Present tax law makes a clear distinction between spending and gifting. If you spend money, it is taxable to you and taxable again to the person who sold you the goods/services. If you gift money to your brother, it is taxable to you and (within limits) not to him. If you gift money to a recognized charity, it is taxable to neither you nor the charity.

I suppose there is no essential need to differentiate between money gifted to a charity and money gifted to your brother.

Like you, I would love to have a simpler system with fewer deductions and a lower (but more consistent) marginal tax rate. The present system has very high rates in the middle (between $100k and $200k) and lower rates on either side of that bridge. Not to mention a mess of exceptions, credits, and deductions to slog through each year…

No, you pay tax on money that flows through your hands. If you work for a charity, no money flows through your hands. If you work somewhere else and give money that you got from that other job to the charity, then it still flows through you. If you buy a car instead of giving it to the charity, you no longer have the money, but you still have to pay taxes on the money that flowed from you to the dealer. so we’re saying if you give your money to a charity that will spend it, you don’t have to pay tax, but if you give it to a car dealer that will spend it, you do have to pay tax.

I’m ok with cutting the schedule A deductions also. I would like people to pay tax on income over a minimum level needed to stay alive in a great nation without having to work 3 jobs, say people pay tax on all income over $25,000 – no deductions (but you know how I feel about credits for investment, which can be viewed as tax deferrals). That would be fairest and most simple, and would not distort decisions on how to use money that you earn or otherwise get possession of.

If I work for free, then I don’t pay tax because I don’t end up with the money. If I give the money to a charity (receiving nothing in return), then I don’t pay tax because I don’t end up with the money. Exactly the same as the restaurant scenario.

Also, there are two ways of looking at Schedule A deductions. You can assert that people without mortgages or sufficient deductions to top the standard deduction do not benefit — but the standard deduction could easily be described as a no-hassle give-away for people whose limited deductible activities aren’t worth the trouble to track. Cut the standard deduction to zero, and EVERYBODY benefits from Schedule A deductions — but who would be helped by that change?

I’m not saying deduction of charitable donations is an outrage, just that I don’t want government spending to be effectively determined by individuals who choose to direct what would otherwise be tax revenue to their favorite cause. If I have $5 million in tax free income and $1 million in taxable income, but I give $1M to a non-profit that spends its money telling people that climate change is a lie, then essentially the government is spending $1M on that cause. If they want to work there for free, I don’t have a problem with that, but I don’t like tax dollars shifted to personal causes. The system breaks down, and usually in the favor of those who can afford to make big contributions.

Sure, there are insurance contracts written along those lines.

Not clear why the IRS would care. Deducting “lost revenue” from “supposed revenue” gives you zero income to tax anyways.

“What you can make is irrelevant when it comes to calculating taxable income.”

Sure. But why should income forgone from a donation to charity be treated any differently from income forgone from a donation to charity? Just because the first was a donation of time while the latter was a donation of the income produced with that time?

I guess I just don’t see why a deduction for charitable donations is an outrage, especially when the individual contributes three times more lost income than the government in that donation.

What you can make is irrelevant when it comes to calculating taxable income. I could have bought more Apple stock than I did, but instead bought a bunch of other stocks with higher P/E’s and ended up losing money. Fortunately I don’t have to pay taxes on what I might have earned.

I could do a similar job elsewhere and would earn 2x or 3x as much, with the government receiving accordingly more revenue.

In many cases, the government DOES lose revenue when people donate their time to charities.

But your time has monetary value…

A “what if” story. Sci-fi offers a vehicle from which to explore oddball ideas, since it is not forced to conform to present-day society. (Of course *good* sci-fi will be largely analogous except for the key issue in question.)

As for your objection, there is presently little distinction between giving your labor to charity and giving the fruits of your labor to charity. (The former arrangement is free of FICA taxes, but they are otherwise similar.) It seems to me a natural symmetry…

I don’t think it would work, either. I’m wondering how many people would want to fund the IRS.

I still don’t like the system, regardless of how the deduction is valued. I don’t like the idea of individuals getting to make government spending decisions just because they are wealthy. The next thing you know they’ll be able to pay people to talk congressmen into making laws that benefit themselves.