He did avoid taxes by restructuring the company like that, but there's many ways he could have avoided taxes, including putting it all in a profit-making trust to his kids. There were also ways to make so much money that even after taxes, he'd still be way wealthier than he is now, like by bringing it public on the stock exchange.

Even if he was doing it only to avoid taxes (which I think he wasn't), this was the absolute best way to make sure Patagonia continues to be used for good. Tax-free status is given to most non-profit organizations and to most money that's donated to non-profits, and for a good reason. It encourages people to do good things for society, rather than to hoard profits.

Pretending that this is some evil tax avoidance scheme is just propaganda from corporations that don't want to be called out on their continued greed, and their own tax avoidance. They're afraid that if enough people realize what a good thing Chouinard did, then society will draw attention to the bad things they do.

And, since OP asked, their warranty really is that great, too. They'll replace or repair anything, no matter how long you've had it, and for virtually any reason, if you think there's something wrong with it. That said, their stuff is really high quality, so I know of almost no one that's ever had to legitimately use the warranty.