Comment by replwoacause
2 years ago
You should read up on this a little more, because the quality of your question is poor. It cost the Chouinard family roughly $17 million gift tax on the stock donated to the Holdfast Collective, so yeah, not exactly a wind fall.
They paid $17.5M in taxes, and donated $3B. That's a tax rate of 0.58%. Why is the tax rate so low? Because 98% of the donation went to a 501(c)(4). They managed to avoid tax on 98% of their donation by using a 501(c)(4).
Now for Mr. Seid, he donated 100% of the money to a 501(c)(4), so he managed to avoid tax on 100% of his donation.
NYT says that when Mr. Seid avoided 100% of the tax, he got "an enormous personal tax windfall".
NYT says that when the Chouinard family avoided 98% of the tax (for a total tax rate of 0.58%) they got "no tax benefit".
How is avoiding 100% of the tax a massive tax benefit but avoiding 98% of the tax no tax benefit? The benefit that the Chouinard family got was 98% the size of the benefit that Mr. Seid got. How is something that's 98% of something massive not still massive or at least very large? NYT says 98% of massive is equal to 0.
The Chouinard family paid $17.5M in taxes, but if they hadn't used a 501(c)(4) they would have paid $875M, meaning they saved $857.5M in taxes, which could be considered a windfall.
They donated the company, they didn't sell it. That means they would have never paid 875M in taxes since a donation means they don't receive the underlying investment gains as they would have if it were a sale. His family is left only with voting rights, not equity.
Similarly Mr. Seid donated his company, didn't sell it. NYT says he got "an enormous personal tax windfall". Yes, the charity he donated it to then sold it. Does a person's tax windfall status depend on what the charity does with the stock after donation?
I guess you could say that NYT's position is:
* If the charity sells the stock, we'll consider the donor to have gotten "an enormous personal tax windfall".
* If the charity holds the stock and instead collects dividends from it for a long period, we'll consider the donor to have gotten "no tax benefit".
I don't think that's a logical position though. For one thing, what if the Patagonia-owning charity decides tomorrow to sell the stock? Does NYT retroactively go back and say the Chouinard family actually did get a tax benefit?