- May 1, 2014
- Posted by: essay
- Category: Term paper writing
Charity has a long history and has always been encouraged in all countries. In 2008 Charities Aid Foundation published a report consisting of the analysis of charitable experience in the world. According to the results of the analysis, the USA is considered to be the world’s philanthropic leader. Around 1,7% of the US GDP is spent for charitable purposes. It equals 300 milliard dollars a year. The second place is occupied by Great Britain. The following research analyzes some of the most important charitable contributions in the USA, providing information on tax issues and considering the appropriateness of charitable contribution with the IRS tax rules. The research also deals with the extent of the discussed charitable donations.
The majority of Americans are engaged in charity regardless of their income. Nowadays the USA has over 50 thousand charity foundations and organizations collecting donations and directing them for various programs. According to federal and state tax services, in the last 10 years the average income of Americans has grown 44%, while average sum of charitable donations equals 64%. The major part of those donations comes from private individuals and comprises 75%.
Those who make charitable contributions receive certain economic privileges based on the decrease of the amount of taxes. According to the IRS statistics, less well-to-do people make greater donations than rich people. However, one of the pioneers of existing system of charity in the USA was millionaire Andrew Carnegie, who was a famous philanthropist. He has spent 350 million dollars for charity. He has donated around 280 million dollars only within the USA. For this money there has been built a well-known Carnegie-Hall. Such charitable contribution is appropriate to certain tax rules of IRS, such as the rule that investments or other donations may provide some benefits not only to recipients, but also to the person who donates. As for the tax issues, Carnegie’s activities dealing with charity were encouraged by governmental structures of the USA mainly through tax legislation.
Charity gives opportunities for a person who makes a contribution to economize their taxes, and it provides a possibility for different organizations to receive a non-repayable financial aid. The most considerable charitable contributions are made by representatives of big business. Bill Gates dominates in the list of the most generous American philanthropists. The head of the Microsoft Company has donated for charity purposes the sum exceeding half of his capital, which equals 28 milliard dollars. The tax issue in this case is that charitable contributions are voluntary donations to the organizations registered in IRS. Bill Gates has made contributions to such organizations as Red Cross, The United Way and some governmental departments. These donations follow the IRS tax rules. In this regard it is important to remember that charitable contributions may be presented both in the form of money and property, the price of which is determined according to its market price on the day of donation. A Corporation may provide money or property documented in the appropriate bills.
Recently, Warren Buffett declared that he intends to spend 50% of his capital for charity purposes. He encourages the richest people of America to follow his example. Warren Buffett has 47 milliard dollars, and if his plan is accomplished, it will be the most significant contribution in the history of charity. Warren Buffett is widely known as a great philanthropist, and his future charitable contribution is likely to follow the IRS rules, according to which the donation is written off during the year when it has been transferred to the account of some charity organization.
Speaking about charitable contributions, it is important to mention Steve Jobs, the former owner of the Apple Company. There are certain things that would have never happened with Apple Corporation under the reign of Steve Jobs. Financial charity is one of them. Unlike many of his competitors, the former owner of the richest technological company in the world had a different opinion on charity practices. Under his guidance Apple has never made charitable donations to those in need, regardless of the circumstances or accusations in greed. The iPods marked “Product RED”¯, the cost of which was partially contributed to the similarly-named foundation, do not count. The new owner of Apple Corporation Timothy Cook has changed the rules of the company. Nowadays, every Apple employee has an opportunity to participate in the program of charitable contributions to any organization. Today, Apple Corporation spends nearly 10 thousand dollars a year for charity purposes. This program is available in the USA only, but it is likely to spread all over the world. This program goes along with the IRS rules according to which charity contributions might be invested not only in the form of cash, as it was stated above. And the charitable gifts benefit the recipients as well as the organizations to which a certain amount of money is transferred. A number of mutual funds however require primary donations of at least one thousand dollars, while some of them lower such requirements. In such a way, every employee of Apple Corporation has a chance to donate up to one thousand dollars a year according to the IRS tax rules.
Speaking about the ethical considerations of charitable contributions it is important to mention that the phenomenon of charity attracts attention of many sociologists, psychologists and lawyers. The ethics of business and charity in the USA is not yet completely formed. However, ethical behavior is more effective than overcoming competition with the help of unethical means. Starting with Carnegie who cared about the development of schools and libraries, charity in the USA gradually progresses. And donations of such famous philanthropists as Bill Gates are likely to contribute to further development of charity in the nearest future.
Experienced tax experts strongly advise taxpayers to make charitable contributions as it is profitable not only for the charity organizations, but for taxpayers themselves. A contribution to certain charity organizations in order to reduce taxes is known as tax incentives and might be a great motivation for taxpayers. The most widely known tax incentives consist of tax deductions or tax credits which are intended to increase the interest of taxpayers in making charitable contributions.
In conclusion, the research has analyzed the charitable contributions of such famous multi-millionaires as Bill Gates, Warren Buffett, Steve Jobs and Andrew Carnegie from the point of tax system. The research is based on the IRS tax rules and different tax issues. It provides general information on the problem of charity and tax reduction. It also deals with charity ethics, which is an important part of any business dealing with charitable contributions. Thus, the US charity is going to enter a new era with the help of numerous donations of multi-millionaires and owners of corporations widely known throughout the world.