Some criticisms of the philanthropy of the wealthiest one percent

Some time ago Bill Gates and Warren Buffett issued an invitation for the very rich to join their Giving Pledge. Some of Germany's super-rich have rejected the invitation.

Some of the critics claim that obligations that are often better provided by the state should not be left to philanthropy and private funding. Peter Krämer, a Hamburg-based shipping magnate and multimillionaire, has emerged as one of the strongest critics of the "Giving Pledge." TheWikipedia entry on the pledge reports:

 April 2012 that "81 billionaires committed to giving at least half of their fortunes to charity".[1] As of August 2015, 137 billionaire or former billionaire individuals or couples have signed the pledge; a significant majority so far are, like Buffett and Gates, US-American citizens.[2]Most of the pledges come from North America but there are a number from Europe and Asia as well.

Peter Hamburg notes that those super-wealthy people who sign on get to decide what their money is used for, not the state or the people. In the end, the super-wealthy indulge in their hobbies that could be in the common good but are quite personal and not decided by representatives of the people. Of course many will claim the money is the property of the rich individuals to use as they wish. I presume Hamburg's point is that a proper tax system would ensure that the rich paid more in the first place in the form of taxes, so that they did not have such large sums of money.Hamburg concludes:It is all just a bad transfer of power from the state to billionaires. So it's not the state that determines what is good for the people, but rather the rich want to decide. That's a development that I find really bad. What legitimacy do these people have to decide where massive sums of money will flow?What gives them the legitimacy and power is that they have the money, in most cases probably legitimately in terms of existing laws. Hamburg also takes a swipe at the US noting that it already has a desolate support system. He said that Gates and Buffet should have given their money to some of the many communities in the US who do not have funds to provide proper public services.

Recently on the birth of their daughter, Mark Zuckenberg a co-founder of Facebook, and his wife Priscilla Chan announced they would donate 99 percent of their worth, mostly Facebook stock valued at $45 billion . However, the couple are not donating directly to charities or even setting up a charitable foundation. Zuckenberg has created a limited liability company, the Chan Zuckenberg Initiative LLC. As Gawker explained: The Chan Zuckerberg Initiative is not even an actual charitable organization, but rather structured as an LLC. Unlike a charitable trust, which is compelled to spend its money on charity, Chan Zuckerberg Initiative, LLC will be able to spend its money on whatever it wants, including private, profit-generating investment.As the New York Times points out the LLC unlike a charitable foundation is not even required to allocate a certain percentage of its assets every year to charity. The LLC will not be subject to such rules or the transparency requirements either.

The LLC can invest in for-profit companies but no doubt described as socially responsible. The LLC can also make political donations and spend money lobbying for changes in the law. Jesse Eisenger in the New York Times says of Zuckenberg's donation: He created a limited liability company, one that has already reaped enormous benefits as public relations coup for himself. His P.R. return-on-investment dwarfs that of his Facebook stock. Mr. Zuckerberg was depicted in breathless, glowing terms for having, in essence, moved money from one pocket to the other.

In spite of these issues, society is no doubt better served by Zuckerberg channeling his money into the LLC rather than spending it in conspicuous and lavish expenditures of the type exhibited by some gulf oil potentates as well as others. One of the reasons Zuckerberg and his wife have a great deal of public appeal is this lack of conspicuous consumption to show that they are rich. However as critic Teju Cole puts it the power of being rich often "supports brutal policies in the morning, founding charities in the afternoon, and receives awards in the evening".

Greece still has no deal with its EU creditors

On Tuesday negotiations between Greece and international lenders ended with no deal reached on reforms that would allow the release of more bailout funds.

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Greece must reach a deal with international institutions, formerly known as the Troika of the European Commission, International Monetary Fund(IMF), and the European Central Bank(ECB), before it can receive the next instalment of bailout funds. Technical talks have halted for now but could begin again next week. Greece could be unable to make debt payments in April if it does not receive more cash.

Greek creditors said that the package of reforms submitted by Greece were ideas rather than a concrete plan of reform. Greek representatives had been meeting with what are called the "Brussels Group" of representatives from both the European Union and the IMF. Creditors are intensifying efforts to collect data in Athens. On Monday, prime minister Alexis Tsipras had appealed for an "honest compromise" with his creditors but warned it could not be won at any cost. He stressed that the government had "red lines" such as avoiding wage and pension cuts, mass layoffs, and a fire sale of state assets.

Spokesperson for the European Commission, Mina Andreeva, told reporters: " The constructive talks are ongoing since Friday, but we are not there yet, so this is why the talks should continue. The Eurogroup working group will discuss the matter at its next meeting,The talks are constructive and are ongoing,"There was to be a conference call of the Eurogroup working group on Wednesday that would provide an opportunity to appraise the debate so far.

The Financial Times reported on the new list of economic reforms that Greece sent to the euro zone authorities on Wednesday. The document was 26 pages long. The reform measures are estimated to generate about 6 billion euros this year. Greece is attempting to unlock 7.2 billion euros in bailout funds. Many of the reforms tackle tax evasion a continuing problem in Greece. There is also a new lottery scheme. In a short introduction the document states: “The larger purpose of this document is, in the first instance, to unlock short-term financing that will permit the Greek government to meet its immediate obligations. The Hellenic Republic considers itself to be a proud and indefeasible member of the European Union and an irrevocable member of the eurozone.”In spite of the lack of a deal so far, the atmosphere of the talks appears improved. Even so, several EU officials said they did not expect a deal until the next meeting of the eurozone finance ministers on April 24. Greece claims it has the necessary funds to make a payment of 450 million euros to the IMF on April 9.

The new list of reforms fails to address an overhaul of the Greek pension system and greater labour market liberalisation. The new reforms even suggest 1.1 billion euros in new spending, partly on pensions. The document also suggests a suspension of the "zero deficit clause" since this would force more cuts to state pensions. These measures are not likely acceptable to creditors.

The reforms in the labour market include a gradual increase in the minimum wage and the strengthening of collective bargaining laws. These measures point in the opposite direction of policies already adopted in earlier reforms. On privatisations the document appears to grant concessions even though this conflicts with the express statements of some Syriza ministers. However, the document does estimate that privatizations would bring in 1.5 billion euros this year as against the planned 2.2 billion in the original agreement.

Economy minister George Stathakis said he expects a deal next week. The reform list presented on Wednesday, included the leasing of 14 regional airports and the privatization of the largest port Piraeus to raise 1.5 billion euros through asset sales and leases. Yet, Stathakis said the government had no plans to sell all of its 67 percent stake in the Piraeus Port Authority. He claimed that government would pursue a joint venture. There seem to be inconsistent statements given by different officials. It seems unlikely that the Greek government will be able to pursue any substantial reforms and reduction in austerity as promised to voters during the election campaign and at the same time satisfy its creditors and obtain the release of more bailout funds. Even Warren Buffet thinks that it might not be such a bad thing if Greece left the euro zone.

People with lower incomes give more of their income to charity in percentage terms than the rich

Several studies show that those with very high incomes give a smaller percentage of their income to charity than those with lower incomes.

No doubt some of the wealthy give a hefty percentage of their wealth to charity. Bill Gates, Warren Buffett and 38 others among the very rich formed a pact to donate at least half of their wealth to charity. However, statistics show that on average the wealthy do not donate as high a percentage of their income to charity as the less well off.

Judith Warner in the New York Times reports that Americans who earn less than $25,000 a year donate 4.2% of their income on charity on average. On the other hand those who earn more than $75,000 give only 2.7%.

Households that earn between $50,000 U.S. and $75,000 a year, on average, give 7.6% of there post-tax and post-living expenses income to charities. Households earning $200,000 a year or more donate only 4%. However, people with high incomes who live close to people with low incomes give more than those with high incomes who live in isolated wealthy area according to a report on NPR.

According to another study by the Chronicle of Philanthropy that analyzed charitable donations as related to ZIP codes, only nine of 1,000 most generous areas were among the richest 1,000 ZIP codes. The study also noted that in areas where rich people were highly concentrated giving in terms of income percentage was quite low.

The report found that in neighborhoods where more than 40 percent of taxpayers reported earning $200,000 or more, the average giving was just 2.8 percent of discretionary income.

In 1906 ZIP code areas where at least 10 taxpayers earned $200,000 or more none of those taxpayers reported giving to charity! Almost eighty per cent of those areas were outside metropolitan areas indicating that the residents may not have had much contact with problems of the poor. Actually there is often plenty of poverty in rural areas as well. Buffett and Gates are the exceptions rather than the rule when it comes to charity among the rich.

SIxty per cent of Americans favor increased tax on very rich

The plan is nicknamed the Buffet rule after billionaire Warren Buffet. Buffet noted he paid a lower tax rate than his secretary. The Obama plan would raise the tax rate on those earning more than a million a year.

Obama claims the tax would reduce the inequality between the top one per cent and the other 99 per cent of Americans. His proposal will no doubt be defeated in the senate probably today (Monday 16th of April). However this is fine with Obama since he can then campaign on the theme that the Republicans support and represent the rich one per cent of Americans. 37 per cent oppose the Obama tax.

Independents actually support the tax by over 60 per cent, a good sign for the Democrats. Only the Republicans have a majority opposing the plan at 54 per cent while even among them 43 per cent approve.

A Republican spokesperson said:"Democrats can talk about this tax hike until they're blue in the face, but Americans are looking for solutions on jobs, gas prices and the deficit, and this gimmick doesn't offer a solution to any of them." Polls show that the Republicans may have a point. Only one per cent of Americans found the gap between rich and poor was the U.S. number one issue. Most found the economy, jobs, and problems with government more important. For more see this article.

Buffet, others say high U.S. debt levels pose risks.

Interesting that this article has lots to say about the costs of programs that help Americans stay healthy and provide needed services but nothing at all about the huge U.S. military expenditures that are far beyond those of any other country in the world. Cut Social Security and Medicare expenditures but leave the military-industrial-prison complex alone!


Buffett, others say high U.S. debt levels pose risks
Fri Aug 22, 2008 12:52am EDT

By Jonathan Stempel
NEW YORK (Reuters) - Warren Buffett, the billionaire co-founder of a top private equity firm and a prominent voice for U.S. fiscal responsibility, called on the United States and its elected officials to combat the nation's fast-growing, multi-trillion dollar debt load.
Buffett, Blackstone Group LP co-founder Peter Peterson, and former Comptroller General David Walker were part of a panel that spoke Thursday night in Omaha, Nebraska following the national premiere of the documentary "I.O.U.S.A." The talk was simulcast in more than 350 movie theatres.
The film argues the country might face economic disaster if it can't find a way to pay some $53 trillion it has committed to spend -- and doesn't have now -- as the population ages, and Medicare and Social Security costs soar.
It also argues, and panelists agreed, that the United States has become too dependent on foreign investors to buy its goods and its publicly-issued debt. There was also agreement that many politicians fear making tough policy choices that have ramifications far beyond the current election cycle.
"Our politics have become so embedded and so partisan, with so many special interests, that they require a massive effort from the public telling them, 'we want something done'," Peterson said.
Buffett, who runs Omaha-based Berkshire Hathaway Inc and turns 78 on Aug 30, was more sanguine than other panelists, though he said he doesn't want debt to grow as a percentage of gross domestic product.
"The prospects of being born in the United States are still better than being born anyplace else in the world," Buffett said.
Buffett, the world's richest person according to Forbes magazine, added: "It has not paid to sell America short since 1776, and the time to start is not in 2008."
He added that even if there are more debts to cover, the United States will have greater resources to pay them. "The pie gets larger over time," he said.
Another panelist was Bill Novelli, chief executive of the AARP advocacy group for people 50 and older, who called for bringing health care inflation under control. A fifth was William Niskanen, chairman of the libertarian Cato Institute, who said the nation's retirement age should rise to 70.
CREDIBLE PLAN SOUGHT
Roughly four-fifths of the $53 trillion figure is related to projected shortfalls in Medicare and Social Security.
Most of the rest is what is commonly called the "national debt," which in July totaled nearly $9.6 trillion, according to the U.S. Treasury Department's Bureau of Public Debt.
Walker as comptroller general ran Congress' Government Accountability Office from 1998 until this March. He said aggressive action is needed by whoever becomes the next president, likely either John McCain or Barack Obama.
Now running the Peter G. Peterson Foundation, Walker called for the creation of a "capable, credible and bipartisan" commission to make recommendations to ensure tough budget controls, comprehensive Social Security reforms that will last indefinitely, and "round one" of health care and tax reform.
"What we have to do is to recognize and reward elected officials -- Democrats, Republicans, independents, whatever -- who tell the truth and who stand up and try to help make tough choices sooner rather than later to make sure that America's future is better than its past, and reject the B.S. and the nothing types of solutions and platitudes that we hear from so many politicians today," he said.
Peterson added that the United States should consider the "provocative" notion of mandatory savings for individuals, as have some other countries, saying the nation had become "so consumption-obsessed and so borrowing-obsessed."
The 82-year-old Peterson is also a former chief executive of Lehman Brothers and former U.S. secretary of commerce under President Richard Nixon.
(Editing by Kim Coghill)

Warren Buffet: I should pay more tax.

Buffet is hardly the typical plutocrat. It is good to hear a rich person who has a sense of fairness. The Chamber of Commerce on the other hand seems to speak for greed and wields the typical scare mongering threat of depression and loss of jobs as a stick to bludgeon the working person into submission.

I should pay more tax, says US billionaire Warren Buffett

By Andrew Clark in New York

11/01/07 "The Guardian" -- -- Warren Buffett, the famous investor known as the "Sage of Omaha", has complained that he pays a lower rate of tax than any of his staff - including his receptionist. Mr Buffett, who is worth an estimated $52bn (£25bn), said: "The taxation system has tilted towards the rich and away from the middle class in the last 10 years. It's dramatic; I don't think it's appreciated and I think it should be addressed."

During an interview with NBC television, Mr Buffett brandished an informal survey of 15 of his 18 office staff at his Berkshire Hathaway empire. The billionaire said he was paying 17.7% payroll and income tax, compared with an average in the office of 32.9%.
"There wasn't anyone in the office, from the receptionist up, who paid as low a tax rate and I have no tax planning; I don't have an accountant or use tax shelters. I just follow what the US Congress tells me to do," he said.

Mr Buffett also took a pot shot at hedge fund managers. He said: "Hedge fund operators have spent a record amount lobbying in the last few months - they give money to the political campaigns. Who represents the cleaning lady?"

His intervention comes amid an increasingly rancorous debate on Capitol Hill about tax. Shortly after taking office, President Bush pushed through $2 trillion in temporary tax cuts, including sharp reductions for high-earners. These expire at the end of 2010 and the White House wants to renew them.

A leading Democrat, the Harlem congressman Charlie Rangel, published alternative plans this week that would impose a 4% surcharge on people earning more than $200,000 a year, while delivering tax relief to 90 million working families.

Republicans say the net effect would be a $2 trillion tax increase that would hurt small businesses and farmers. Meanwhile, Mr Buffett's remarks drew a robust response from the US Chamber of Commerce, which said the top 1% of US earners accounted for 39% of tax revenue - and the highest earning 25% of the population delivered 86% of the tax-take.

The chamber's chief economist, Martin Regalia, said: "Mr Buffett has made an awful lot of money and if he wants to pay more taxes, I think that's fine. But I think he should get his facts straight."

He added: "There's no question in my mind: if you were to impose [the Democrats'] tax increases, you would see the US go into a recession."

© Guardian News and Media Limited 2007