> These donations are effectively free. A company or wealthy individual can either pay taxes or donate the money to a "non-political" think tank to promote policies they'd like to see. That's not how deductions work. A donation costs the donor much more than the tax reduction. All a deduction does is reduce your adjusted gross income, not literally offset the nominal sum you pay in taxes. Say my top marginal tax bracket is 20%. If I donate $100 then it's costing me precisely $100. If I don't donate then I'm on the hook for $20 ($100 * 20%) in tax. $100 > $20. This presumes the $100 is earned income, and that the donation is in fact tax deductible. If neither of those hold then the relation is $100 > $0. People have similarly mistaken ideas about so-called write-offs: [this video]
> Broadcom very much is able to write off a ton as donations to charity If I donate $1000 dollars so that I can "write it off," do I come out ahead financially? [this video]
Kramer: It's a write off for them. Jerry: How is it a write off? Kramer: They just write it off. Jerry: Write it off of what? Kramer: They just write it off! Jerry: You don't even know what a write off is, do you? Kramer: No. Do you? Jerry: No I don't!! [this video]
Crypto losses always remind me of Kramer and Jerry talking about losses. - Not a problem. It is a write-off for them. - How is it a write-off? - All these big companies do it - they just write it off! - Write what off? You don't even know what a write-off is! - Maybe I don't but they do. And they are the ones writing it off! [this video]
It seems like VCs will often sell shares for a near-total-loss on their investment, for simplicity and relationship with founders, and they can write it off[0]. [0] [this video]
This reminds me of seinfeld scene: [this video] Anyway, for the bottom line of your company I think it rarely makes sense to frivolously spend more just to decrease your tax burden. There's smarter ways to spend money.
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