Scrooge Rampant (More on Generosity)
by Milo Clark


And in this corner, the deluded, impotent and naive rant on and on. . . .

As long as philanthropy is understood, in part, as guilt money for the wealthy, there is little surprise in Bill Gates or anyone "giving" a minuscule portion of their networth to philanthropic organizations. There is also little surprise that a very significant portion of such "giving" goes to elitist organizations whose major contribution to alleviating disadvantages consists in ameliorating the circumstances of the advantaged.

That the tax laws which allow deduction of contributions include a very wide range of recipients of largesse opens numberless opportunities for the affluent to support their own generosity at little or no direct loss to themselves. In many cases of creative accounting, a contribution can actually add to the contributors overall net worth and cash flow. Taken one giant step further, legal deductions can be seen to be a gigantic societal ripoff by the rich and famous.

The mechanics are very simple. If, let's say, this tax year I have a personal projected taxable income from all sources of $250,000,000; my army of accountants will recommend a litany of tax avoidance schemes. I can involve myself in income deferral schemes (there are big guy versions of IRAs, Keoghs and 401k plans). I can plant avocado or orange trees on steep sloops and claim an agricultural deduction. I can order a resort built on a pristine beach in Fiji and the investment will be sheltered by any of a large number of methods. I can give money to any organizations or associations or corporations sole* designated 501(c)(__) by the United States government. Those "contributions" will be fully deductible to the extent allowed by law.

The "extent allowed by law" is to offset taxable income thereby allowing other lesser taxpayers to shoulder whatever part of the governmental budgets your taxes might have covered if you had paid those taxes rather than avoided them. Corporations as a whole now pay about ten percent of US taxes. In parallel, corporations and wealthy individuals receive nearly half a trillion dollars in wealthfare so that they are getting back almost as much as they are paying out in taxes.

Your university or symphony or art museum or religious organization will have benefited to the extent that the government was deprived of money to squander on poverty and such unpopular matters of little benefit to your class.

That this information is not part of the political agenda to any significance is also one example of how information is self-censored by media purveyors who are among the greatest beneficiaries of the process.

I puzzle myself by wondering why no environmental or ecological or poverty alleviation group or anyone else has yet to tackle this issue directly. Quite literally, all of the degradations to environment or ecology, for example, that I love to hate are financed not by the perpetrators but by taxes avoided. How? One simple example will do.

I own a controlling interest (3% of the common) in the Watan Corporation. We are making a ton of money on our weapons contracts for Saudi Arabia. As a good free-marketer and government hater, I have a visceral need to keep it for myself and out of the hands of socialist do-gooders. I decide what projects to invest in and how to use cash flow and surplus, not some government agency.

My corporation, which is an extension of my interests and a legal "person," decides to put another power plant by Morro Rock or some other place of some natural attraction. We want to get in on the co-generation bonanza opening up in California. (In case you are unaware, there is already one giant power plant next to Morro Rock on the central California coast and a nuclear plant on a fault line not too far away).

Since I like to keep a yacht (the company owns it really) in Morro Bay for occasional use, by having a facility there, all my trips over are also deductible as business expenses. The local Congressperson likes sailing, so the yacht gives us many opportunities for conversations far from any interruptions or surveillance.

Some people get upset by this plan since there are many alternatives available with less destruction to fragile ecosystems and compromise of natural beauty. Not to worry, all the legal expenses related to overwhelming citizen protests are deductible. Besides, the police who beat off the protesters are (Ha! Ha!) paid for by public tax money--not by us. We suck even more money away from community resources which might be used to fight us

By draining cash flow into this project as an investment-in-process, I also avoid pressure by other stockholders for dividends without compromising the overall net worth of the corporation thereby keeping our stock overvalued (but they don't know it). Besides, under the various interlocking utilities regulations (some regulations are very good for us) and the new privatization cover for the co-generation program, even more tax avoidance opportunities are opening. We will be able to leverage immense amounts of money totally outside the capacity of government to monitor especially since we are making great headway in cutting out regulations or not funding regulatory agencies.

Once on-line, the total power plant investment will be available for depreciation allowances and other investment credits. Depreciation is a subtraction from revenue and thereby tax avoidance. The capital cost of the facility offsets future revenue for many years so that other taxpayers directly build the facility even though they may have been among those protesting against it. A wonderful irony.

Since we plan to operate this plant at an accounting loss for many years, the continuing revenue flowing from our weapons facilities will also be sheltered and taxes avoided accordingly.

And I can laugh and laugh at all ye fools who rant and rave at our nearly absolute control of nearly everything. You suckers are paying for the very things you rant about. You pay for the destruction of eco-systems. You pay for the tools of repression which we use on you. You pay for all of it. Whatever we dribble out to your pathetic charities, we take out of our taxes and get all the good PR that flows from it.

Merry Christmas and Happy Holidays, suckers!

*the legal forms of not-for-profit organization are state- not federally-controlled. They vary by state. In many states, these forms parallel those of "for profit" organizations. There are sole-proprietorships (corporation sole), partnerships (unincorporated associations) and corporations (corporations). The Roman Catholic Church, for example, uses the form of corporation sole. This choice avoids the complications most other religious organizations experience through parishioner boards or vestries or trustees who may interfere with absolute control by church hierarchy.


Published December 26, 1996
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