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

[jadelennox]

With that kind of income, lots of places will be happy to invite you to their functions or even their honorary boards

In theory, I agree, but in practice... If you're a rich person who resents taxes and wants to be told you don't have to give away more than 1.5% of your income, I don't actually want you sitting on any charitable boards. Those end up being the people who are very excited by the annual gala and who don't want your homelessness charity to support any movement to decarceralize, you know? I mean, if we're lucky, LW will get excited by supporting the museum or the theatre -- they always need money and aren't harmed by people like LW. Or, heck, the OTW, probably. But I don't actually want someone who feels like LW vying for a spot at the affordable housing charity.

[melannen]

I mean, yeah, but I also think some people here are being a little harsh on LW - they say in the letter that (sometimes) they agree they should be giving a lot more away, they aren't actually in the top tier of asshole rich people (and when you know you should be giving more away but you don't really know how or where so you don't, it's easy to come up with reasons why.) $700 000 and don't know how to handle that money kind of reads to me like someone who didn't grow up that rich but just landed a really overpaid job, and it does take awhile to figure it out.

I would rather they annoy the people at the homeless charity while giving them money and learning from them than give the money to the first dominionist megachurch pastor who asks. But this goes back to the "giving away large amounts of money is hard" point I was making - having large amounts of money to give away doesn't actually come with the ability to know the best way to do it, and saying they should give it away but then nitpicking every opinion they express about it doesn't help. At that point they might as *well* just give some extra to the government. You gotta learn who needs help somehow; getting to know the people who run the homeless charity is as good a way as any, and the fundraising people at the homeless charity ought to have some expertise on handholding and/or disposing of clueless rich people with bad politics. (They also all know each other, and it hooks you into a network of a) local charities who need money and b) other charitable rich people who can mentor you.)

[jadelennox]

I'm pretty sure the primary person being harsh here is me, tbh. I feel like I'm being so much meaner to LW than anyone else that I've gone back and reread the letter a few times wondering why I'm so out of sync. But that "Do I really owe society more?" really, really aggravated me.

(I am also a person who is a few income tiers out of how I was raised; in my earliest memories my family is aspirational rising working class, and by the time I left home we were would-be-comfortably-upper-middle-if-not-for-expensive-disabilities-and-a-bankruptcy, and now I'm a Gen X techie in a relationship with a Gen X techie. So it's possible that my utter lack of sympathy for LW is that particular node of "ffs, I've figured it out, it wasn't that hard", but, like. I grew up in a home where putting some coins in the box was a required part of Friday night religious practice, so I had to figure out how to give away a lot of money, but I never had to figure out for myself that I was obligated to so at all.)

I mean I also feel pretty strongly that the actual problem here is the same as tipping when we know the tipped wage is shit: private charity can't make up for a lack of government services. Anand Giradharas is right: private philanthropy is one of the many ways the economic elites (not one percenters like LW, but .01%-ers) control and manipulate the world, and the actual solution is to tax the shit out of me, and LW, and definitely the .01%-ers, and then actually provide the government services. It's been heartbreaking to watch the growth of the Trussell Trust in the UK after 12 years of Tories and 13 years of New Labour before them. (The Trust formed the same year Blair was elected. 🤔) It's good to watch people in the UK be charitable, but also, WTF, watching a country that used to have very low food insecurity levels, even during some pretty bad downturns, turn into the UK today is just crushing.

[melannen]

Ah, you're not the only one, but I'm probably leaning kinder than most people, because while I make about 5% of this person's income I do come from a family of the kind of accidental millionaires I described below which makes me constantly feel like I'm not giving enough because familial wealth and being raised to just chuck all your money into investments and forget about it keeps expenses and debt so low. I probably am giving over 10% - it's the single biggest category in my recurring bills, other than the rent I give Mom which she gives right to charity - but I'm still saving way more than most people in my place, and I do have a ton of choice paralysis about it.

I think we both are basically agreed here - ideally the answer is LW doesn't have to give a huge percent to charity, because they *are* giving so much in taxes, and the taxes are being spent on actually helping people, and if they want to give above that it's just because it brings joy. But alas that's not the world we live in.

But I guess because of that their "I'm already giving half my income away, isn't that enough?" didn't strike me quite as badly as it did some people because I think if all of the 1% learned to think of paying income taxes as putting their money in trust for the aid of society as a whole and that being a good thing to do - which the person does seem to do! - we would live in a much better world (with a much healthier tax base.) Like if even one billionaire sat down and thought, you know what, maybe instead of micromanaging my charitable trust I will just ask my accountants to try to max my taxes instead of mimimizing them and give money to politicians who want to bring back Reagan-era taxes, that's a good outcome.

(And also, this person isn't having trouble figuring out that they're obligated to give at all; they're giving $10,000 a year, which isn't pennies, especially if you grew up in a situation where that's a year's rent, and it still takes making a decision that you're going to give.)

[jadelennox]

I think we both are basically agreed here

Yeah, we're interpreting LW with different levels of charity (heh) but we agree about the systemic and individual issues.

if all of the 1% learned to think of paying income taxes as putting their money in trust for the aid of society as a whole and that being a good thing to do - which the person does seem to do!

Valid, I suppose. While people in some other threads are questioning the person's math, someone with $700K actually will get to 44% if you include state, federal, and fica -- but if someone is making that amount of money and hasn't figured out some rich person method of making it mostly non-taxable, that's an actively good. A normal selfish slimeball at that wealth level could probably finagle it differently. Of course we don't know how this person is managing their investments and what taxes they're paying there, but we don't even know what they have, just income.

Like if even one billionaire sat down and thought, you know what, maybe instead of micromanaging my charitable trust I will just ask my accountants to try to max my taxes instead of mimimizing them and give money to politicians who want to bring back Reagan-era taxes, that's a good outcome.

Hell, yeah. If you haven't read Giridharadas's Winners Take All about billionaire philanthropy I think you'd find it interesting. I take Giridharadas with a big old barrel of "well, you worked at McKinsey before you started bashing McKinsey" salt, but that also gives him a really interesting lens. If even one billionaire wanted to do real altruism, that's a good outcome. (Now of course I'm thinking about Effective Altruism and I'm suddenly furious, because the idea of data-driven philanthropy had so much promise! And then it turned out everyone who was into it was just mentally masturbating about the AI singularity and refused to actually pay attention to any data that contradicted their priors and they all actively decided that preventing climate disaster is a waste of money.

And also, this person isn't having trouble figuring out that they're obligated to give at all; they're giving $10,000 a year, which isn't pennies

Meh, like I said, this is where I disagree out of my own experience. I make vastly less than LW, I was never lived in penury but I was buying groceries for my parents while I was in college for a little while, and I still give more than $10,000 a year.

Man, I want to start an advice column that's all about charity. Like, "here's how to do it. Pay off your own bad debts first (credit cards, home equity, etc.) Then, if you have managed that: Open a dedicated bank account, ideally one without fees and with either a checking account or a credit card directly billed from it. Then, if you have direct deposit, make sure N% of your paycheck goes straight into that account. Boom, that's your charity account. That money's not yours, so you don't emotionally mind giving it away! But on the other hand, it's an entire account full of money you get to give to whomever you like. Fun!!!"