As long as you and the wife are on the same page about how your joint estate will be distributed after your departure to Elysium.
You're not anywhere close to Oligarch status. Maybe set up some sort of trust instrument for the grandkids that distributes in tranches upon them reaching their majority? As in, enough to get advanced degrees if they want; and/or seed capital for a startup. With the balance transferred at age 28 or so.
I worry about major philanthropy as a substitute for government, since there is no democratic process for deciding where money goes. (Of course that assumes a democracy...) There's plenty of literature about where the rich donate, and anti-poverty organizations are generally lower on the list than arts organizations, educational institutions, and health-related causes.
BUT, I'm also tremendously worried about the cultural trend, a la Peter Thiel, to disparage philanthropy and limit giving. The lack of trust in nonprofits and the lack of care for the people who benefit from them is perhaps the worst indicator of where we are right now. I'll take some billionaire-directed medical research any day over Peter Thiel calling the giving pledge an “Epstein-adjacent, fake Boomer club.”
Finally, I have to mention the role of the legal industry in this an, as you point out, all the IRS opinion letters that people get to protect themselves from their "playing in the gray." If we did better as tax lawyers, maybe that would help too. I do realize law is a service industry, but saying no to clients who want to do certain things instead of continually thinking of new ways to enable them would be a great start!
(last last thought, I'm curious what you think about split-interest trusts!)
There is a fantastic book on this subject called Just Giving by Rob Reich, a political science and ethics professor at Stanford, which is centered on the point that philanthropy gives the rich an outsized vote with respect to which social issues get addressed. However, there is no other obvious solution to me, as tax rates can be manipulated and are subject to political influence (although David unsurprisingly makes some good points on how to approach this), and a VAT/sales tax would affect the poor, who spend much more of their income proportionally on goods. I also agree (and lament) that previous generations valued social stewardship much more than the tech billionaires do today - although it's also important to keep in mind that material living conditions were exponentially worse then, before any kind of basic building safety codes, social security, Medicaid/Medicare, labor laws (which Carnegie ruthlessly exploited), etc.
Thanks Audrey, I think a sales tax can be structured to mitigate the regressive element by excluding staples and using some of the revenue to send money back to those with lower incomes. Other countries do this. But the devil would definitely be in the details!
Land value tax of course. Has a lot of good properties economically, being efficient, hard to escape/manipulate compared to other taxes, and incentivising things like more housing.
Thanks Allison. I hadn't heard that ridiculous Thiel comment. I do think the Giving Pledge can be seen as performative. Why wait in your giving?
I'm attracted to giving where the impact is greatest and, perhaps selfishly, where I can see the impact at work. People in material need tend to fulfill those two criteria well.
The schemes are really rotten and corrosive. The attitude is if I get caught the worst that will happen is I have to pay some penalties. It is a positive risk/reward in pure financial terms but in moral terms it is very negative.
My grandfather set up a charitable remainder trust and when I was younger I had the privilege of directing some of the associated foundation's assets to various 501c3s. Soon I was giving some of our money alongside. I think it turned out to be personally a great way to get a taste of the joy of giving. I don't think they are bad or good.
I think your example provides a reason why split-interest trusts may be a very good planning tool! they create long-term relationships with organizations and they at least try to balance the privilege of tax preferred treatment with charitable giving. I worked in a university development office, right before law school, and I really enjoyed learning the details about how they worked. It was my first taste of planned giving :)
David, I was stunned… and then delighted… that you keep track of your spending every week via a spreadsheet. To me, that means you are controlling your wealth, rather than the other way around. If you did go on a mad spending spree one week, you’d see it immediately on your spreadsheet the next. Presumably that would cause you to pause and reflect… what prompted the spree, how do you feel about it, etc. I tend to think “well, I have enough” so it’s okay to order the more expensive bottle of wine at the wine bar (in Paris!), rather than putting that spend into a bigger picture. I think you’ve got a lot to teach me about money, even if I’m in a completely different tax bracket! 🙏
David - thanks for all of this - I too track relentlessly though my zeros are fewer. On the social safety net- I recently wrote on the striking inequity among Boomers, those 62-80 with the lowest quintile (15 million people) destined to live out their lives in poverty. As Americans we should be ashamed of this. If there was ever a cause for basic income this is it.
Jane, thanks for the link. Just read it. And you cite important truths. Homes are strange assets in that as you point out they have negative cash flow to the owner.
Thanks for this look at where we are now versus where we were, historically. It doesn’t surprise me that the tech bros give virtually nothing, as they all seem to be sociopaths who constitutionally don’t care about people’s welfare. (For some, it’s even tworse than that.) As a trying-to-be multiracial democracy, our country’s attitude about social services has been manipulated and distorted by the wealthy, who would rather keep “their” money for themselves, thank you very much. Jeremy Ney’s graph says it all. To rely on individuals to pay for the myriad programs to help those in need, or deliver benefits like healthcare and housing that are basic human rights, simply doesn’t work. Even with Carnegie’s massive wealth, it didn’t work. Government has its inefficiencies but it’s the only entity that is controlled by we the people.
Thanks Julie. I agree. Our social safety net is best provided collectively, like what we pay for protection from crime, fire, and foreign threats. And so many other things as well.
yes. and, the greatest resources we can share are those of mind and spirit, I think. the most challenging things I have faced have not been solved with money. there is a wealth of inner resourcefulness that many materially wealthy people can learn from others, and also offer as resource.
I imagine in the near future we will monetize resourcefulness over resources. because money, as a means of exchanging energy, will change. money cannot buy topsoil or the immediate depth of knowledge and skills to rebuild it. true wealth is always knowledge first. money is about flow and it is meant to flow, like water. and this truth is one reason for the giving that wealthy people do, because they understand this foundational principle.
in the city, where concrete blocks the rain and things flood, we get to remove the impediments to natural flow. this takes the sharing of knowledge and a desire for nature to be followed instead of controlled.
people who are wealthy with money can offer resources to others just as others can offer their wealth of resourcefulness to monetarily wealthy people. being wealthy can take so many forms, and knowing this is the true wealth.
survival of the fittest is actually
survival of the most adaptable.
plutocracy(n.)
"government by the wealthy class; a class ruling by virtue of wealth," 1650s, from Greek ploutokratia "rule or power of the wealthy or of wealth," from ploutos "wealth" (see Pluto) + -kratia "rule" (see -cracy). Synonym plutarchy is slightly older (1640s). Pluto-democracy "plutocracy masquerading as democracy" is from 1895.
Pluto things… Pluto is the god of the things people don’t want to look at that hold great alchemical power. the compost, the sitting water and earth that births new life. new richness. change happens slowly then seemingly all at once.
energy magnetizes, collects, grows, and flows, evermore. nature determines the governing principles.
I am suggesting that actual cash has been propped up as true wealth but it’s not and our world will reflect that soon. because if cash is not backed by actual resources like land or knowledge then it’s empty and emptiness will follow - it seems to me from being in all worlds and observing what really holds power.
what I really aim to say is: money was always to be a portable way to exchange value. but money itself was never the value, rather it is a representation of the value, a promise of the value. a portable image of the value. like a mirror can represent your self to you. however when money gets confused with the actual value it is supposed to represent, then there is no there there. that’s where we seem to be, and that’s why true value will rise. money as we know it might change - the way we represent and exchange value.
the value of the dollar and external institutions to uphold social contracts will change rapidly over the next year. the ingredients that build a new way will be of the ever-valuable kind. money is great until it’s not the means of getting things done. inner fortitude and relationships will hold more power than agreements on money or social norms. we are in grand cycles of time, and a new one has begun. things are changing. deeply.
any way we can spread the wealth around is great, but upholding institutions that act as gatekeepers to wealth is not where it’s at, in my opinion, obviously.
so much wealth in America is from the exploitation of others within our country and around the world, and the balancing is coming.
Thanks for this info. I think it was Carnegie who first gave away his fortune. I wonder if the others who followed did so as a competition. Even so it would be nice if there was a charitable giving “competition” among the tech bros today. Instead of comparing yacht sizes, how about 501c3 competitions?
Your charitable giving has affected the lives of hundreds of children in Haiti that otherwise would not have food or an education. This I know for a fact. Bottom line and regardless of method, you and your family have helped save the lives of beautiful children and offered hope and a future for them and their families in an otherwise desperate situation! We, at Wings Over Haiti can’t thank you enough!
I’m not surprised that you and Debbie give so much and thoughtfully. Even though I have little I give $10 a month to the cat shelter and volunteer there once a week. I also pay for a few substacks because I want to financially help authors who are struggling. I briefly taught a class on entrepreneurship for a teacher who was on leave. The curriculum talked about all sorts of social justice things businesses could do, including hiring low income workers, but didn’t talk about how just creating jobs that pay decent wages is good. I wish that all those people who claim to hate the rich would figure out that the rich are the ones creating jobs and paying the taxes (yes some get away with not paying but most still pay more than folks on welfare). The mindset of working to build a business that then creates good jobs seems to have disappeared. Of course philanthropy is great but it can’t and shouldn’t be expected to take the place of people providing for themselves.
My concern goes beyond philanthropy; it is the sense that the financial oligarchy are an island to themselves. I do not see a sense of community, of involvement in mankind, in their behavior. The Leitz family during the Third Reich went way beyond "philanthropy" and in placed their company (nowadays best known for Leica photographic equipment) and themselves in harm's way to aid their Jewish employees and their families. Elsie Kuhn-Leitz was arrested by the Gestapo and imprisoned for a period. Noblesse oblige personified, something utterly lacking in the Thiels/Bezos/Musks/Trumps etc.
I am so bad at math and investments and stuff like that. My wife handles that part of our lives.
To your suggestions I’d add, a dramatic reduction in military spending. Everyone always poopoos that because “it’ll never happen,” because what politician is going to sign a bill that “cuts the military.” But what we spend and how that money gets tracked (or doesn’t in reality), is gross.
I don't know if this will make you feel better but our spending as a % of GDP is very low compared to our history. That said, I do wonder whether some of our strategy in what we spend money has failed to keep pace with what has been seen in Ukraine with relatively inexpensive drones being the most effective weapons.
“I’m far more motivated to fulfill the commandments of ethical acts––doing our part to “repair the world”––rather than to observe the commandments of prayer, faith, and ritual. 1”
In the Protestant world, that debate is summed up as faith vs works.
I’m not very into the rituals of any religion; some I’m actively against. It’s the works that matter to me.
I stopped attending church as the right wing co-opted it. At a religious funeral for a friend’s mother, however, I was moved to tears and I’d only met the lady once; I was there for my friend so not personally grieving her. But the old hymns and such touched me. I guess I do miss some of it.
I enjoyed this and understood more than the minimum. Always learning with each essay David. Respectfully, I cannot imagine capital gains ever being taxed the same as ordinary income. I appreciate your candor with your philanthropy rate. Be well.
I highly recommend Michael D'Antonio's book about Milton Hershey. If you are impressed with Carnegie's philanthropic philosophy, you will be stunned by Hershey's.
Also, Jennifer & David Risher started a campaign called Half My DAF in 2020 in a quest to convince people to spend down their DAFs during a crisis. I find that DAFs so often become another bank account for people to check the numbers on their phone to feel the safety a large number provides.
Thanks Alyssa. I'm sure some people "bank" their DAFs over the long term. But the stats I found show a 20% plus payout ratio for DAFs overall. One thing about giving from DAFs is there is virtually no friction. You press a few buttons and in a minute you've made your contribution. I hope that in a crisis we'd see more giving. Thanks for the Hershey recommendation.
Thanks for the tip on Puerto Rico! Kidding.
How do your children feel about this kind of thinking? Are you leaving them anything?
I'm always transparent with them.
As long as you and the wife are on the same page about how your joint estate will be distributed after your departure to Elysium.
You're not anywhere close to Oligarch status. Maybe set up some sort of trust instrument for the grandkids that distributes in tranches upon them reaching their majority? As in, enough to get advanced degrees if they want; and/or seed capital for a startup. With the balance transferred at age 28 or so.
I worry about major philanthropy as a substitute for government, since there is no democratic process for deciding where money goes. (Of course that assumes a democracy...) There's plenty of literature about where the rich donate, and anti-poverty organizations are generally lower on the list than arts organizations, educational institutions, and health-related causes.
BUT, I'm also tremendously worried about the cultural trend, a la Peter Thiel, to disparage philanthropy and limit giving. The lack of trust in nonprofits and the lack of care for the people who benefit from them is perhaps the worst indicator of where we are right now. I'll take some billionaire-directed medical research any day over Peter Thiel calling the giving pledge an “Epstein-adjacent, fake Boomer club.”
Finally, I have to mention the role of the legal industry in this an, as you point out, all the IRS opinion letters that people get to protect themselves from their "playing in the gray." If we did better as tax lawyers, maybe that would help too. I do realize law is a service industry, but saying no to clients who want to do certain things instead of continually thinking of new ways to enable them would be a great start!
(last last thought, I'm curious what you think about split-interest trusts!)
There is a fantastic book on this subject called Just Giving by Rob Reich, a political science and ethics professor at Stanford, which is centered on the point that philanthropy gives the rich an outsized vote with respect to which social issues get addressed. However, there is no other obvious solution to me, as tax rates can be manipulated and are subject to political influence (although David unsurprisingly makes some good points on how to approach this), and a VAT/sales tax would affect the poor, who spend much more of their income proportionally on goods. I also agree (and lament) that previous generations valued social stewardship much more than the tech billionaires do today - although it's also important to keep in mind that material living conditions were exponentially worse then, before any kind of basic building safety codes, social security, Medicaid/Medicare, labor laws (which Carnegie ruthlessly exploited), etc.
Thanks Audrey, I think a sales tax can be structured to mitigate the regressive element by excluding staples and using some of the revenue to send money back to those with lower incomes. Other countries do this. But the devil would definitely be in the details!
Don't most sales taxes already exempt uncooked food staples?
yes, I'm a fan of his work! And very true about the difficulties of a good solution grounded in tax!
Land value tax of course. Has a lot of good properties economically, being efficient, hard to escape/manipulate compared to other taxes, and incentivising things like more housing.
Thanks Allison. I hadn't heard that ridiculous Thiel comment. I do think the Giving Pledge can be seen as performative. Why wait in your giving?
I'm attracted to giving where the impact is greatest and, perhaps selfishly, where I can see the impact at work. People in material need tend to fulfill those two criteria well.
The schemes are really rotten and corrosive. The attitude is if I get caught the worst that will happen is I have to pay some penalties. It is a positive risk/reward in pure financial terms but in moral terms it is very negative.
My grandfather set up a charitable remainder trust and when I was younger I had the privilege of directing some of the associated foundation's assets to various 501c3s. Soon I was giving some of our money alongside. I think it turned out to be personally a great way to get a taste of the joy of giving. I don't think they are bad or good.
I think your example provides a reason why split-interest trusts may be a very good planning tool! they create long-term relationships with organizations and they at least try to balance the privilege of tax preferred treatment with charitable giving. I worked in a university development office, right before law school, and I really enjoyed learning the details about how they worked. It was my first taste of planned giving :)
David, I was stunned… and then delighted… that you keep track of your spending every week via a spreadsheet. To me, that means you are controlling your wealth, rather than the other way around. If you did go on a mad spending spree one week, you’d see it immediately on your spreadsheet the next. Presumably that would cause you to pause and reflect… what prompted the spree, how do you feel about it, etc. I tend to think “well, I have enough” so it’s okay to order the more expensive bottle of wine at the wine bar (in Paris!), rather than putting that spend into a bigger picture. I think you’ve got a lot to teach me about money, even if I’m in a completely different tax bracket! 🙏
Thanks Debbie. it gives me a sense of control, whether imagined or not!
We’re all thinking similarly this week @Jeremy Ney !!
David - thanks for all of this - I too track relentlessly though my zeros are fewer. On the social safety net- I recently wrote on the striking inequity among Boomers, those 62-80 with the lowest quintile (15 million people) destined to live out their lives in poverty. As Americans we should be ashamed of this. If there was ever a cause for basic income this is it.
With apologies for the blatant self promotion: https://aging4thquarter.substack.com/p/rich-boomers-poor-boomers?r=3su1z&utm_medium=ios
Jane, thanks for the link. Just read it. And you cite important truths. Homes are strange assets in that as you point out they have negative cash flow to the owner.
Thanks for this look at where we are now versus where we were, historically. It doesn’t surprise me that the tech bros give virtually nothing, as they all seem to be sociopaths who constitutionally don’t care about people’s welfare. (For some, it’s even tworse than that.) As a trying-to-be multiracial democracy, our country’s attitude about social services has been manipulated and distorted by the wealthy, who would rather keep “their” money for themselves, thank you very much. Jeremy Ney’s graph says it all. To rely on individuals to pay for the myriad programs to help those in need, or deliver benefits like healthcare and housing that are basic human rights, simply doesn’t work. Even with Carnegie’s massive wealth, it didn’t work. Government has its inefficiencies but it’s the only entity that is controlled by we the people.
PS thanks for a wonderful event last night.
Thanks Julie. I agree. Our social safety net is best provided collectively, like what we pay for protection from crime, fire, and foreign threats. And so many other things as well.
yes. and, the greatest resources we can share are those of mind and spirit, I think. the most challenging things I have faced have not been solved with money. there is a wealth of inner resourcefulness that many materially wealthy people can learn from others, and also offer as resource.
I imagine in the near future we will monetize resourcefulness over resources. because money, as a means of exchanging energy, will change. money cannot buy topsoil or the immediate depth of knowledge and skills to rebuild it. true wealth is always knowledge first. money is about flow and it is meant to flow, like water. and this truth is one reason for the giving that wealthy people do, because they understand this foundational principle.
in the city, where concrete blocks the rain and things flood, we get to remove the impediments to natural flow. this takes the sharing of knowledge and a desire for nature to be followed instead of controlled.
people who are wealthy with money can offer resources to others just as others can offer their wealth of resourcefulness to monetarily wealthy people. being wealthy can take so many forms, and knowing this is the true wealth.
survival of the fittest is actually
survival of the most adaptable.
plutocracy(n.)
"government by the wealthy class; a class ruling by virtue of wealth," 1650s, from Greek ploutokratia "rule or power of the wealthy or of wealth," from ploutos "wealth" (see Pluto) + -kratia "rule" (see -cracy). Synonym plutarchy is slightly older (1640s). Pluto-democracy "plutocracy masquerading as democracy" is from 1895.
https://www.etymonline.com/word/plutocracy
Pluto things… Pluto is the god of the things people don’t want to look at that hold great alchemical power. the compost, the sitting water and earth that births new life. new richness. change happens slowly then seemingly all at once.
energy magnetizes, collects, grows, and flows, evermore. nature determines the governing principles.
I’m a very resourceful person — I’d say in the upper few percent! — but that has not taken me very far, frankly. Actual cash is still elusive.
Yes. My father used to say, "Better *nouveau,* than no *riche* at all." He being Old Poor.
I also come from Old No Money.
I am suggesting that actual cash has been propped up as true wealth but it’s not and our world will reflect that soon. because if cash is not backed by actual resources like land or knowledge then it’s empty and emptiness will follow - it seems to me from being in all worlds and observing what really holds power.
what I really aim to say is: money was always to be a portable way to exchange value. but money itself was never the value, rather it is a representation of the value, a promise of the value. a portable image of the value. like a mirror can represent your self to you. however when money gets confused with the actual value it is supposed to represent, then there is no there there. that’s where we seem to be, and that’s why true value will rise. money as we know it might change - the way we represent and exchange value.
the value of the dollar and external institutions to uphold social contracts will change rapidly over the next year. the ingredients that build a new way will be of the ever-valuable kind. money is great until it’s not the means of getting things done. inner fortitude and relationships will hold more power than agreements on money or social norms. we are in grand cycles of time, and a new one has begun. things are changing. deeply.
any way we can spread the wealth around is great, but upholding institutions that act as gatekeepers to wealth is not where it’s at, in my opinion, obviously.
so much wealth in America is from the exploitation of others within our country and around the world, and the balancing is coming.
Profits sent out of the USA should be taxed double the amount of a reasonable incoumtry tax rate.
Thanks for this info. I think it was Carnegie who first gave away his fortune. I wonder if the others who followed did so as a competition. Even so it would be nice if there was a charitable giving “competition” among the tech bros today. Instead of comparing yacht sizes, how about 501c3 competitions?
Yes, great idea.
Your charitable giving has affected the lives of hundreds of children in Haiti that otherwise would not have food or an education. This I know for a fact. Bottom line and regardless of method, you and your family have helped save the lives of beautiful children and offered hope and a future for them and their families in an otherwise desperate situation! We, at Wings Over Haiti can’t thank you enough!
Thanks Jonathan. What you do for the children in Haiti is incredible and we are privileged to play a part in supporting that work.
I’m not surprised that you and Debbie give so much and thoughtfully. Even though I have little I give $10 a month to the cat shelter and volunteer there once a week. I also pay for a few substacks because I want to financially help authors who are struggling. I briefly taught a class on entrepreneurship for a teacher who was on leave. The curriculum talked about all sorts of social justice things businesses could do, including hiring low income workers, but didn’t talk about how just creating jobs that pay decent wages is good. I wish that all those people who claim to hate the rich would figure out that the rich are the ones creating jobs and paying the taxes (yes some get away with not paying but most still pay more than folks on welfare). The mindset of working to build a business that then creates good jobs seems to have disappeared. Of course philanthropy is great but it can’t and shouldn’t be expected to take the place of people providing for themselves.
But jobs are actually created by consumers/customers. Good luck running a business without any.
Good philanthropy, in my view, finds and fills needs that neither personal effort nor government programs can meet.
I’m all for good philanthropy.
Michelle, that's a concise, excellent definition of good philanthropy.
Feel free to mention it to a few wealthy people you know :)
My concern goes beyond philanthropy; it is the sense that the financial oligarchy are an island to themselves. I do not see a sense of community, of involvement in mankind, in their behavior. The Leitz family during the Third Reich went way beyond "philanthropy" and in placed their company (nowadays best known for Leica photographic equipment) and themselves in harm's way to aid their Jewish employees and their families. Elsie Kuhn-Leitz was arrested by the Gestapo and imprisoned for a period. Noblesse oblige personified, something utterly lacking in the Thiels/Bezos/Musks/Trumps etc.
Thanks for highlighting the courageous legacy of the Leitz family.
I am so bad at math and investments and stuff like that. My wife handles that part of our lives.
To your suggestions I’d add, a dramatic reduction in military spending. Everyone always poopoos that because “it’ll never happen,” because what politician is going to sign a bill that “cuts the military.” But what we spend and how that money gets tracked (or doesn’t in reality), is gross.
I don't know if this will make you feel better but our spending as a % of GDP is very low compared to our history. That said, I do wonder whether some of our strategy in what we spend money has failed to keep pace with what has been seen in Ukraine with relatively inexpensive drones being the most effective weapons.
“I’m far more motivated to fulfill the commandments of ethical acts––doing our part to “repair the world”––rather than to observe the commandments of prayer, faith, and ritual. 1”
In the Protestant world, that debate is summed up as faith vs works.
I’m not very into the rituals of any religion; some I’m actively against. It’s the works that matter to me.
I was thinking about the faith and acts "debate." Like you I'm drawn to acts. But I think rituals and traditions keep religions alive.
I stopped attending church as the right wing co-opted it. At a religious funeral for a friend’s mother, however, I was moved to tears and I’d only met the lady once; I was there for my friend so not personally grieving her. But the old hymns and such touched me. I guess I do miss some of it.
The Quakers are seemingly still pretty cool folks...Diabolically nonviolent, though...
I enjoyed this and understood more than the minimum. Always learning with each essay David. Respectfully, I cannot imagine capital gains ever being taxed the same as ordinary income. I appreciate your candor with your philanthropy rate. Be well.
Thanks Sharon. Reagan's 1986 tax reform act made Capital gains and income taxes equal, although at 28%. So there is precedent from 40 years ago.
I highly recommend Michael D'Antonio's book about Milton Hershey. If you are impressed with Carnegie's philanthropic philosophy, you will be stunned by Hershey's.
Also, Jennifer & David Risher started a campaign called Half My DAF in 2020 in a quest to convince people to spend down their DAFs during a crisis. I find that DAFs so often become another bank account for people to check the numbers on their phone to feel the safety a large number provides.
Thanks Alyssa. I'm sure some people "bank" their DAFs over the long term. But the stats I found show a 20% plus payout ratio for DAFs overall. One thing about giving from DAFs is there is virtually no friction. You press a few buttons and in a minute you've made your contribution. I hope that in a crisis we'd see more giving. Thanks for the Hershey recommendation.