Charitable deductions in the crosshairs

The agonizing over the fiscal cliff would be funny if it weren’t so tragic. Here we have the players including House Speaker John Boehner, the President, and various senators, wringing their hands over dealing with the looming fiscal cliff, when they are the ones who created it! It’s so typical of government – create a crisis and then march in pretending to solve it.

And so many of them in the ruling class, principally Democrats but also too many Republicans, are facilitating this inexorable growth of government. And now they see the charitable deductions from income tax as a source of revenue.

It makes statists uncomfortable to have free people doing what they feel the government should do. And this caring for the poor, promoting life-saving scientific research, and other charitable activities, in their view, all needs to be brought under the thumb of the government. I cannot help but think that this is a motivation for limiting deductions for charitable giving. It is so obvious on its face that limiting those deductions will dampen the amount of giving.

They point to surveys showing that people do charitable giving for the joy of giving, and not because it’s tax-deductible. Of course. There can be no doubt that this is the case. But at the same time, there can be no doubt but that the amount of the gifts is affected by tax policy. We have known this since 1917, when this deduction was first enacted in order to encourage giving to charities that were supporting our war effort. (Source: Nonprofit Quarterly).

If I have $1000 to give, but a tax bite of 30% is going to be taken out of that, then I have $700 left to give. If I get a tax deduction, I can contribute the entire $1000.

For most of my own giving, I pay no attention to the tax consequences. However, there have been times when I have sat down with my tax accountant and we’re strategizing over projected taxes near the end of the year and I will, as a matter of tax strategy, give an extra gift here or there in order to lower my tax bill. So for me, most of my giving would not be affected by the tax deduction, but some of it would.

Everyone has to know this. It’s so obvious. But some don’t like it, and they are choosing to try to ignore it.



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About mesasmiles

By Dr. David Hall. Dr. Hall runs Infinity Dental Web, a small company that does Internet marketing for dentists. He has had a long-standing interest in politics and as a college student toyed with the idea of a political career.
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