Goodwill, and Tax Avoidance and Evasion

Goodwill Industries International is a non-profit enigma operating donation drop-off locations and retail stores worldwide. It was founded in 1902 by Reverend Dr. Edgar J. Helms and ranks in the top ten on Forbes list of largest US Charities. According to Forbes.com, revenues totaled $7.4 billion with total expenses of $6.3 billion resulting in a net surplus of $1.1 billion. They received $527 million in government support and provided $5.6 billion in charitable services. (source: https://www.forbes.com/companies/goodwill-industries-international/?list=top-charities&sh=1a949ed38f8d ). The company’s over 3,000 affiliates enjoy non-profit tax benefits including reduced real estate taxes to the LLCs that own many of the Goodwill stores. The organizations are exempt from federal taxes on net profits. In 2021, the parent company received $26 million in federal awards and nearly $3 million in Paycheck Protection Program (PPP) loan forgiveness while ending the year with over $55 million in cash, cash equivalents and investments according to its consolidated financial statement on its goodwill.org website.

Last year, I dropped off a bag of clothing at the local Clermont Goodwill store which is an attractive and relatively new stand-alone building on a fantastic corner property in booming Clermont, Florida. The worker who assisted me did not offer a tax receipt so I asked for one. He looked at the medium sized bag in my hand and gave me a cynical look. Sarcastically, he said he would give me a tax receipt because I was pretty. I was wearing modest attire and drove up in a white four door Acura. Warby Parker sunglasses, Skechers flip flops made of yoga mat material, and Kohl’s Sonoma camouflage pants and a dark green t-shirt was the outfit of the day. There was nothing about my appearance that would indicate I was a tax avoider or evader. Politely, I informed him that I was not one of those people who ridiculously overinflate charitable donations to avoid paying taxes and I did not receive a tax receipt the last time I donated there. He handed me the receipt and told me not to spend it all in one place. He seemed to judge me to be someone avoiding or evading paying taxes by the way I looked, the car I drove and the relatively small size of my donation. God knows my husband and I pay plenty in federal taxes and. can go to our graves with a clear conscience knowing we did not cheat our government. We may not agree with our mandated tax rate but we are law abiding citizens and pay it despite not having a say in how our tax dollars are spent. Politicians think they know how our hard-earned income levels we spent decades working to achieve should be spent. They are mistaken given the years of deficit spending and national debt standing in excess of $31 trillion.

Tax avoidance and tax evasion are somewhat synonymous. The differences between avoidance and evasion have to do with intent. It is not my intent to evade paying my fair share of taxes even though I feel the amount we pay is ridiculous. It is my intent to avoid paying more taxes than we legally have to. Avoid is to stop oneself from doing something. Evade is to escape or avoid, especially by cleverness or trickery. We encourage cleverness as an admirable quality especially in business and politics. It is a problem-solving attribute and to many, the amount of taxes we are required to pay is a problem. Cleverly means in an intelligent, original, or skillful way. By intelligently and skillfully keeping track of the personal belongings my husband and I donate to charities, we could be judged to be evading taxes. Charitable donations in the form of cash or property were some of the few tax deductions that were available to some of us to avoid paying more in taxes than we are legally required to pay. Thanks to The Tax Cuts and Jobs Act passed in 2017, itemized deductions were limited while the standard deduction was nearly doubled taking away our ability to write off charitable donations and other expenses while eliminating personal exemptions. This same tax law increased the exclusion amounts for estate taxes, lowered corporate tax rates and eliminated their need to pay US taxes on overseas income. We do not have a charitable foundation that can cleverly skirt the tax laws. Forming an LLC to engage in clever accounting to avoid paying taxes would require tremendous effort and hiring full time staff to keep up with the trickery. Borrowing against assets to supplement income deliberately suppressed to avoid paying taxes is manipulative behavior that goes beyond the line we draw between right and wrong.

It did not sit well with me to be judged as one who avoids or evades taxes to an extravagant degree by overstating donations that a Goodwill worker seemed to deem to minimal. Particularly since I question whether Goodwill is a non-profit that should benefit from federal grants, PPP loan forgiveness, no federal income tax, and reduced real estate taxes at over 3,000 locations. It uses infrastructure, water and sewer systems, rescue services if an employee or customer slips and falls or a fire breaks out in a store, and government offices that provide services to their business locations among other things. There are over 1.5 million non-profit entities, some of which have dubious purposes, in the United States and non-profits can and do make profits.

When we pay taxes each year, it feels like the government is choking the life out of us. We are not able to retire as young as we would like such as a government worker with a pension and post-retirement health benefits can. This includes politicians who devise tax laws even they do not understand and that the majority of us are trying to avoid or evade because said politicians are doing the same thing. People in the middle and upper middle-income brackets are getting squeezed between the needs of those who make less and the clever and sometimes trickery behaviors of those who make more and fail to pay their fair share.

Politicians have allowed a tax system to be created that is incredibly convoluted and is one that no one can possibly fully understand much less be able to enforce. The tax system is oppressive and I have had about as much of it as I can tolerate. The Goodwill worker seemingly judging me by the size of my donation was the icing on the cake. I didn’t write the tax laws that are in my best interest to use and I cannot blame anyone who does the same legally. We desperately need a simplified tax system that is easy to follow and enforce. It is one step that will bring us towards eliminating deficit spending that has gone on for decades under both political parties. The only way the $31 trillion federal outstanding debt that is growing will be eliminated is collecting more revenues than is being paid out. That means everyone and every entity should be contributing towards the financial success of our government and not just receiving from it.

“There’s room for everyone to win.” – Poshmark Motivational Message