Last week, Mark Zuckerberg and 17 more of America’s wealthiest individuals pledged to donate a majority of their wealth to charity over their lifetimes, as part of The Giving Pledge. The Giving Pledge is just that - a campaign, spearheaded this year by Bill Gates and Warren Buffett, to invite America’s wealthiest to pledge to give over 50% of their wealth to philanthropy. It now has 58 pledges, with donations estimated at $139 billion. You can view them all here.
Now don’t get me wrong. I really think that’s awesome. But.. it can be argued that Mark just cost me (and you!) $10. Well, $8.53 to be more exact. And these 58 pledges could cost us $50 billion, or $350 each. And if The Giving Pledge succeeds in getting all of the Forbes 400 wealthiest individuals to pledge a majority of their wealth, that could cost America $210 billion, or about $1500 each.
That’s because charitable contributions aren’t taxed. As economist Richard Thaler in his recent NYT article describes, the contribution is deducted from the contributor’s taxable income, and, therefore, tax revenue is lost. Thaler argues that lost revenue is effectively subsidized by the government. So if the estimated donations of the 58 pledges is $139 billion, that means we are losing out on $50 billion in tax revenue (assuming a 35% tax bracket). That $50 billion is, thus, put on the rest of us 141.5 million taxpayers. For about $350 each.
(Similar calculations follow for the $10 for Zuckerberg and $1500 for the Forbes 400.. the estimated net worth of the Forbes 400 in 2009 was $1.2 trillion. If they give away 50% of their wealth, that is $600 billion in charitable contributions. Taxed at 35% = $210 billion in lost revenue. And divided among each of us, that’s about $1500.)
Now, they’re obviously not directly “costing” me that money (it’s for effect!). And the “lost tax revenue” cited is based on cumulative net worth and is overstated due to limits of what can be deducted (50% of adjusted gross income in a year). And despite my hyperbole, again, I totally laud the pledges. But seriously… Mark? Can I get that ten spot?
the inspiration for Nike’s ‘Just Do It’ came from the last words of murderer Gary Gilmore before he was executed by firing squad in 1977. When asked if he had any last words he replied, “Let’s do it.” That phrase became a meme at the time, with references in movies, SNL, later on Seinfeld, even hit songs. Dan Wieden of ad agency Wieden+Kennedy tweaked it to be the iconic ‘Just Do It’ slogan for a Nike campaign that launched in 1988.
I learned that while watching Art & Copy, a pretty decent documentary about advertising.
Adding them to the queue. (via onlineclasses.org)
I just had an awesome series of discoveries. I’ll take you through my journey..
I had recently stumbled upon and posted photos of Jonathan Safran Foer’s new innovative novel, Tree of Codes. It is innovative because it is basically a novel cut out of another novel. He literally cuts out words from his favorite novel, The Street of Crocodiles by Bruno Schulz, thereby creating a new story with those that remain.
Intrigued, I obviously ordered Tree of Codes. But I thought I’d first read The Street of Crocodiles so that I can compare. I picked up a copy at The Strand, and once I accustomed myself to reading prose again (been on a bit of a non-fiction kick lately), fell in love with his writing. It’s beautiful.
I just finished the book, and in seeking to learn a bit more about it and Schulz, I discovered this amazing 20 minute stop-motion video produced by the Brothers Quay in 1987 called “Street of Crocodiles”, inspired by Schulz’s novel. I found it in two parts on YouTube.
It looked too familiar, though I knew I hadn’t seen it before. So I took to researching some more and discovered that I had seen it before - or something like it. In Tool’s music video for Sober (1993), and also in NIN’s music video for Closer (1994), both which were influenced by the “Street of Crocodiles” film.
And then I rediscovered my love for Tool (and Nine Inch Nails).
Just kidding - it’s a big deal! So what is the deal with the tax deal? Well I’m sure we’ve all read about the details (just in case, here’s a quick overview):
But I was curious about the various viewpoints of economists (and others) whose opinions I entertain. So I went ahead and aggregated my google reader.
Brad DeLong thinks it’s “low bang-for-buck.”
Paul Krugman is disappointed but not bitter. He projects an increase in GDP by 0.7 percent and a decrease in unemployment by 0.35 percentage points. He also believes it to be too short-sighted, with programs ending in 2012 under the assumption of a strong recovery by late 2011. We already made that mistake, he said, with the original stimulus.
Robert Reich says it’s an abomination. He seems to believe it only serves to concentrate wealth even more. It will cost $900B, the majority of that going to the wealthy. And it will do nothing to stimulate the economy.
Greg Mankiw is generally pleased. The plans for short-run recovery, he thinks, are consumption-based. But he proposes reducing the employer’s share of payroll taxes, rather than decreasing the employee’s share. This will be more impactful than hoping for increased consumption, because it will reduce the cost of hiring and thus increase employment, as well as increase business investment.
Ezra Klein thinks it’s imperfect, but not that bad. Most of the money will be spent keeping previous stimulus programs in effect that would have otherwise expired. This is good for economic recovery, but does nothing for the deficit. He also believes it to be a “hopeful sign” that a compromise was arrived upon.
Lane Kenworthy breaks it down into political and economic logics. Tax breaks for the rich were exchanged for extension of unemployment benefits and tax reductions for low and middle-income Americans. Tax breaks for the rich will help the economy, though only slightly. Politically speaking, he thinks compromising hurts Obama politically.
Barry Ritholtz thinks it’s too small to do the job. He thinks the two parties got what they wanted — the Republicans extended Bush tax cuts and got an estate tax plan they like; the Democrats got extended unemployment benefits, a cut in payroll taxes, and some other tax credits. He adds that he would have wanted a full payroll tax holiday and a temporary exemption for repatriation of money held overseas by US companies.
Bloomberg loves the compromise. It’s exactly the kind of coming together that we need in Washington, he says.
Wall Street economists are raising their GDP forecasts in light of the deal.
And that’s it (for now)! The WSJ also has a list including views from Goldman Sachs and others.