I happened to be watching 60 minutes the other evening with another interview with President Obama. After the interview, they did a short piece on Howard Buffett who is slated to take over as Chairman of the Board for Berkshire Hathaway in the near future. Mostly, the story was about Howard being a farmer and the great charitable work he is doing around the world. They discussed that Warren Buffett gave over 31 billion dollars to the Bill Gates foundation which is also spending a great deal of money helping those that are underprivileged around the world.
While I was watching the program, several things occurred to me that I thought might of interest for the smart money moves readers. First and foremost, it seems to me that we are very concerned with how to raise more revenue in this country to balance out our budget. Part of the proposed solution is to potentially increase the estate or death tax to capture more assets from the very wealthy when money moves from generation to generation. One strategy used by the very wealthy today is to set up an assortment of charitable trusts that can potentially lower current income taxes today and estate taxes down the road. However, nobody questions what is happening with this charitable money. How much charitable money today that is being deducted is helping causes inside the country versus causes outside of the country?
I’m not sure if anyone knows that answer, but I do know this. With many families living below the poverty line, unemployment still remains at high levels and homes foreclosing every day, that charitable money could do a heck of a lot of good if it remained within the United States. Perhaps we need to revisit what really qualifies for a charitable deduction to see if the cause benefits something inside of our country or outside of our country?
This is something we need to consider as money leaves our country every day. Some of it because people take the cash back to their own country and don’t pay taxes and others who get a deduction for helping out those less needy who don’t live in the United States. For those that do live here, they sure could use a little of that Warren Buffett magic.
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Ted Jenkin, CFP®, AAMS®, AWMA®, CRPC®, CMFC®, CRPS®
Co-CEO and Founder of oXYGen Financial, Inc
Ted Jenkin is one of the foremost knowledgeable professionals in giving financial advice and Smart Money Moves to the X and Y Generation.
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