Simply Giving Money to the US Government.

I was actually inspired to ask this question some time ago. Billionaire Bill Gates donated the majority of his fortune to a charity.

I can understand his logic. Just how much money does one man need? But when he did, I thought something ironic to myself. Instead of donating it to a charity, why didn’t he just pay his fair portion of taxes, income presumably, and others?

Because someday Medicare and Medicaid will go broke. And there are public libraries and public schools and public roads in need of funds. People want all these things to run efficiently. Yet they want to pay little in taxes to support them. Think about it.

Of course, then it occurred to me, rich people in the USA actually pay very little in the way of taxes. Tax havens and tax shelters and the like. And it doesn’t help four of our six last presidents were Republicans.

Bill Gates like many rich people simply doesn’t have to pay many taxes.

I don’t know what you will think of this. But this gave me a wild idea (I assume GD is the right forum for this:)). Why isn’t it possible for someone to make a donation (if you will) to the US government or even some state government?

You could even earmark it for whatever social services you want, like Medicare or Medicaid for example.

My question: Is this already possible (I know there is a department just for people to donate money if they have a twinge of conscience for something–seriously)? And if it isn’t, should it be?

I think this is a good idea, BTW. In fact, if anyone in Washington is reading this, I hope they will even take it seriously. Especially if it has never been tried before.

:):):slight_smile:

You can do this right now if you like. Perhaps not for every example you wrote down, but you can certainly donate money to the federal government for general budgeting purposes or explicitly for paying down the national debt. See https://www.fiscal.treasury.gov/fsfaq/fs_gifts_to_govt.htm.

I expect there are some mechanisms to donate specifically to local organizations (e.g. your local public library district). But I assume that varies depending on where you are and the specific institution. I’d also point out that this sort of thing might not be so straightforward. There may be some transparency and policy concerns regarding having significant portions of government privately funded. I might be concerned, for example, if 90% of the EPA’s budget came from Exxon Mobil and what sort of implicit expectations they might have from such a gift.

Bill Gates would think that he can do more good with the marginal value of his last dollar than the government could. And he’s probably correct. The greatest needs are in the third world for example. Gates can target education spending to poorer Americans.

The bulk of USgov spending, in contrast, is for the middle class. Which isn’t bad. But it isn’t best. Medicare and social security are middle class programs. And a good portion of medicaid goes to formerly middle class folk in nursing homes.

Let’s look at the numbers. Bill Gates’ net worth is just under $100 billion. Yowsa. But following plutocrat tax cuts passed in Dec 2017, the US budget deficit is headed towards $779 billion. Medicare benefit payments are $709 billion, a comparable number.

So Gates’ entire wealth, while gee-normous, would pay for less than 2 months of Medicare spending. He is a peripheral player and should properly focus on things the federal government does not do well.

Just a nitpick: Medicaid cannot ‘go broke’ because it is paid for entirely out of current Federal and state revenues.

The Social Security and Medicare trust funds can go broke, but that would at most mean a reduction in benefits, since Social Security and Medicare benefits are paid for mostly out of current revenues.

Pretty much what Measure said. To put this in perspective, if Gate’s gave all his money just to California it wouldn’t even be a fraction of the trillion dollars they currently owe. Even if they used it just for this fiscal year it wouldn’t be 10% of the state annual budget. Giving it to the US would basically be meaningless in the greater scheme of things.

Folks like Bill Gates don’t pay much in income taxes because the majority of his wealth isn’t in the form of yearly income.

One slight redirection. Should SS or Medicare’s Trust Funds go broke there MAY be a reduction in benefits. However, I think that unlikely.

It is, instead, possible to raise SS and Medicare withholding to pay for the programs. Or, more likely, the government just goes further into debt to finance them until - someday - the water hits the bottom of the hill.

No one - except perhaps Paul Ryan - wants to be the congressman who tells his constituents “Sorry, you don’t get what we promised”. There’s an easy way to establish a quick set of term limits, right there.

Hence the “at most” in the last sentence of my post. :slight_smile:

The payroll tax on Social Security is capped to only tax the first $128,400 of income (increasing to $132,900 on 1/1/2019), and the obvious first step in dealing with the Social Security income stream would be to lift the cap. This is frequently proposed.

The Medicare tax isn’t capped, but the Medicare tax is only 1.45% of income, so (for example) a 20% increase in the Medicare income stream could be accomplished by an 0.29% increase in individual taxpayers’ tax burden. Not exactly back-breaking stuff.

Indeed.

Two years ago I attended a briefing about SS. The analyst speaking said that SS could be entirely solvent by some combination of lifting the contribution cap and/or raising the withholding rate 2/10%.

The reason it’s an issue is because it is more convenient for our leaders as an issue for electoral purposes than to actually solve it.

From the Committee for a Responsible Federal Budget: “According to the Chief Actuary of the Social Security Administration, eliminating the taxable maximum would extend the life of the trust fund by 32 years[.]” Since it’s currently set to run out of funds in 2034, that would take us to 2066, by which point the trust fund will have accomplished its main reason for existence: paying the excess costs of the Baby Boom generation’s retirement, since even the youngest Boomers will turn 102 in 2066.

While the CRFB makes the point that more is needed in the long run to solve Social Security’s problems, the most salient fact is, we really have no clue about what the world of 2066 will look like, any more than we could have gotten a good read on the world of 2018 back in 1970. To say that we can figure out how to make Social Security solvent even that far into the future is so dependent on changing circumstances - will global warming turn most of America into a hellscape? will robots take all our jobs? - that trying to solve its problems beyond 2066 is a fool’s errand. We don’t even know what its problems will look like.

So lifting the cap suffices as a fix for Social Security for as long as the world looks sufficiently kinda sorta like the one we’re in for our projections to have meaning. I’m good with that. :slight_smile:

I disagree with that.

We have one party that deeply desires to solve such problems. But for all but 16 weeks in late 2009 and early 2010, we’ve been in a political environment where the other party could block that party at will, and has been almost gleefully eager to do so.

That other party has no interest in solving the problems of ordinary Americans, but a deep interest in solving the ‘problems’ of rich people and large corporations. Rather, it needs for ordinary Americans to have nontrivial problems, so that those problems can be scapegoated and demagogued.

That’s why it’s an issue.

As a default rule, Federal agencies are prohibited from accepting donations or volunteer work. The idea is that Congress should have ultimate control of the budgets of each agency, and if they could go out an solicit funds, then the congressional power is weakened. Let’s use a silly example: the National Endowment for the Obscene Arts is provided zero dollars by Congress, but goes out and raises a billion dollars from porn enthusiasts. That fundraising would effectively nullify the congressional policy on the agency’s work.

Note also that when agencies can collect funds (like for fees on various things), the default is that the fees go to the General Fund of the Treasury as miscellaneous receipts, so that the agency doesn’t get to keep the funds it collects.

Note that I’m using the term “default” very intentionally here. There are numerous exceptions in law for specific agencies. But as a rule of thumb, if a rich person wanted to make a contribution to the government generally, no problemo. If the rich person wanted to make a contribution to a specific agency or activity, much more likely than not it would not be allowed.

Rich people in the US pay alot in taxes. Bill Gates has claimed to have paid over 10 billion dollars in taxes. There is no legal way to know how much he has paid but he most likely is understating it.
The top income bracket in the US pays an effective federal tax rate of 24%, over twice the effective tax rate for the middle income bracket.

First, much of Bill Gates’ charitable work is done outside the United States, which given the need seems fine with me.
Plus, even if he were allowed to give to a specific federal agency, the result would likely be that their budget would get cut by a similar amount, so nothing much would be accomplished.
And as the Social Security discussion shows, first the amount rich people could pay is not significant, and worse, it might delay the necessary changes to put programs onto a sustainable track.

To be accurate, it’s actually 2.9% and there’s an additional 0.9% (3.8% total) on some income for some taxpayers.

Be careful of giving money to the US government. Champion prize fighter Joe Louis donated a lot of his income to the US government during WW II as a patriotic gesture. But he donated before tax income and didn’t leave enough to pay tax. The IRS hounded him over it for the rest of his life. They refused to count his voluntary donation towards his taxes or at least allow him to deduct the donation from income.

Where did you get this idea?

Taxpayers in the top 1% of income paid 39.5% of federal income taxes in 2014, which was more than the bottom 90% combined.

Some wealthy people pay taxes at a lower rate than middle-income people when their income is derived mostly from capital gains, which is taxed at a lower rate than ordinary income. But that doesn’t mean they don’t pay much in taxes.

Also note that our system taxes your income, not your wealth.

I wondered about people waiting until their passing to donate their wealth (my plan is to die penniless and I’m a good way towards that goal! :)). Then it dawned on me, most wealthy people (at least those who manage to keep their wealth) are good at or have people that are good at managing and growing their money. So if Bill Gates lives another 20 years, his $100 billion could grow to 300 billion or more.

On the other hand, governments, not just the US are like a kid in the candy shop with a pocketful of money and a bunch of friends (lobbyists, special interest groups) hanging around to make sure they don’t leave the store without spending every penny!

Sure, inflation will devalue a good bit of the $300 Billion in 20 years, but it will still be worth and hopefully do more then, than $100 billion today.

BTW, Hong Kong star Chow Yun Fat will leave his ~$700 million wealth to charity upon his passing. And unlike Bill Gates, part of the growth of his wealth can be attributed to the frugal lifestyle he’s maintained since before his stardom. Two giant pats on the back Chow!

I wondered about people waiting until their passing to donate their wealth (my plan is to die penniless and I’m a good way towards that goal! :)). Then it dawned on me, most wealthy people (at least those who manage to keep their wealth) are good at or have people that are good at managing and growing their money. So if Bill Gates lives another 20 years, his $100 billion could grow to 300 billion or more.

On the other hand, governments, not just the US are like a kid in the candy shop with a pocketful of money and a bunch of friends (lobbyists, special interest groups) hanging around to make sure they don’t leave the store without spending every penny!

Sure, inflation will devalue a good bit of the $300 Billion in 20 years, but it will still be worth and hopefully do more then, than $100 billion today.

BTW, Hong Kong star Chow Yun Fat will leave his ~$700 million wealth to charity upon his passing. And unlike Bill Gates, part of the growth of his wealth can be attributed to the frugal lifestyle he’s maintained since before his stardom. Two giant pats on the back Yun Fat and Jasmine (his wife)!

Donations, even to charities must be carefully weighted. At one time I sat in a committee of where we’d decide how to distribute the excess donations we’d received to others. Do you give the money to a group that will feed 100 adults for a month, 100 children for two months or 200 babies for 3 months?