Ross: Is Patagonia’s sale to a non-profit shameless exploitation of a tax loophole?

Sep 20, 2022, 7:56 AM | Updated: 10:32 am
patagonia loophole...
(Photo by Michael M. Santiago/Getty Images)
(Photo by Michael M. Santiago/Getty Images)

Recently, the owner of Patagonia – the makers of those super-comfortable $35 boxer briefs – announced he would donate the whole company to a new non-profit organization that he set up. And this organization will collect and spend the company’s profits – on “social welfare.”

That arrangement makes the transaction tax-free. No capital gains on the appreciated value of the company; no gift tax on the donations to the non-profit.

More from Dave Ross: Months after his SCOTUS decision on prayer in schools, where is coach Joe Kennedy?

Sounded pretty noble – until Axios covered the story under the headline: “The Ultimate Billionaire Tax Dodge

Which suddenly made it sound a little sleazy.

Axios reported that Patagonia was the second company in the past year to do this – the other being Tripp Lite, which makes electrical devices, and was also donated to a non-profit set up by its owner, a transaction that was also tax-free.

This is all completely legal under the IRS rules which grant tax exemptions to “Social Welfare Organizations.”

The question is whether this is truly a good thing or a shameless loophole.

Well, according to the IRS, these non-profit social welfare organizations must, “further the common good and general welfare of the people of the community.”

And to achieve those goals, they are allowed to lobby congress. Ah! There’s the loophole!

Axios clearly suspects that these new social welfare organizations are going to be knee-deep in lobbying. Patagonia on the left, and Tripp Lite on the right.

But I say we give them a chance!

Because it could be a great demonstration of the ingenuity of the private sector.

With the number of billionaires we’ve spawned, I can see social welfare organizations solving so many social problems that government welfare programs– and the bureaucracy that goes with them – would no longer be necessary.

Housing for the homeless would appear on privately-purchased land donated by Patagonia. Drug treatment centers would sprout up courtesy of Tripp Lite.

These profit-funded non-profits could remove graffiti, powerwash the sidewalks, build sterilized and supervised public bathrooms – and we would reward them by purchasing their products, and posting hearts on Twitter.

And yes, if these organizations promote something you hate, you should be free to boycott their products.

Especially if they choose to spend their social welfare budgets on political lobbying because that’s just using their untaxed wealth to shell each other while the problems go unsolved.

Instead of trying to manipulate politicians – who’ve proven they can’t agree – why not go around them and solve these problems yourselves!

Pay for daily graffiti removal. Build permanently-affordable housing on private land. Provide detox on demand. I would post so many Twitter hearts! But if you’re in it just for the fight – I’m not buying your stuff anymore. No matter how comfortable your briefs are.

Listen to Seattle’s Morning News with Dave Ross and Colleen O’Brien weekday mornings from 5 – 9 a.m. on KIRO Newsradio, 97.3 FM. Subscribe to the podcast here.

Dave Ross on KIRO Newsradio 97.3 FM
  • listen to dave rossTune in to KIRO Newsradio weekdays at 5am for Dave Ross on Seattle's Morning News.

Dave's Commentary

Dave Ross

Dave Ross

Ross: The key to wedding success? Eat lots of cake and make your dancing look spontaneous

Yesterday on Gee & Ursula’s “Scenarios” segment they took on a listener’s wedding dilemma. The listener is going to his brother’s wedding, and he’s bringing his girlfriend, who likes to do karaoke. Well, his brother needs a wedding singer, and the girlfriend convinced him … to let her do it. More from Dave Ross: Before fearing […]
10 hours ago
Dave Ross

Ross: Before fearing what migrants destroy, try helping them build something first

The U.S. border is swamped with hundreds of thousands of migrants who want in – and border states are fed up.
1 day ago
Dave Ross

Ross: Those who don’t learn history are doomed to accept whatever they are told

Zinn’s book failed to shake my patriotism, any more than visiting Cuba or the Soviet Union. I still see America as a unique experiment worth protecting.
2 days ago
Dave Ross

Ross: Metaverse already has its problems, from monetization to groping

2D social media isn’t immersive enough, so now we’re going to strap a fat cell phone over our eyes to join a lawless 3D cartoon universe?
3 days ago
Dave Ross

Ross: Physicist says time travel is impossible … but can’t make an absolute promise

I wanted to highlight part of an interview with a physicist about time travel since it appears mainstream media didn't pick up on it.
4 days ago
Dave Ross

Ross: It’s either middle managers or robots looking over your shoulder

If you draw a paycheck, one way or another, your office is going to make sure you deserve it.
7 days ago

Sponsored Articles

Anacortes Christmas Tree...

Come one, come all! Food, Drink, and Coastal Christmas – Anacortes has it all!

Come celebrate Anacortes’ 11th annual Bier on the Pier! Bier on the Pier takes place on October 7th and 8th and features local ciders, food trucks and live music - not to mention the beautiful views of the Guemes Channel and backdrop of downtown Anacortes.
Swedish Cyberknife Treatment...

The revolutionary treatment of Swedish CyberKnife provides better quality of life for majority of patients

There are a wide variety of treatments options available for men with prostate cancer. One of the most technologically advanced treatment options in the Pacific Northwest is Stereotactic Body Radiation Therapy using the CyberKnife platform at Swedish Medical Center.
Work at Zum Services...

Seattle Public Schools announces three-year contract with Zum

Seattle Public Schools just announced a three-year contract with a brand-new company to the Pacific Northwest to assist with their student transportation: Zum.
Swedish Cyberknife 900x506...

June is Men’s Health Month: Here’s Why It’s Important To Speak About Your Health

According to the Centers for Disease Control and Prevention, men in the United States, on average, die five years earlier than women.

Anacortes – A Must Visit Summertime Destination

While Anacortes is certainly on the way to the San Juan Islands (SJI), it is not just a destination to get to the ferry… Anacortes is a destination in and of itself!

Ready for your 2022 Alaskan Adventure with Celebrity Cruises?

Celebrity Cruises SPONSORED — A round-trip Alaska cruise from Seattle is an amazing treat for you and a loved one. Not only are you able to see and explore some of the most incredible and visually appealing natural sights on the planet, but you’re also able to relax and re-energize while aboard a luxury cruise […]
Ross: Is Patagonia’s sale to a non-profit shameless exploitation of a tax loophole?