When I was a kid, I remember listening to my Dad come home from work and frustratingly relay a story to my mom. For whatever reason, the story stuck with me and I continue to see similar behavior from people that should know better – or if they don’t know better, they should shut their mouths. The gist of it is, he supervised a small crew of people and took them out to lunch at the end of the year for a job well done. He didn’t make a ton of money, especially when I was younger and spending a few hundred dollars on a nice outing for his team certainly set back the family budget for the month considerably. He paid for it out of his own pocket since he wasn’t in the position to spend company money on entertainment for staff.
Well, when the meal was done, one of the staff thanked him and he said, “No problem, it’s the least I can do for a great year” or something to that effect. As they were leaving, someone else muttered, “Yeah, like he paid for it? The company pays for this stuff”. He ignored it, simmering inside I’m sure. So, not only was that an uninformed, incorrect statement, but now his staff may have felt he took credit for something he shouldn’t have, completely negating any goodwill that stemmed from his gesture. That was the last year he did the outings. I never asked him about it later, but that was the story as I remember it.
People Don’t Donate “Because They Have To”
More recently, I overheard someone discussing another acquaintance and admiring how much they gave to charity. They were saying how he gave thousands to this charity and so much to another and served on some board, etc. It was a nice compliment. Well, some ignoramus says, “He does that because he HAS to! He has so much damn money, he has to decrease his reportable income for tax reasons or he gets killed by the IRS!”. It wasn’t my conversation to intervene, but what a load of crap! Not only was this person completely ignorant of how tax deductions work, but they were talking with such authority and nobody challenge him on his asinine assertion. With people nodding heads and putting their hands to their chins like “Wow, I never thought of that” I’m thinking “How the hell doesn’t anyone know he’s full of it and call him out?!?” It’s rude to go butt in on a conversation that you’re not part of, especially with people you don’t know all that well, so I figured I’d post on it – and them perhaps share the link with them in a passive aggressive manner later.
In case you’re one of those people that thinks rich people give because they have to, I have news for you – they don’t have to.
Put simply, let’s say someone’s salary has their income in the top tax bracket of 35%. If they give $10,000 to a charity that is tax-deductible, they’re essentially lowering their taxable income by $10,000. In essence, you could think of it as them getting to donate $10,000 but it only cost them $6,500 to do so since they are being taxed at 35% on $10,000 less for the year.
But they still gave away $6,500!
That part gets lost on the haters. They didn’t “benefit” financially by making this donation at all. They gave $6,500 of their money for the betterment of someone else. This is not a rich person tax trick. It’s one act of kindness that millions of Americans do every year and to think that so many people don’t understand this is just frustrating to me. Are people just jealous? misinformed?…or stupid? I don’t get it.
On a related note, one of the big concerns for charities throughout the world this year has been what will happen to their incoming funds in the wake of the financial crisis since so much of their funding comes from wealthy people tied to the financial industry. I recently watched a 60 minutes segment on entire blocks of NYC dedicated to specialized safe schools for kids with top teachers to try and turn around the prospects for inner-city kids. The results are astounding – this is what happens when a private charity/industry combine to do something better than the government can – which usually destroys everything it touches. The program’s run by an incredible charismatic man that grew up in those conditions and it costs millions of dollars per year to run on such a large scale. The source of funds? Rich Wall Street firms and employees. They basically fund it and keep it alive and this year, the endowment is suffering because of the crash. What would happen if this money went away entirely? With the administration stirring populist rhetoric and fomenting hatred toward those with resources, it is ironic that they are indirectly damaging the very people that need the help the most.
So, what’s my point? Rich people aren’t all that bad.They actually help a lot of people when they could be helping themselves.
Disclosure: We’re not rich, I don’t work in the financial industry and I don’t have any family that does so either. Just sayin’
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