Comments on: The problematic charitable-donation tax deduction http://blogs.reuters.com/felix-salmon/2011/11/28/the-problematic-charitable-donation-tax-deduction/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: dharmeshjpatel http://blogs.reuters.com/felix-salmon/2011/11/28/the-problematic-charitable-donation-tax-deduction/comment-page-1/#comment-49573 Tue, 01 Apr 2014 12:30:39 +0000 http://blogs.reuters.com/felix-salmon/?p=11263#comment-49573 PLEASE VISIT http://donationmoneyfreetocharity.weebly .com

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By: jdex http://blogs.reuters.com/felix-salmon/2011/11/28/the-problematic-charitable-donation-tax-deduction/comment-page-1/#comment-34034 Wed, 14 Dec 2011 19:01:18 +0000 http://blogs.reuters.com/felix-salmon/?p=11263#comment-34034 Donate stock now to ensure 2011 deduction. See http://www.kindshares.com/?p=383

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By: TFF http://blogs.reuters.com/felix-salmon/2011/11/28/the-problematic-charitable-donation-tax-deduction/comment-page-1/#comment-33603 Wed, 30 Nov 2011 13:57:26 +0000 http://blogs.reuters.com/felix-salmon/?p=11263#comment-33603 KenG, I wholly agree that donating an asset of dubious value should NOT be treated the same as donating money or more liquid assets. Limiting the charitable deduction to the cost basis of collectibles makes a ton of sense. (That, at least, is a “hard” number.) Excluding collectibles entirely might make even more sense.

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By: KenG_CA http://blogs.reuters.com/felix-salmon/2011/11/28/the-problematic-charitable-donation-tax-deduction/comment-page-1/#comment-33580 Tue, 29 Nov 2011 22:18:01 +0000 http://blogs.reuters.com/felix-salmon/?p=11263#comment-33580 TFF, I think I understand you. I get what you are saying, but I’m saying that directing the flow of money to a non-profit should be impact my taxes any differently than directing the flow of money to a for-profit. I just don’t think that donating money or an asset of dubious value should be treated the same as donating time with regards to taxes.

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By: TFF http://blogs.reuters.com/felix-salmon/2011/11/28/the-problematic-charitable-donation-tax-deduction/comment-page-1/#comment-33578 Tue, 29 Nov 2011 21:57:14 +0000 http://blogs.reuters.com/felix-salmon/?p=11263#comment-33578 KenG, I am clearly not explaining myself clearly! :)

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…

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By: KenG_CA http://blogs.reuters.com/felix-salmon/2011/11/28/the-problematic-charitable-donation-tax-deduction/comment-page-1/#comment-33575 Tue, 29 Nov 2011 21:11:42 +0000 http://blogs.reuters.com/felix-salmon/?p=11263#comment-33575 “you pay tax on the money that ends up in your bank account”

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.

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By: TFF http://blogs.reuters.com/felix-salmon/2011/11/28/the-problematic-charitable-donation-tax-deduction/comment-page-1/#comment-33574 Tue, 29 Nov 2011 20:40:58 +0000 http://blogs.reuters.com/felix-salmon/?p=11263#comment-33574 KenG, look closely at what you wrote? You’ve explained in great detail the essential principle of the income tax system — you pay tax on the money that ends up in your bank account. If the restaurant ends up with the money, either through actual sales or through an insurance payment, then they pay tax on that. If the restaurant does not end up with the money, then they don’t pay tax on it.

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?

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By: KenG_CA http://blogs.reuters.com/felix-salmon/2011/11/28/the-problematic-charitable-donation-tax-deduction/comment-page-1/#comment-33564 Tue, 29 Nov 2011 18:28:37 +0000 http://blogs.reuters.com/felix-salmon/?p=11263#comment-33564 Restaurants can obtain insurance on lost revenue, but the IRS doesn’t allow the restaurant to deduct lost revenue from income. And, if they do get paid from the insurance company, they will have to declare that as revenue.

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.

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By: TFF http://blogs.reuters.com/felix-salmon/2011/11/28/the-problematic-charitable-donation-tax-deduction/comment-page-1/#comment-33560 Tue, 29 Nov 2011 18:01:46 +0000 http://blogs.reuters.com/felix-salmon/?p=11263#comment-33560 “if a restaurant has to shut down for a day because of a power failure, can they declare lost revenue?”

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.

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By: KenG_CA http://blogs.reuters.com/felix-salmon/2011/11/28/the-problematic-charitable-donation-tax-deduction/comment-page-1/#comment-33552 Tue, 29 Nov 2011 17:14:16 +0000 http://blogs.reuters.com/felix-salmon/?p=11263#comment-33552 TFF, so if a restaurant has to shut down for a day because of a power failure, can they declare lost revenue? No, you cannot deduct what you don’t receive.

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.

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