Zuckerberg just cost me $10
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?
