Pay Dirt: I Make $700,000 a Year, and I Pay a Lot in Taxes. Must I Also Donate to Charity?

[jadelennox]

Dear Pay Dirt,

What’s the appropriate amount to give to charity for my income level? I make around $700,000 a year, and give around $10,000 a year to charity, which seems measly for my income level. Some days I think this is absurdly low—with current levels of inequality I should be giving half of my after-tax income to charity. Other days I think, hell, my effective tax rate is about 50%. Do I really owe society more?

—Am I A Scrooge?

Dear Scrooge,

Acknowledging inequality says a lot about you, so no, I don’t think you’re a total scrooge. Honestly, I would get angry paying that much in taxes myself. And you may have other situations where you’re being generous—supporting family members who have less, for example—that aren’t strictly “charity,” as most would understand it.

People’s opinions may differ, but I don’t think you should have to give to a charitable cause just in order to feel better about your high income. Instead, acknowledge your high income as a gift and find a cause you feel passionate about. Donating just because is different than donating to a cause that keeps you up at night. You may find that, as you become more passionate about the work being done, you may want to donate more, whether that be dollars or time. You could also look into making a recurring donation, like setting up a scholarship fund at a local non-profit. You’d be making a difference while changing someone’s future.

Source

Comments

[lemonsharks]

Imo if LW is a millionaire then they are ethically obligated to give away their money until they aren’t a millionaire anymore.

Or to really, really look at their profession and determine whether the work that gives them 700k/yr after tax is putting more good than awfulness into the world. Fossil fuel industry? Time to quit and do something else. Biopharma research scientist? Maybe keep doing what you’re doing. Celebrity plastic surgeon? Have you considered switching to doing mostly pro bono reconstructive work? Anesthesiologist? Have you done everything you can to forgive debts and charge rates your poorest patients can afford?

[melannen]

Around where I live, a millionaire is a 65-year-old retired schoolteacher with a perfectly normal suburban house they own outright after a 30-year-mortgage and the minimum retirement savings recommended to be secure. I'm not convinced you're ethically obligated to not have a house or retirement savings. (In fact, I would prefer if everybody had a house and enough retirement savings.)

That said, this person could buy a perfectly normal suburban house in cash anywhere in the country and then sock away enough in retirement savings in less than two years and then go become a public school teacher, so I don't think that applies to them.

[jadelennox]

Yeah, my mother and I have been looking at local Continuing Care Retirement Communities, and good lord they cost a freaking fortune. A million dollars in assets won't get you into any* of them unless you qualify for affordable housing. I'm not exaggerating; they have a financial component of the application and you have to show that you have enough money, and a lot of them are things like "$700K buy in, $7000 a month, and you have to prove that your post-retirement income is three times the monthly fee." (And seniors can't just up and move to another, cheaper part of the country where their support networks aren't.)

But as you say, unless the LW has been buying cryptocurrency or yachts, nothing about their letter implies any of the above would be difficult for them.

---

not "any". There's one being built here that's aimed for actual middle income people. it's very exciting! They also haven't broken ground yet, though. And there's one that's willing to help many seniors get classified as qualified for affordable housing, as long as they're willing to move into a studio with a galley kitchen, but that can be a rough ask for someone who's entering a frailer part of their life when they need more mobility, not less.

[melannen]

Yeah, I don't even know what counts as "middle income" anymore. I've known several people who've gone into that kind of housing, and none of them were what I'd call more than middle income - several of them were factory worker's wives - *but* they were all White pre-Boomers who had lots and lots of house equity they could put into it. Because you could buy a house and a couple of acres of land for half a year's factory pay in 1932. (These days if you want to buy a house on half a year's pay, you're making 700,000 a year.)

[ethelmay]

That's the old-fashioned definition of "millionaire," which no longer really means someone with a million in assets, because inflation has messed up the implications of that. It used to be that someone who had a million in well invested assets could live very luxuriously indeed by drawing off $30K or $40K per year, and never run out of money. These days you'd need maybe ten million to live in a remotely "millionaire" style. It's also often used for someone who makes a million dollars per year, which this person doesn't quite, but not so far off.