US billionaire’s lesson in generosity for Ireland’s super-rich tax misers
By Matt Cooper (Examiner)
WHAT must the super-rich in Ireland make of Chuck Feeney? The American billionaire has put it up to them by giving away more than €1 billion to support worthy causes in this country and he wasn’t even born here.
Worse, the 75-year-old has broken the habit of a lifetime by allowing others recently to publicise his actions, making people aware not just of his generosity but raising serious questions as to who has done even close to the same.
A fascinating biography — with which he co-operated fully — has been written by Conor O’Clery and deservedly is selling well. Now Feeney’s Irish publicist has let it be known that Atlantic Philanthropies — the cover name for his personally funded venture — donated about €45 million last year to selected ventures and intends to spend about €100m over the next year before the money runs out.
Maybe Feeney developed an ego late in the day, but if he has then he is entitled to it, given what he has done, especially for places such as the University of Limerick, which thrived because of his investments.
More likely, however, he is trying to show up the rather lacklustre efforts of our newly minted multimillionaire classes. If they can’t give to Irish educational, artistic and cultural funds, then why should Feeney and other Americans like him do so?
It is a highly relevant point when you consider the latest figures on tax payments by the wealthy that emerged this week from the Department of Finance. Three of the country’s highest earners in 2003 paid no tax at all, 45 paid less than 5% and 17 paid less than 10%.
You can be damn sure that others also used all sorts of government-provided incentives legitimately to avoid the payment of taxes, reducing their bills to a fraction of what they could have been. You can also be sure that many of these people only take what income they need from their wealth — so as not to make it liable to tax — benefiting from increases in asset valuations that are not turned into cash.
After all, this is a country where it is estimated that there are 300 people with a net worth of more than €30m. That may be a conservative estimate and banking sources suggest that at least 50 people have a net worth of more than €100m.
The loss to the exchequer of not taking full taxes from these people has not been calculated.
Proponents of the system argue that the tax benefits arising from economically enhancing investments they make to get the tax break — that might not otherwise be made — outweigh any loss.
It has been suggested that these figures fail to include the loss of revenue from our coterie of super-rich, Irish-born foreign residents who have relocated to other jurisdictions for tax purposes while maintaining substantial assets here. This is not entirely true, as they do have to pay tax on income and profits derived from their Irish-located assets and they can offset such income with tax breaks just like other multimillionaires. However, they do not pay tax in Ireland on income and profits generated outside of Ireland and there is a substantial loss to the exchequer as a result.
All of this might be acceptable if the same people who pay so little tax contributed to society in other ways. But there is not much evidence of that. Irish people, of all incomes, are good at giving to charities and towards the relief of disasters, but those limited figures available on philanthropy do not suggest mind-boggling generosity.
The Centre of Non-profit Management at TCD’s School of Business recently published research showing that a mere 10.5% of the income of 3,215 charitable organisations came from private donors, compared with 60% from the State. This is about €200m, or 0.55% of GDP, which is half the US rate of 1.01%.
Much of this money may have come from overseas, largely due to the pioneering efforts of the Ireland funds established a little more than 30 years ago by Tony O’Reilly, when he was at Heinz in Pittsburgh, and the local American football team owner Dan Rooney. This venture has raised more than €300m for projects in Ireland and is to the forefront in trying to encourage others to get involved in organised donations to good causes.
The problem for some, however, is that many Irish people suspect the motives of those who get involved in philanthropy, especially when they boast of it, are showy at elite events or insist on having buildings named after them. Some may host high-profile events involving international stars and then distribute the money to local causes, but the intention may be to buy goodwill domestically, even if they spend much time abroad.
Much of the money raised may come from others and what they put in may be a fraction of what they have saved on tax by claiming foreign residence (even if wives and families live in Irish mansions).
Such behaviour arouses hostility that results in other lower-profile donors being reluctant to publicise their generosity, even as a way of encouraging others to do the same, lest they fall foul of such criticism.
There is also a question as to how much money anyone needs.
Many of Ireland’s new rich have been so busy creating wealth that they don’t seem ever to have stopped to think about what they want to do with it, other than buying new aircraft or a portfolio of private residences, or using the money to become even richer. One of the current crazes is for demolishing huge houses to build even bigger ones.
Warren Buffet, the super-rich billionaire, once famously declared that the super-rich should leave their children "enough money to do anything but not enough to do nothing". He later elaborated on that by saying the rich should bequeath their children "enough money for the best education and a home of the quality they’re accustomed to, but after that they’ll have to work for it".
Buffet has given more than $30 billion (€24 billion) — 85% of his wealth — to the Bill and Melinda Gates Foundation, which the Microsoft founder established in 2000 mainly to combat disease in the Third World. It focuses on health and education, fighting HIV, TB and malaria in poor countries and improving schools in the US and benefits from the application of many of the business skills that have built Microsoft.
SO WHAT does Ireland need to do to encourage philanthropists — not as a replacement for government funding but as a partner to it in funding non-commercial ventures for overall social betterment?
Ironically, given the low taxes paid by the super-rich, some advocate more tax breaks. For example, last year the Government allowed for gifts of shares to charities to be made tax-deductible.
There have been suggestions about having a regulated and registered foundation sector, with tax incentives for donors, and consultancies specialising in philanthropy along the lines of American banks and investment firms offering donor-advised funds that help clients transfer wealth into donations.
Maybe that is required, as an appeal to conscience apparently seems redundant in many cases. But the legendary philanthropist of a century ago, Andrew Carnegie, once said: "He who dies rich, dies in disgrace."
Or put another way, you can’t take it with you, so you might as well give some of it back.
Both Lazarus and the rich man had stewardships. Lazarus' was the stewardship of suffering, which he endured until his life ended.
The rich man was given the stewardship of wealth. But by neglecting his fellow man, he became unfaithful with much. Lack of generosity and concern for one in need destroyed the rich man.
Parable of the Rich Man and Lazarus Luke 16:19-31.
Jesus compares their lives
Now there was a rich man, and he habitually dressed in purple and fine linen, joyously living in splendor every day.
And a poor man named Lazarus was laid at his gate, covered with sores, and longing to be fed with the crumbs which were falling from the rich man's table; besides, even the dogs were coming and licking his sores.
Lazarus and the rich man die
Now the poor man died and was carried away by the angels to Abraham's bosom; and the rich man also died and was buried.
Rich man's 1st plea
In Hades he lifted up his eyes, being in torment, and saw Abraham far away and Lazarus in his bosom.
And he cried out and said, "Father Abraham, have mercy on me, and send Lazarus so that he may dip the tip of his finger in water and cool off my tongue, for I am in agony in this flame."
But Abraham said, "Child, remember that during your life you received your good things, and likewise Lazarus bad things; but now he is being comforted here, and you are in agony.
And besides all this, between us and you there is a great chasm fixed, so that those who wish to come over from here to you will not be able, and that none may cross over from there to us."
Rich man's 2nd plea
And he said, "Then I beg you, father, that you send him to my father's house for I have five brothers in order that he may warn them, so that they will not also come to this place of torment."
But Abraham said, "They have Moses and the Prophets; let them hear them."
Rich man's 3rd plea
But he said, "No, father Abraham, but if someone goes to them from the dead, they will repent!"
But he said to him, "If they do not listen to Moses and the Prophets, they will not be persuaded even if someone rises from the dead."
A last farewell from the shadowy developers and speculators who inhabit the murky world of Fianna Fail,s "Ballybritt chapter".
Liam lawlor, leaving this world to face the final Tribunal Judge, with as little, in his pockets, as the day he entered it.