Charity in Lieu of Taxes

The latest news from the world of billionaire philanthropy features Michael and Susan Dell, who committed $6.25 billion to fund special government-created accounts for newborns. The Dells’ gift to these funds, branded “Trump Accounts,” would add $250 to each of 25 million such accounts.

This announcement provided the Dells with lots of exposure. It’s also gotten me thinking about just why this kind of “philanthropy” rubs me the wrong way.

Five observations:

1. It’s extraordinary how rich the rich are. According to Business Insider, the Dells are worth $148 billion. As I remind people, a billion is a thousand million, which means that Michael and Susan Dell are millionaires 148,000 times over. Consequently, this seemingly huge charitable commitment – one of the largest publicly announced philanthropic commitments ever – amounts to only four percent of their net worth.*
2. This commitment wins the Dells great favor with the Trump regime, which, in turn, will no doubt make them richer still. These days, it seems that nearly every corporate mogul is bending the knee and paying homage to Donald Trump. This is repulsive, reprehensible, immoral… and, in a practical sense, totally logical. Obsequious praise of Mr. Trump earns CEOs and their shareholders sanctuary from the many forms of retribution the Trump administration can and will unleash upon those it deems disloyal. So by making this gift, Michael Dell is staving off investigations from regulators, IRS tax audits, blocked mergers and acquisitions, and spurious (or real) legal actions. By appearing at the podium with Trump and giving billions to funds called “Trump Accounts,” the Dells have won for themselves and their corporate entities inoculation from governmental attacks, at least through January 2029. And it may even win Dell Technologies a government contract or three. 
3. This comes across as bipartisan, even while Trump sees it as a tribute to him. Reallocating wealth is a progressive cause. Trust accounts for newborns have been promoted by poverty-alleviation advocates under the names of “baby bonds” and “child savings accounts” for years as a way of building wealth among the poor. The notion, if not the MAGA-branded naming of the funds, is something that Democrats and Republicans can both support. In other words, unlike donating to an unabashedly partisan and literally gilded project like the Trump White House ballroom, the Dells have managed to suck up to the president while not coming across as particularly partisan to the general public. 
4. This is the latest effort by billionaires to ingratiate themselves with Trump by taking on what should be governmental expenditures. Take the aforementioned White House Ballroom, which will supposedly be paid for by 37 corporations and individuals. (It’s not clear who paid for the earlier destruction/desecration of the East Wing.) Or consider Timothy Mellon, heir to a century-plus-old industrial and banking fortune, offering $130 million to pay the miliary’s payroll this fall as the government shutdown stretched into a new pay period. And now there are the Dells, offering to top off the $1,000 federally-funded Trump Accounts for newborns with an additional $250. The fact that individual donors are even in a position to make these kinds of commitments reinforces point number one: The rich are wildly rich. And the fact that Mr. Trump will gladly accept these donations without worrying in the slightest about conflicts of interest proves that the government and access to the president are basically up for sale. 
5. Those six billion dollars need to be seen in the context of the Dells otherwise paying almost nothing in federal taxation. As Ray D. Madoff explains in her new must-read book, The Second Estate: How the Tax Code Made an American Aristocracy, the billionaire class pays almost nothing in federal taxes. They dodge paying income taxes by drawing no more than a token salary, instead focusing on growing their assets through market appreciation. They don’t pay taxes on those increasingly valuable corporate stock holdings, because they avoid selling the stock. Because they don’t want to receive taxable income and because they don’t want to sell appreciated stock, they borrow against their billions in assets, transactions that provides them with the funds for their lavish lifestyles. Then, when they die, the assets pass to their heirs at a new, higher “step-up cost basis,” allowing the heirs to sell the stock at no tax cost, pay off their parents’ loans, and start the cycle anew. This strategy, called “buy, borrow, die,” means that the Michael Dells of the world pay virtually no taxes in or after their lifetime. As Pro Publica reported in 2022, relying on leaked tax returns of some of the nation’s richest people, Jeff Bezos, Michael Bloomberg, Elon Musk, George Soros, and Carl Icahn have all enjoyed years recently when they paid not a penny of tax. And when they did pay taxes, the billionaire class paid at rates that were a fraction of what you and I pay.

So, let’s summarize what’s really going on here.

The GOP’s so-called Big Beautiful Bill provided ongoing tax relief to corporations and the wealthiest Americans, while gutting the Affordable Care Act and, according to the Center on Budget and Policy Priorities, likely throwing nearly four million people off of insurance and, on average, doubling the premium costs for millions more.

Consequently, millions of families will pay thousands more a year for health insurance coverage. Millions more will risk bankruptcy or death by going uninsured. But the Republican bill will throw a bone to these struggling families in the form of a $1,000 savings account for newborns, now increased $250 by Michael and Susan Dell.

It’s not a good deal for those families, or the nation.

Meanwhile the Dells, along with their coterie of attorneys, accountants, and investment advisors whom activist/writer Chuck Collins calls the “Wealth Defense Industry,” are laughing all the way to the tax filing. The Dells, in any kind of fair tax system, would be paying billions in taxes each year. But they aren’t. And now they get a charitable tax break that helps them avoid paying what little they would otherwise owe, while getting some invaluable face time with a president who keeps careful score of friends and enemies.

Count me unimpressed, even angry.

I’ve come to understand (helped by Ray Madoff’s terrific book) that the kind of philanthropy reform (particularly regarding donor-advised funds) that she and I have long advocated needs to go hand-in-hand with a dramatic reform of the overall tax system. In Madoff’s book, the titular “second estate” is a reference to the nobility in pre-revolutionary France, who, along with their wealth and titles, had the privilege of paying no taxes whatsoever. This is the situation we have here in America today, where someone working at Dunkin’ Donuts pays 15% of her hourly income in payroll taxes, while the Michael Dells of the world game the system, pay nothing in taxes, and then get to preen as major philanthropists. Until that’s fixed – and Madoff offers some clear and logical solutions – we’ll simply be nibbling around the edges of fixing what’s broken in America.

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* I know some of you will respond by saying, “Hey! It’s the Dells’ money!  And they’re giving away a ton of it! What kind of ingrate are you to criticize their generosity?!” To which I respond, “It’s my money, too – and here’s why. The Dells likely funded this gift with highly-appreciated stock, which means that on top of the $6.25 billion charitable deduction they’ll receive for the value of their gift, they will likely avoid paying any capital gains tax on that same amount. Assuming the top tax rates, this means that they will receive up to a 74% charitable deduction on their gift. In other words, the federal government will be foregoing tax revenue of over $4.5 billion dollars, which in turn means that you and I (who, unlike the super-wealthy, are actual taxpayers) are subsidizing this gift. So, yes, I have a speaking part in this deal. It’s not only the Dells’ money. It’s our money, too.”

Copyright Alan M. Cantor 2025. All rights reserved.