spread fear like no one, and if you receive a m$ mobster's call saying that they want your business, man, there's nothing you can do!

fixyourthinking said...

"...I would stop short of ragging him about his generosity. Name anyone else who has given more."

The Walton family - and in more ways than just charity.

The point isn't how much he gives, it's how much ACTUALLY GIVES and does so completely with no ulterior motive. And to me, if you are so completely wealthy - you don't take it off your taxes.

Bill Gates could give 100% more and still reap 10 million + a year.

Also, I would take into account before mentioning anyone else who has given more than Bill Gates - hardly anyone in history has HAD more.

fixyourthinking said...

"Funny, I don't remember hearing anything at all about any philanthropic efforts by Microsoft or Bill Gates(& Melinda foundation) until just after the first rounds of the DOJ trial against Microsoft regarding it's monopoly abuses. Would I be cynical to suspect this was just a public relations campaign to "soften" the image of Microsoft, and it's founder?"

Many are saying that that Steve Jobs wouldn't have done this "pre-cancer" either. I completely disagree. He has always been very hard in business but a very conscious and kindred spirit.

I don't want to say that Bill Gates giving is bad. But honestly, it is required of him. If he gave no money then he would be a sick individual. And ... until he married Melinda, had children, had to "contribute to Congressional coffers charities" - he practically gave nothing.

Bill Gates is not evil - he does have a completely opposite view of technology though. He sees technology as a tool - and therefore a hammer is a hammer. Steve Jobs sees technology as inspiration to create - a hammer isn't a hammer if it doesn't have a leather quality grip.