Progressives Scream Like Banshees After Entrepreneur Helps Homeless
by Thomas Woods on December 2, 2019 at 10:52 AM
Pro-government, anti-entrepreneur memes spread like wildfire on social media, particularly Facebook.
A recent one criticizes Jeff Bezos on the grounds that his $98.5 million to help the homeless just isn’t enough.
(Now: no emailing me to tell me Bezos is a crony capitalist, or you don’t like Amazon’s policies, or whatever. None of that has anything to do with what I’m writing, and those things are not the point, dear reader.)
The meme says, “This is the equivalent of the median American worker giving about $26. Meanwhile, Amazon paid $0 in taxes on its last $24 billion in profits.
“If Amazon paid the 35% corporate tax it owed pre-tax cut, it would have paid $8.4 billion in taxes.
“That’s 85 times more than $98.5 million.
“Taxation > Philanthropy”
Want to see this smashed?
That’s where the Meme Policeman comes in.
On its Facebook page, the Meme Policeman refutes and smashes memes like this.
It was particularly detailed with this one. Here’s its response:
This meme throws out a series of non sequiturs. Some are true, and some are false, but as a whole it’s an impressive whopper of nonsense, the kind which doesn’t come around often. It’s tough to untangle this web of confusion and misdirection, but here we go:
–Jeff Bezos recently announced giving $98.5M to various charities helping the homeless, which is part of a much larger $2B commitment announced last year. It’s unclear over what period of time this $2B will be spent, but it’s a significant effort, probably the largest ever. Also, the homeless donations are not Bezos’s only charitable givings. This year isn’t over yet, but last year Bezos donated $131M (including $97M to homeless initiatives). So we’ll estimate his total givings at $131M/yr.
–This meme, like so many voices today, misleadingly tries to equate Bezos’s donations with a median American worker. In doing so, they compare Bezos’s donations with his TOTAL net worth, but only the annual INCOME for a worker. To illustrate this deceit, imagine a retired worker who owns a $500K house and has a prudent $1.5M in retirement savings. This allows them to live off $75,000/yr (drawing a reasonable 5% per year). If they donated $7,500 to charity, that would be 10% of their “salary” which would be a significant donation to them. But using the Bezos critique, one would say “that’s only .5% of your net worth, cheapskate!”
–We should be comparing apples to apples, which is annual income. Almost all of Bezos’s net worth is tied up in Amazon stock, it’s not money in the bank, and certainly not income. His net worth actually fell by over $40B from last year’s highs ($150B vs $108B today), so if one wants to equate net worth to income, Bezos actually lost more money than anyone on the planet. But that’s absurd, which is why net worth is a misleading metric, particularly when it involves volatile assets.
–So let’s look at income. Bezos gets a salary of $81,840 from Amazon, plus $1.6M in security and travel expenses. In July he sold $1.8B in stock, so his total income this year is roughly $1.8B. Which means Bezos donates about 7% of his income to charity.
–The median US worker earns $47,996 according to the BLS. This would be the equivalent of them donating $3,360 to charity.
–The meme’s claim that Amazon paid no federal taxes is a complete non-sequitur. Bezos isn’t Amazon, and he DID pay taxes on his income. Every time he sells his Amazon stock, he must pay tax on the gains. Forbes estimated that he paid $400M in taxes from the $1.8B in stock he sold, about 20%.
–The current corporate tax rate is 21%, not 35%. Amazon made $11B in pretax income during 2018, so their max tax bill without any deductions (something no company would pay) would be $2.3B, not $8.4B. But again, Bezos is not all of Amazon, he owns about 16% of the company. Comparing his wealth or income to the entirety of Amazon is a non sequitur.
–But if we indulged this meme’s “logic,” Bezos’s share of Amazon’s max corporate tax obligation would be $368M, less than 3X his charitable giving, not 85X like the meme claims.
–Going further, money paid in taxes does NOT equal philanthropy. Most of the budget goes to Social Security, Medicare/Medicaid, Defense spending and many other discretionary items like highways or NASA. As it relates to homelessness, the entire HUD budget in 2020 is $44.1B, which is about 1% of federal spending. In other words, out of Bezos’s share of Amazon’s full theoretic tax rate, less than $4M would go to programs ostensibly helping the homeless. As it’s likely that his private contributions will have more efficiency and success, his charitable donations are actually far more powerful than his taxes from a philanthropy perspective.
Not bad, eh?