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Heavy clickbait to generate outrage. The Chouinards are the only ones who actually acted in any real meaningful way towards the Giving Pledge.
A better article that is more about the facts: https://www-nytimes-com.cdn.ampproject.org/c/s/www.nytimes.c...
[..]The Chouinards then donated the other 98 percent of Patagonia, its common shares, to a newly established nonprofit organization called the Holdfast Collective, which will now be the recipient of all the company’s profits and use the funds to combat climate change. Because the Holdfast Collective is a 501(c)(4), which allows it to make unlimited political contributions, the family received no tax benefit for its donation.
[..]
“There was a meaningful cost to them doing it, but it was a cost they were willing to bear to ensure that this company stays true to their principles,” said Dan Mosley, a partner at BDT & Co., a merchant bank that works with ultrawealthy individuals including Warren Buffett, and who helped Patagonia design the new structure. “And they didn’t get a charitable deduction for it. There is no tax benefit here whatsoever.”
[..]
“This family is a way outlier when you consider that most billionaires give only a tiny fraction of their net worth away every year,” said David Callahan, founder of the website Inside Philanthropy.
“Even those who have signed the Giving Pledge don’t give away that much, and tend to get richer every year,” Mr. Callahan added, referring to the commitment by hundreds of billionaires to give away the bulk of their fortunes.[..]
Yvon is a champion.
He once talked about discovering that he was in Forbes magazine which had described as a billionaire, something he said "Really, really pissed him off."
There's not much of a story here.
He's making it a non-profit effectively, so he's not going to be personally getting income, and therefore no tax.
That the family controls the non-profit is one thing, but they're not going to financially benefit from it in a significant way.
I mean, their airfare and hotels are going to be paid forever though ...
This is just taxes in a straight forward way: profit/income = tax, otherwise not. His kids aren't getting the assets, so no generational tax.
It's just straightforward as one should expect it to be for the most part.
On a moral level I think it's fair to give them a tax break on this, since they're effectively donating all future company profits to global society through the foundations.
It's not even a tax break. The headline is basically shaming them for skipping 700 million in taxes by not selling the company.....
.....except since they're not selling the company, they're also likewise not earning a net 2.3bln in income. Hence: ridiculous.
It's one of the most absurd articles to ever come out of Bloomberg, and in fact it's so bad that I'd instead rather see meaningful dialog about people with the means exerting long lasting influence beyond death. The tax argument presented here is entirely contrived.
I'd likewise prefer seeing a debate around whether a 501c4 is enough to achieve the stated goals around influencing climate change policy and whether the option of political contributions is worthwhile compared to a 501c3, for instance. Any discussion stemming from the current "skirts $700m in taxes" headline is bunk.
I think this is a very meaningful article.
Without knowing anything else about Bloomberg, it allows the reader to see just how bad the quality of their content is.
To be honest, since he's giving the money to a non-profit that he owns, we have no idea what the money will be used for.
We take his word that it will be used for Climate Change.
If he takes $1MM to donate to Harvard to secure a seat for each his children/grandchildren, then that's legal. If he uses it to host parties for the wealthy to "raise awareness", then that's legal. If he uses it to setup hotels, flights, IT servers, consultants, etc, then that's all legal. If he runs for office and uses the money for his campaign, that's all legal.
Moreover, if he gets into office he can now accept donations to his foundation in order to influence policy/laws without much question.
...and for a myriad of other quasi-personal uses, it's basically untraceable as non-profits have low financial reporting requirements.
I am very skeptical of these personally owned family "Foundations".
> guy does good thing
> but look… he could’ve done bad thing
We have every reason to believe Yvon and co. will be handling this responsibly and no reason to believe they will not be.
>If he runs for office and uses the money for his campaign, that's all legal.
This would definitely not be legal.
It possibly could be given that the nonprofit is structured as a 501c4 (though not primarily or directly), but it's more likely that this was done to enable lobbying as a primary activity.
https://www.irs.gov/charities-non-profits/other-non-profits/...
Lol.
Yeah, that's how it works. Where would the money come from to pay a tax on something given away? There is no profit, there is only loss.
This is how the wealthy avoid estate taxes. Move it to a non-profit controlled by your heirs. The non-profit now provides a never ending piggy bank for said heirs.
They'd be better off just eating the tax hit. $250k salaries for sitting on a board of trustees is nice, but it ain't nothing like a $500 million inheritance
What a dumb article
See also: the more you spend, the more you save!
Pretty clear they have an amazing PR department that spun this as nothing more than an altruistic move.
What more is it, exactly? He and his family have billions fewer dollars.
Avoiding the $700M tax doesn't suddenly net them billions. The money is still gone from their family.
It was an altruistic move that was also done in a way that avoided taxes.
Moreover if those 700m went to the federal government, would it be as efficiently allocated to environmental programmes? It would just as soon be used to build depleted uranium munitions.
I can't find details about the 501(c)(4) organization the 98% of shares were transferred to, but it feels unlikely that there's no family control of that? Yes, that's no longer family money, but it's also not like it's independent of the family.
The transfer to the 2% trust passed through estate/gift taxation (apparently), but also skipped capital gains tax.
It's all within the scope of the rules, but this is clearly tax avoidance as well as whatever else.
If they really just wanted to avoid taxes, there are ways to do it where they’d keep way more than 2% of the company. And with all that saved, money they’d still have plenty of political power. Is this the best of all possible outcome? Maybe not. But it’s a lot better than the estate planning of basically every other rich family. You’d think we’d try to encourage more people to do it.
If not selling the company and therefore not having to pay tax on the sale proceeds that you would have made is tax avoidance, then so is sitting on the couch instead of getting a job.
"Still, the moves mean Chouinard won’t have to pay the federal capital gains taxes he would have owed had he sold the company, an option he said was under consideration. On a $3 billion sale, that bill could be more than $700 million. It also helps Chouinard avoid the US estate and gift tax, which is a 40% levy on large fortunes when they’re transferred to heirs."
Rather than an altruistic play, it was an attempt to avoid taxes and keep the company under control of the family. Seems like others use this channel too.
Why do people keep saying this. They keep some control but they don't keep ownership. It's not like they sold the company and saved 700M on the deal... they still gave away their stake in the company. Why are people trying to spin this as a tax scheme?
Some people hate the idea that other people are both more accomplished than them and morally better than them. Others hate those individually but the combination of accomplishment, moral worth and wealth really drives a lot of people to hatred.
People are so brainwashed into thinking that money is the only thing that matters that they get suspicious when others behave as if it isn't.
The article lays this out pretty well I thought?
They avoided a ton of tax if they had sold the company or even passed it to their heirs.
Instead, they created a couple non-profits, special ones that can make unlimited political donations, then put their family in charge of the non-profits.
So while they don't retain ownership, they retain control and are able to direct the company's money to their own political causes, all while saving on a $700M tax bill.
I mean, that doesn't seem that "altruistic" to me?
HN seems to be the first to say "paying your taxes is the right thing to do for society".
But these guys get a pass when they avoid a $700M tax bill and get to continue to use their billions in wealth to influence politicians?
The choice for them was between:
A. Sell the company for multiple billions, pay $700M+ in taxes, and end up with multiple billions
B. Keep the company (don't sell or donate) and have billions in assets
C. Donate the company and lose billions in assets
They were never considering option A, so the choice was between B and C. So their total tax evasion was negligible.
They had no tax obligation to avoid because they were never selling the company.
Right, and with option B there was a massive tax burden, as per the article.
So they chose C, avoid taxes, keep the family in charge of the company.
Would it be legal for them to influence political bodies with money from a non profit?
https://www.irs.gov/charities-non-profits/charitable-organiz....
From what I understood, the reason people are supporting this move is not because he's giving up money but because he is ensuring that the company doesn't have stake holders that will push for profit above all else.. Because that could lead to bad outcomes for the environment.
So he gave the company to a non profit to run. Because itvs a... Non profit.
> their billions in wealth
...they no longer possess billions in wealth. The other response to you got it right... you're not scoring 700M unless you have some tax bill on a 3B income to pay.
My whole point is that people keep saying "tax evasion" when what they really mean is "paying your taxes is the right thing to do for society", which are not the same thing. "Tax evasion" would be contriving some scheme to sell this company for profit and not paying the bill while keeping the profit. What happened here is a whole order of magnitude less offensive than that. (Not I think it should be possible, but then, taxing transfers of wealth doesn't make a lot of sense from first principles anyway...)
I thought the money going to the 501(c)(4) isn't deductible? edit: ah nvm, this is focused more on them not paying cap gains since they didn't sell anything
Ownership is just equity. Sure they won’t be able to sell shares for themselves but if they have control then it means they can divert profits to themselves in a way of salaries. Which is fine I guess.
Because it’s the same hypocritical behavior from all rich people who push socialism (for thee but not for me).
They will all whine about billionaires not paying their share and how we need to tax carbon to fix the planet.
But given the chance to make a 700m donation to the government of course he used a structure to avoid making that donation.
What? If it was paid to take it'd be absolutely wasted. Bernie Sanders needs another mansion, it isn't going to pay for itself. Gotta hand those kickbacks out.
It’s pretty funny and wholly unsurprising that this is such an unpopular opinion on this website.
HN users often tend to see themselves reflected in the ultra-rich, so any criticism of the decisions of a billionaire tend to be treated as personal attacks.
I think it is very likely that this move was not entirely an altruistic act that just happened to have saved over a half a billion dollars in a tax break and generated a boatload of good will for the brand as some sort of unforeseen side effect.