Link to original article

Welcome to The Nonlinear Library, where we use Text-to-Speech software to convert the best writing from the Rationalist and EA communities into audio. This is: Passing Up Pay, published by Jeff Kaufman on July 13, 2022 on The Effective Altruism Forum. I recently switched from earning money to donate to doing something directly useful. I think this work is very important (or I wouldn't have switched!), and if I were still earning to give it's the kind of work I'd be excited to fund. I also think this about Julia's work; what should this mean for our donations? We've been donating 50%, and say we decide to continue doing that in future years. Let's say our employers are willing to pay us a combined $300k, so we donate $150k and have $150k left over. Then we pay $51k in taxes and our employers pay another $22k, for a total of $73k in income taxes. This leaves us with $99k for ourselves: Donate 50% Income $300k Donations $150k Employee-paid taxes $51k Employer-paid taxes $22k Post-tax post-donation pay $99k Since I'm equally happy for us to donate $1 as for either of our employers to keep $1, however, another option would be for us to ask for lower pay instead of donating. Let's say we want to keep the same $99k in post-tax post-donations pay; what does that look like? Donate 50% Reduce Pay Income $300k $130k Donations $150k $0 Employee-paid taxes $51k $31k Employer-paid taxes $22k $9k Post-tax post-donation pay $99k $99k Our family is equally well off in the two cases, but in the donation case $33k goes to taxes that would otherwise go to something much more valuable. That's 11% of what our employers would be willing to pay us, and 1/3 of our post-tax post-donation pay. This happens because while donations are "tax-deductible", that's only for Federal Income Tax (10%-37% in brackets). Social Security (12.4%), Medicare (2.9%), and State (5% for MA) taxes are all calculated on pre-donation income. While this is more efficient, there are some reasons why this might not be a good idea: This only works if there isn't some other organization you think would do more good with your money. People may overvalue their particular organization when they would be more objective in choosing among organizations at large. Your employer might say they are willing to pay the larger amount, but if it actually came down to it they wouldn't follow through. Perhaps they think they can get someone else to do the job for closer to what they had been paying you, or they just don't have the funding. One way this could happen is that they would have been fine with the larger amount initially, but over time that no longer makes sense for the organization, and no one notices because money that doesn't need to be spent feels less like real money. The more pay you are waiving, the larger an issue this is. If you know you're costing your employer less, you might hold yourself to a lower standard in your efforts. This would be ignoring major costs like you taking a spot that could go to someone more productive, and the way many top organizations are primarily constrained by management capacity, but I could still see someone falling into this. If you've pledged with Giving What We Can, it was initially not clear to me whether a voluntary and easily-reversed decision to waive pay would count. I wrote to community@givingwhatwecan.org, however, and they said it would. It's less legible. When you donate to a 501(c)(3) you get a tax receipt ("no goods or services were provided in exchange for your contribution" etc) and have something clear to list publicly. But if you instead waive pay the best you can do is write something up explaining what you're doing and get a document from the organization confirming it. It's a lot less clear! Some situations where this could be a problem: In trying to get a mortgage or other loan: "I understand sir, but for the purposes of this loan application what matters is what they've actually been paying you." In media: "These so-calle...