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.

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Comments

[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!!!"