BTW, as soon as the budget was proposed the Republican spin machine was out in force with the disinformation talking point about how “Obama wants to raise taxes during a recession!?” Uh, NO. Letting the Bush tax cuts lapse for higher-income people starting in tax year 2011 is not “raising taxes during a recession.” I think there’s a fairly decent chance that we’ll be recovering by then. Meanwhile the tax cuts for couples bringing in less than 150 grand/year start like, what, next month (through reduced withholding)?
These people are morons. They don’t seem to understand the concept of marginal income tax rates. So what if your taxable income goes from 249,999 to 250 grand? You pay the higher rate only on the last buck! Horrors!
Yeah, I love the fact that people have no idea how income tax actually works, yet feel entitled to bitch about it. Go ahead, make $249,999 … knock yourself out. You won’t be paying any less tax but, hey, whatever helps you sleep at night.
That’s a valid point though. If you really believe it’ll make a difference, then why not make the money but give the excess over $250K to charity? Oh right, because that would be a positive thing and we don’t roll like that.
Actually Obama has floated the idea of phasing out deductions for charitable contributions for the >$250K crowd. I can’t imagine that is going to survive as a lot of organizations on both sides of the aisle would be hurting if that went into effect.
Oof, I gotta say I don’t love that. I know a lot of people who work in the nonprofit sector (which is very strong here, go MN!) who would be out of work very shortly.
Encouraging philanthropy is exactly the sort of thing our tax code should be doing, IMO.
Now, if we want to take a nice long look at what exactly counts as a charitable donation, I’m for that.
Also, I’m going to play devil’s advocate (full disclosure: I work in not-for-profit fundraising). Why should we allow for the wealthy to divert their taxes to charitable institutions? Every three dollars given to charity means one dollar diverted from US tax revenue.
Those charitable deductions represent would-be tax revenue that would otherwise be distributed by an elected body. As unpopular as that group may be, I sometimes think that I would rather have elected officials making those decisions than a random bajillionaire. Elected officials can be held accountable, random bajillionaires can’t.
We should be willing to ask whether or not not-for-profits do a better job than the government might. I know there are those here who would scoff at the suggestion and I’m not saying exactly where I come down on this ('cause I’m not entirely sure), but those who believe not-for-profits are more efficient, by definition, than the government need to have their heads checked.
I actually think that charitable giving would continue even if those deductions went away. Reasons for supporting not-for-profits are legion and there are plenty that have nothing to do with decreasing your tax exposure. Those of us who work for not-for-profits would just have to adapt.
Conveniently, he hasn’t proposed that. Apparently the cap on charitable donations that are deductible will go from 33% of income to 28% of income. So terrible!
The deduction cap is roughly the equivalent of a 3% hike in the marginal rates. So it’s a bit of a hit. That said, I don’t mind phasing out deductions at all.
