A Question About the Fiscal Cliff Negotiations

Discussion in 'Politics' started by Publius1787, Dec 11, 2012.

  1. Publius1787
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    Publius1787 Gold Member

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    A Question About the Fiscal Cliff Negotiations

    Some democrats say that capping tax deductions won’t amount to anything substantive. That is, unless you cap charitable deductions. They further contest that capping charitable deductions would be bad for charities across the United States. My question is this; if you get a deduction for charitable giving, isn’t it in fact the government who paid for the charity and not the person making the donation? Is that charity or blind government incentivized welfare?
     
  2. DiamondDave
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    DiamondDave Army Vet

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    They worry about bad for charities?? Increased taxation is bad for charities
     
  3. Publius1787
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    Publius1787 Gold Member

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    Well, I agree. But that doesn't answer my question.
     
  4. Koios
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    Koios Recreational Kibitzer

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    And even if it did, it's still stupid, if the taxes being raised impact mostly the middle class. It's just a regressive way to tax more, while being able to say "I didn't raise rates." Pure political smoke and mirrors.
     
  5. oldfart
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    oldfart Older than dirt

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    As long as the marginal tax rate is less than 100%, charitable contributions even if deductible will result in a net after-tax cost to the contributor. As long as the marginal utility of playing a big shot exceeds the after-tax cost of the contribution, rational donors will increase their contributions. Note that most taxpayers of modest means give to their churches and relief efforts such as the Red Cross. Wealthy donors tend to give to the ballet, symphony, medical research, and college endowments and athletics. Whether either is "charity" depends on your definition of charity. Of course, I guess many a libertarian would argue that it is better to have individual donors make decisions as to what is a worthy cause than have the government determine that through the budget process.
     
  6. Publius1787
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    Publius1787 Gold Member

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    Yeah, I don't think you answered my question either. If the government is refunding me for a donation to a charity then it is, in fact, blind government spending and not a charitable donation. And I don't think anyone in the middle class pay enough to charity to meet the cap. Nevertheless, Obama is offering more spending and tax increases, republicans are offering a reduction of spending and tax increases, and neither will amount to solving our debt.
     
    Last edited: Dec 11, 2012
  7. Wiseacre
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    Wiseacre Retired USAF Chief Supporting Member

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    You are assuming it is the gov'ts money in the first place, which it is not. If a person makes a charitable donation and gets a deduction, the gov't didn't pay for nothin'.
     
  8. g5000
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    g5000 Diamond Member

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    Every tax expenditure has a cost to the taxpayer.

    If you and I each earn $50,000 this year, say, and you get a deduction for one thing or another, I have to make up the difference. So while you get to keep more of your money, I have to cough up more of mine. I end up paying more of my money in taxes than you do.

    Tax expenditures need to be flat-out banned. They are extremely regressive.

    .
     
  9. Oldguy
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    Oldguy Senior Member

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    Good point.

    In any case, the charitable giving deduction (whatever you may call it) is simply an encouragement for giving. It's an expression of our Will that charities be given to. Giving is deeply embedded in our national psyche and The People, through their elected representatives, have decided it's a worthy enough undertaking to warrant encouragement in the form of a tax deduction.

    However, since it IS an expression of our Will, our Will may change over time and decide it's NOT worth a tax deduction. That's how our democracy works. The People are still supreme and The People will decide whether or not to continue the deduction.
     
  10. Koios
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    Koios Recreational Kibitzer

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    They do not refund you. It merely reduces your taxable income, possibly.
     

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