Garrett: Linux Foundation quietly drops community representation

Posted Jan 21, 2016 23:03 UTC (Thu) by tialaramex (subscriber, #21167)
In reply to: Garrett: Linux Foundation quietly drops community representation by mtaht
Parent article: Garrett: Linux Foundation quietly drops community representation

Such a church is exactly as obnoxious, but even more politically untouchable.

The rationale for why tax exemptions of this sort are obnoxious is that taxes are needed to fund government programmes. Some people don't agree with the whole concept of taxation, or think government should do almost nothing, I don't have time to discuss that. But if you agree that the general idea of taxes makes sense, exempting the arbitrary "charitable" activities of these organisations makes no sense. I also won't dive into why churches are a particularly ludicrous exemption, I understand that people who believe in the Flying Spaghetti Monster can't think of any higher priority, so of course they're going to want the FSM to be tax exempt...

I gave the example of a charity which sends cancer-stricken kids hang-gliding. That seems nice. Sure. But, it's not so nice that we'd divert central government funds specifically to support that arbitrary choice (note, if kids have a heart defect, or want to go surfing, that's not included, wrong charity), surely. So, why is it tax exempt ? If the corporation does the exact same thing but doesn't seek 501(c)3 then it's not tax exempt. The categories in 501(c)3 are super-vague, intentionally in order to permit a broad variety of such organisations, but why?

Sometimes the argument is made that a charity is better able to manage its affairs than a centrally funded government agency, that even a block grant from government would be worse than charitable status. But it's not at all clear that this is better for _society_ and we're funding them, it may be true _for the people running the charity_ but they're not the intended beneficiaries of the rule. Charities often act on the prejudices of their directors, or at the whim of major donors, and whereas a government agency which acts in a prejudiced way or has been "captured" by big money is answerable to that government and thus ultimately the people, the charity is answerable to no-one but its directors. And that takes us full circle to the topic of this LWN article. What the Linux Foundaton is doing here looks suspicious as hell.

Garrett: Linux Foundation quietly drops community representation

Posted Jan 21, 2016 23:12 UTC (Thu) by tialaramex (subscriber, #21167) [Link]

Aha, I see the Foundation is actually a 501(c)6 organisation. So some of my comments don't apply. Whoops.

Garrett: Linux Foundation quietly drops community representation

Posted Jan 21, 2016 23:19 UTC (Thu) by nybble41 (subscriber, #55106) [Link] (2 responses)

The reason that non-profits are exempt from paying income taxes has less to do with "charity" and more to do with the fact that these organizations, by design, do not have any profits to be taxed. Trying to tax them would cost the government more revenues than it brings in. Note that various obviously commercial organizations like the MPAA and RIAA have non-profit tax status, for exactly the same reason: they aren't profit centers and exist to spend money on behalf of their members, not to accumulate assets or pay dividends. The income was earned elsewhere and taxed as such before it every entered the non-profit organization in the form of donations or membership dues or whatever else they chose to call it.

If you want to complain about the impact to the government's take, you should be complaining about the deductions for charitable expenses which are granted to the donors, not the tax status of the organizations they're donating to.

Garrett: Linux Foundation quietly drops community representation

Posted Jan 21, 2016 23:57 UTC (Thu) by Cyberax (✭ supporter ✭, #52523) [Link] (1 responses)

> The reason that non-profits are exempt from paying income taxes has less to do with "charity" and more to do with the fact that these organizations, by design, do not have any profits to be taxed.
It's _contributions_ to charities are exempt from taxation.

Garrett: Linux Foundation quietly drops community representation

Posted Jan 22, 2016 5:16 UTC (Fri) by nybble41 (subscriber, #55106) [Link]

> It's _contributions_ to charities are exempt from taxation.

I referred to the charitable income tax deduction in my second paragraph. However, the complaint was about the tax exemption for the organization itself. Charitable and religious organizations (501(c)3 non-profits) are exempt from income tax in their own right, separate from the deduction for donations to such organizations, and the reason for this is that they are not expected to have any income (i.e. profits) to tax.

The Linux Foundation isn't even classified as a charitable organization in the first place, so donations to it are not tax-exempt. It's a 501(c)6, a different type of non-profit organization which covers business leagues and so forth.