Bill Gates' giving revisited: The spawn of Satan?
•Jim speaks up
Reader Jim offers some reasons he is less than impressed about Bill Gates' philanthropy, a topic previously addressed at in this entry and this one.
I'm not adverse to Gates' charity giving, but would like to point out a few things that make it less than it seems.
•One is that he was well known for not giving much of anything until the Justice Department got on Microsoft's case, at which point he began giving money and making sure he got publicity for it. It's rather obviously a PR gambit.
•Two is that he gives rather less proportionate to his wealth than others in his circumstances often do.
•Three is that he very often gives in such a way that it benefits his business, giving software or money towards computer instruction in school and things like that. These things tend to make the recipient more familiar and hence dependent on his company's products -- in fact, it's pretty much like AOL's business plan of giving out disks for free internet access, which no one would class as charity.
•Four, and perhaps most important, is also the point I'm not positive on, as I'm not a tax expert. But as I understand it, changes in the tax code over the past decade or so, made to encourage giving, allow one to deuct the full current market value of stock given, while the income from that stock is valued at the purchase price. This bypasses capital gains. Since Gates' Microsoft stock was originally purchased for approximately $50,000, and is now worth billions, the value of each dollar's worth of stock is essentially nil. This, and correct me if I'm wrong, would mean that if he donates Microsoft stock worth a million, he lists as income the purchase price of that stock -- this would be what, $50? Yet on the deductions side of his return, he takes a deduction of $1 million, which in a high tax bracket is worth $250,000 or more. Sounds to me like a nearly quarter of a million dollar profit for "giving" to charity.
Food for thought.
I want to thank Jim for sending me this email. It is a quantum leap over the remarks of a previous anti-Gates commentator.
In regard to whether Gates gave before the antitrust case, he did. As someone who lives in the Pacific Northwest, I am a bit more privy to the inside story than most. The Gates family has always been involved in charitable giving. The younger Bill's business success created a lot more of a pot for that pursuit. Earlier in the Microsoft story, much of the giving was to cancer research. Gates' mother, Mary, fought and died of cancer. It is possible the charitable contributions increased and got more publicity after Microsoft's antitrust troubles, but it existed all along.
Regarding share of wealth and giving, there are so few other people in Gates' circumstances, I believe a comparison would be difficult.
I am aware of the perfidious way Microsoft primes the pump by contributing computers and software to schools, which then become hooked on Microsoft software. The Mac in my blog name arose in another context because I am an aficionado of the Macintosh. I have watched Apple's share of the education market slide partly because of Microsoft's sneaky tactics. But, we are talking about money when it comes to the charities Jeanne d'arc of Body and Soul, Elayne of Pen-Elayne on the Web, and Yellow Doggerel Democrat Steve Bates and I approve of. Gates also gives the green stuff (now in the process of becoming less green) to colleges for his low-income and minority education program.
I am not able to address Jim's fourth point in a substantive way. My impression is that at Gates' level of wealth, no tax shenanigans can shelter more than a fraction of his potential tax bill. Fortunately, several economists read Mac-a-ro-nies regularly. I am going to ask Angry Bear to answer Jim's question for us.
I suspect Jim and some other readers may take my "The good Bill Gates" headline too literally. What I mean by it is that Gates is doing good in this instance, i.e., philanthropy. I am not addressing the antitrust issue. In fact, I believe Microsoft is a paradigmatic monopoly, the way the term was interpreted until the Bush era Justice Deparment got involved. I am just as capable of calling Gates middling or bad, according to what is being discussed.
•Jeanne strikes back
Back and refreshed for battle, Jeanne responds to the unexpected disapproval she has received for saying something positive about Bill Gates in the entry referenced above. I was probably among the first people to see Jeanne's original short entry in which she merely said she approved of Gates' charitable impulse and cited an article at Salon. Who would've thought that would lead to all this? Call me clueless because I didn't anticipate the brouhaha.
Whoa! You want to generate controversy, try saying something nice about Bill Gates. Then go away for a couple of days, and watch your e-mail box fill up. Most writers didn't go into great detail about why they hate Gates so much, they just wanted me to know that he is a thoroughly despicable and untrustworthy human being, and/or that Microsoft is the spawn of Satan.
She expands on my comments about Bill Gates, Sr., describing his lobbying to maintain the inheritance tax.
To me, that's an important point. I've been very impressed with Bill Gates, Sr.'s campaign in favor of the inheritance tax. This isn't John D. Rockefeller handing out his shiny dimes. Gates, Sr.'s statements remind me of what drew me to Bobby Kennedy's campaign four decades ago -- an obvious understanding that people don't gain wealth simply because of their own great virtue and initiative, but because they live in a society that has given them the opportunity to create that wealth (and, in many cases, has invested in them, providing a good portion of the wealth) -- and they owe something back....
I think this surprises some people because it does not fit the Daddy Warbucks stereotype of wealthy people. Neither did Mary Gates ' teaching and social work.
I am going to save an intriguing anonymous letter to Jeanne and her reply for readers who go to Body and Soul and read the rest of her entry. it is well worth your time.
•New kid chimes in
Kerim Friedman of Kerim's New Weblog signals his stance with the title of his entry: Is Bill Gates the Next Mother Theresa?
For those not aware of criticism of Mother Teresa, it can be argued that she helped create the same conditions she worked to ameliorate by opposing birth control and abortion. Kerim says:
Well, I suppose that depends on what you thought of Mother Theresa. But he is certainly making a play for sainthood with his decision to give away 95% of his wealth to fighting the problems of poverty - especially health related issues. Last night he appeared on an interview with Bill Moyers, which has already caused some controversy on the internet. Jeanne D'Arc loves him, as does Salon, but OneMan has some good arguments for why we should be cautious in embracing Bill Gates as our savior.
Kerim's main gripe with Gates is that the he is an unrepentant capitalist who does not realize that, in Kerim's opinion, capitalism is inherently corrupt.
The problem with this view, of course, is that it overlooks the important interrelationships between the places where capitalism supposedly works and the places it doesn't. After all, colonialism historically shaped the political structure of these states to fuel capitalism in the wealthiest of countries. Secondly, even in the most successful capitalist states, like the US, income inequality is growing worse, not better.
Kerim does not go into full condemnation mode in regard to Gates, but refuses to let him off the hook for failing to acknowledge what Jeanne calls the systemic effects of corporate business practices.