There has been a great deal of attention paid to the efforts led by Warren Buffet and Bill Gates to their pledge to give awway at least half of their fotunres to philanthropy. This so-called "Giving Pledge" has garnered the support of 58 billionares, each of whom has signed up publicly to the pledge.
I am no billionare and will never be one, but today's news that the Bush tax cuts for the wealthy will be approved by the Senate has got me thinking that perhaps it's time for a "Millionare's Pledge". The form of this pledge might go as follows:
I promise to give away to charity the incremental tax break I will receive from the extension of the Bush tax cuts.
Philanthropy is a central part of our family's life. We try to be very supportive to a range of non-profits, including our synagogue, Facing History and Ourselves (teacher-training organization), Progressive Business Leaders Network (progressive policy), Endeavor (promoting global entrepreneurship) and many others. I know of many other families like me who are philanthropically oriented and have very mixed feelings about the tax cut exension.
The simple calculus, as I understand it, is to take 5% of your annual income (upper income tax rates would have gone back to 39.6%, up from 35%). So if you make $200,000, that's $10,000 in incremental savings that you would direct to charity in 2011 and 2012 (and perhaps beyond!). I know it's not nearly that simple with capital gains changes, estate changes, deductions, etc. But let's keep it simple to make it easy for everyone.
At this point, it doesn't matter whether you are for or against the extension of the tax cuts, the reality is that they will become law, so what should progressive, philanthropically-minded individuals do now that they have an unexpected windfall?
There are 371 billionares in the US, but 3 million millionares and 6 million taxpayers with income greater than $200,000. Now that would be a movement.
I have always contributed what I can, even when making very little. It’s not much, but I always find room to spare a little change here and there. One day I will be able to give back a lot more.
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Thanks, Darren. I think that’s a terrific
aspiration as well.
Great article Jeff! I think however one does the math 3-5% is the bare minimum people making $50,000/yr or more should give. These people are the wealthiest 1% of the entire world. Granted, $50K in Silicon Valley seems like poverty level, but its still far above what many among us are even making. I can’t help but imagine the impact of a nation of people committed to giving 7-10% of their income for charitable causes.
Giving time is a great additional point. Non-profits benefit tremendously from engaged donors, not passive ones.
I love the idea and I’m in. I think the math is a little off in the amount, but the concept is great. Those of us that have the means have a responsibility to support those in true need and many private organizations are well equipped to direct funds exactly where you want them.
To Jason’s comment, while new businesses certainly create jobs I question the incrementality of those jobs (is it a technology replacing something else?) as well as who is getting them. New businesses are a great way to invest money, and generate a return which can drive more philantrophy – a great cycle. However direct giving is very different. The type of jobs new businesses create create may not be as meaningfully impactful to the needy, and certainly not as quickly. I’d also encourage everyone to give of their time – where your money is your heart is also…
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Good point and, naturally, I’m a fan of
more money going into 529 plans!
I agree that we all should “spend” the “extra” money wisely. However, we should calculate correctly first. For a Head of Household such as yourself, the 5% benefit accrues only for income in excess of $373,600 (2010). For most people, the benefit is more like 3% — not insubstantial but not $10K for a $200K household either!
What to spend it on? I think Jason is on to something, but he needed to add a little of your own experience, Jeff. Specifically, the money could be put into 529 (like uPromise) and 401k plans. For a $200K household, facing fearsome academic cost inflation without hope of financial aid, or facing retirement, that’s a wise investment. And since 529’s and 401k’s then invest the money in the capital markets, we’d build the economy and the tax base. That’s important because…
The money is not “extra.” Given the Federal Deficit, the money is borrowed. And the only way _that_ makes sense is if the economy grows faster than the interest rate. Investment makes that happen.
Give a man a fish…
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Good addition, Jason, although I’d rather
see the incremental dollars go into worthy charities myself!
…or that $10,000 could be used to invest in businesses? That would create a number of additional potential angel investments, which would help create jobs, which is key to our continued economic recovery.
…and maybe the progressive angle could then be to encourage the companies to donate some of their future profits to charity 😉