American History 1988
Chapter 323 - 313 Charity is a Business

Chapter 323: Chapter 313 Charity is a Business

Dean’s first act of charity was a donation of 6 million dollars to Stanford University last year for research in the field of computing.

This money had already been put to good use, with a building dedicated to computer science currently under construction on the campus of Stanford University, named after Dean.

This kind of practice is very common in America, where charitable projects often end up being named after the donors.

Perhaps after 1995, more buildings named after the super-rich will spring up here in California.

Dean’s donation was just a beginning, but it brought him many benefits.

For example, the 9 million dollars in capital gains tax that had accumulated last year was completely waived.

In the end, thanks to his charitable work, he paid 3 million dollars less in taxes.

And all of this was perfectly legal, which goes to show that charity is good business.

It was then that Dean had his financial and legal team start a serious study of the charity business.

The study became serious, and after careful validation by his team, he suddenly discovered that charity could be big business.

Previous personal donations were too trifling; a professional private charity foundation was necessary to truly leverage the benefits of this business.

Why is charity considered good business, you might ask? The issues here are quite complex.

Dean didn’t grasp the intricacies until he had thoroughly understood America’s inheritance laws, tax laws, and laws pertaining to charitable foundations.

America discourages wealth accumulation through inheritance without work involved, so its inheritance taxes are frighteningly high.

Though the rates have fluctuated over the decades, they hover around 45% at the federal level.

Imagine that if you have assets exceeding 25 million dollars, and you want to pass them on to your offspring.

This means that half of it will be siphoned off by the federal government as taxes.

Without a doubt, the super-rich would not be indifferent to such astronomical tax rates.

But do you think that’s all? In addition to the federal inheritance tax, there are state-level inheritance taxes as well.

Take Washington, where Gates resides, as an example; they also levy an additional inheritance tax of up to 20% at the state level.

When federal and state taxes are combined, the super-rich could lose more than half of their wealth.

Dean was immensely relieved that California has no inheritance tax; otherwise, he would have had to give up about 60% of his total assets if he wanted to bequeath them to his children.

This is practically no different from robbery, and no wealthy person would be willing to do that.

In addition to inheritance tax, the federal government also imposes a very high capital gains tax on investment income, with rates ranging from 15% to 35%.

For instance, if Dean decided to realize his long-term held stocks, he would pay 15% capital gains tax.

If the realization is from short-term investment gains, for example, holding stocks for less than a year, that rate would spike to 35%.

Dean did some calculations, and if he wanted to sell shares worth 100 million dollars to Little Roy or Little Arthur.

The 100 million would end up being 1x(1-45%)x(1-15%) = 46.75%, that is, forty-six million seven hundred and fifty thousand dollars.

Considering that his children are still young, this money might be used for investment.

Assuming an average tax rate of 30% on investment income, which is reasonable in today’s America,

after thirty years, Dean’s children would have accumulated 350 million dollars.

From a thirty-year investment perspective, such a rate of return is too low; by then, inflation will have eaten up a large portion of the profits.

So if one wants to minimize taxes and leave as much wealth as possible to their children, the only way is to donate the wealth to one’s charitable foundation.

This circumvents three types of taxes—the capital gains tax when selling stocks for the first time, inheritance tax, and yearly investment gains tax.

Moreover, when donating property to one’s own foundation, one can also offset 40% of income tax on wages and other earnings.

However, considering that Dean’s salary and bonuses are a drop in the ocean compared to the value of his stock, this deductible portion is negligible for the time being.

American law also stipulates that all charitable foundations must donate 5% of their property each year.

This is why those super-rich make a donation every year.

Now let’s calculate if Dean were to establish his own charity foundation, how much of every 100 million in assets would be left for his children.

The foundation would still follow a 10% investment return rate, deducting the 5% donated, leaving a net 5%.

Look, the foundation wouldn’t have to pay any taxes from start to finish, even enjoying an additional 5% in earnings.

After thirty years, that 100 million in principal would have grown to 540 million, while Dean would have donated 410 million to society.

Dean would not only have left an additional 190 million dollars for his children but also earned a reputation as a philanthropist through the donations of 410 million dollars.

With both fame and benefit at hand, why would he not establish a charitable foundation?

However, this extra money couldn’t have just appeared out of nowhere; there must be a loser in the equation.

It’s simple—the real victim being sheared is Uncle Sam.

Because it didn’t receive a penny in taxes from the massive wealth that Dean transferred to his foundation.

And ultimately, according to the law, as descendants or beneficiaries of the Price Family’s will, they could control the Price Foundation for generations to come.

A deeply entrenched wealthy family would gradually take shape like this and continue into the future.

Charitable foundations are, to some extent, tax havens where the super-rich can pass their wealth to generations to come.

Thus, having fully considered all the circumstances, Dean had also decided to establish his own charitable foundation.

As for its name, it would, of course, be named after the Price Family—this was an unspoken certainty among everyone.

However, since Dean was still young and might have other descendants, there would be more places to spend money in the future.

Therefore, the Price Foundation would not receive all of his assets for the time being, just a portion.

It would gradually increase over the years, until the children grew up.

Of course, the foundation’s name would need to be widely promoted, after all, the annual 5% donation was genuine hard cash.

...

While Dean was planning to set up his own charitable foundation, Clark and Anderson arrived at the Illinois airport on that Dassault Falcon.

"Holy shit!" Eric Bynner almost dropped his jaw when he saw Anderson dressed in an expensive suit descending from the plane as he came to pick them up at the airport.

"Eric~," Anderson handed his wine glass to a flight attendant and cheerfully stepped down the airstairs.

"F*ck you! Mark, did you just rob a bank or what?!" Bynner cursed as he rushed over.

"Hey, hey," Anderson stopped Bynner’s exaggerated embrace, pointing to the collar of his suit.

"Armani suit, 1,000 US dollars."

"Shit!" Bynner’s eyes blazed with envy as if it were a tangible flame.

"Dude, tell me, where did you strike gold? We’re best friends, aren’t we?"

Bynner sized up his former buddy while his eyes kept darting towards the Falcon.

It was too eye-catching, its streamlined body was undoubtedly the most dazzling boy at the airport.

"Oh, let me introduce you." Anderson turned around and looked back at Clark, who had just emerged from the cabin.

"Jim Clark, founder of SGI, and also the founder of the company behind Explorer browser, Netscape."

"Jim, this is Eric Bynner, a key player in the Mosaic Development Team, skilled in software packaging design."

"Nice to meet you, Eric." Clark extended a warm hand as he greeted him with a smile.

"Oh my God! Mr. Clark, you’ve always been my idol."

Bynner obviously knew about Clark’s big name; he had been a celebrity in Silicon Valley.

"Seeing all you energetic young people reminds me of myself twenty years ago."

Clark was pleased with the impact their arrival had made on others; it was the exact effect he wanted.

"Alright, guys, I’ve already booked the Hilton Hotel. Regarding the matters to come, we’ll talk about them there."

Anderson had quietly revealed his purpose for returning to Bynner.

Now they needed a place to discuss the issue together, considering that the entire Mosaic Development Team consisted of seven people.

Although Clark wanted to take all of them away in one fell swoop, each person had their own will, and he couldn’t guarantee they would all accept Netscape’s olive branch.

Therefore, it fell to Anderson and Bynner to come up with a strategy.

"The others are still near the old campus of the University of Illinois at Urbana-Champaign.

"Mark, they’d be thrilled to hear that you’ve come back."

Bynner was still a researcher at NCSA, and he along with the remaining interns had accepted Smar’s offer.

They had received long-term positions with annual salaries of 50,000 US dollars and were still responsible for the ongoing development of Mosaic.

But unlike their previous freewheeling work, their current job was full of constraints.

Their life under NCSA, known for its "Politburo" style of management, began to turn dreary.

Before the birth of Mosaic, NCSA’s management barely knew these young programmers.

Now, however, they were often required to attend meetings with 40 administratively superior individuals.

As one can imagine, for a bunch of young graduates, this was a dull and tiresome affair.

Anderson’s departure appeared uneventful, but it touched the hearts of the other team members.

Lacking the courage to take the step themselves, Anderson became their trailblazer.

In the hearts of young programmers, California’s Silicon Valley was already renowned.

They wanted to see what opportunities Anderson would find there and whether he really could hit the scarce "Silicon Valley Lotto."

Now, at this moment, there was no need for much explanation; everything before their eyes was the most potent proof.

A tidal wave of awe surged in Bynner’s heart; Anderson’s opportunity exceeded everyone’s imagination.

He was eager to learn about the other’s experiences during this period and whether he too could become one of the lucky few aboard a private jet.

So after Clark and his companions had settled in the Hilton Hotel, Bynner began to actively contact the other members of the Mosaic Development Team.

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