Charities Fight to Keep Tax Break on Donations

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    Nov 30, 2012 4:41 PM GMT
    http://online.wsj.com/article/SB10001424127887324020804578149361607469612.html?mod=googlenews_wsj

    Americans will pay roughly $40 billion less in taxes in 2012 due to the charitable deduction they take, according to Congress's Joint Committee on Taxation. That could be hard for lawmakers and the White House to ignore as they search for ways to cut future deficits.

    There is no specific plan to eliminate deductions for charitable giving in current talks. Instead, proposals that have been floated focus on capping overall deductions.

    The White House in the past has proposed limiting deductions to no more than 28% of income for families making $250,000 or more. Republicans including former presidential nominee Mitt Romney have suggested limiting deductions to a specific dollar amount. Others have suggesting a "haircut" option, letting taxpayers claim, for example, 80% of their current deductions.


    http://www.economist.com/node/21556570

    Different types of donors favour different things. Rich American donors give a lot less to religions than less-well-off ones do. Instead, “Taxpayers with incomes over $1m tend to favour higher education, health, and the arts,” notes Charles Clotfelter, an economist at Duke University, in a recent paper.

    The American tax system, he points out, “gives the wealthiest taxpayers a disproportionate role in allocating public resources.” In 2008, individual Americans with incomes over $500,000 (who make up less than 1% of taxpayers) accounted for 18% of all income and made almost a quarter of all charitable donations. By contrast, the two-thirds of taxpayers with incomes under $50,000 earned about 20% of total income and made about 20% of all donations. In 2006 taxpayers with incomes over $100,000 received 76% of the total $40.9 billion tax subsidy due to the charitable deduction, although they made only 57% of all donations; those with incomes of less than $50,000 received a mere 5% of the subsidy, despite making one-fifth of all charitable donations.

    This unfairness costs a lot of money and in some cases, at least, makes little difference. Warren Buffett recently told The Economist that tax concerns were largely irrelevant to his giving, and that he thinks the same is true of many of his super-rich peers. “I gave $2 billion last year and saved almost $2m in tax.” The “plutocratic bias” also tends to argue against the pluralism case for tax incentives, in that it overpopulates civil society with organisations friendly to, and aligned with, the interests of the wealthy.
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    Nov 30, 2012 5:16 PM GMT
    Every group that benefits from deductions is getting their lobbyists involved. From banking and construction opposing any cuts to deductions on mortgage interest rates or cuts on deductions from refinancing points, to charities, to health insurance companies and providers opposing cuts to deductions for health insurance premiums, to higher education expenses, and so on. Who's ox gets to be gored? Even if Congress doesn't pick which exact deductions to eliminate, opting instead to just have a cap on deductions, all groups and JOBS that benefit now from the deductions will be negatively affected.
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    Nov 30, 2012 5:21 PM GMT
    sfbayguy saidEvery group that benefits from deductions is getting their lobbyists involved. From banking and construction opposing any cuts to deductions on mortgage interest rates or cuts on deductions from refinancing points, to charities, to health insurance companies and providers opposing cuts to deductions for health insurance premiums, to higher education expenses, and so on. Who's ox gets to be gored? Even if Congress doesn't pick which exact deductions to eliminate, opting instead to just have a cap on deductions, all groups and JOBS that benefit now from the deductions will be negatively affected.


    Why not eliminate them all instead of the crony capitalism?
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    Nov 30, 2012 6:09 PM GMT
    riddler78 said
    sfbayguy saidEvery group that benefits from deductions is getting their lobbyists involved. From banking and construction opposing any cuts to deductions on mortgage interest rates or cuts on deductions from refinancing points, to charities, to health insurance companies and providers opposing cuts to deductions for health insurance premiums, to higher education expenses, and so on. Who's ox gets to be gored? Even if Congress doesn't pick which exact deductions to eliminate, opting instead to just have a cap on deductions, all groups and JOBS that benefit now from the deductions will be negatively affected.


    Why not eliminate them all instead of the crony capitalism?

    You just posted an article about the benefits of deductions on charitable donations, and now you want to get rid of all deductions? And what about deductions on children and retirement accounts and other things I didn't mention? I agree that we shouldn't be giving people mortgage interest deductions on people's second mansions, but you really don't see a problem with getting rid of all of these deductions? MILLIONS of middle class homeowners depend on the mortgage interest deduction. If we get rid of it, are we prepared for all the foreclosures and loss of property values? Do we really want another housing collapse like in 2008? Maybe going forward we can get rid of the deduction, but getting rid of it outright for existing middle class homeowners would be an economic disaster.
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    Nov 30, 2012 6:16 PM GMT
    sfbayguy said
    riddler78 said
    sfbayguy saidEvery group that benefits from deductions is getting their lobbyists involved. From banking and construction opposing any cuts to deductions on mortgage interest rates or cuts on deductions from refinancing points, to charities, to health insurance companies and providers opposing cuts to deductions for health insurance premiums, to higher education expenses, and so on. Who's ox gets to be gored? Even if Congress doesn't pick which exact deductions to eliminate, opting instead to just have a cap on deductions, all groups and JOBS that benefit now from the deductions will be negatively affected.


    Why not eliminate them all instead of the crony capitalism?

    You just posted an article about the benefits of deductions on charitable donations, and now you want to get rid of all deductions? And what about deductions on children and retirement accounts and other things I didn't mention? I agree that we shouldn't be giving people mortgage interest deductions on people's second mansions, but you really don't see a problem with getting rid of all of these deductions? MILLIONS of middle class homeowners depend on the mortgage interest deduction. If we get rid of it, are we prepared for all the foreclosures and loss of property values? Do we really want another housing collapse like in 2008? Maybe going forward we can get rid of the deduction, but getting rid of it outright for existing middle class homeowners would be an economic disaster.


    There are many countries out there without the mortgage interest deduction - why should government favor one industry over another? I think it makes sense to phase it out over time - why do you suppose real estate bubbles are so pronounced in the US?

    These subsidies to buy real estate despite the fact it resulted in the financial collapse is crazy. I think a phasing out would make sense but given the people who really benefit from the deduction aren't the poor it would seem an easy target for elimination and reallocation of resources.

    This is how it starts - 'yeah let's eliminate everyone else's subsidies but keep the ones that benefit me'...
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    Nov 30, 2012 7:03 PM GMT
    riddler78 said
    sfbayguy said
    riddler78 said
    sfbayguy saidEvery group that benefits from deductions is getting their lobbyists involved. From banking and construction opposing any cuts to deductions on mortgage interest rates or cuts on deductions from refinancing points, to charities, to health insurance companies and providers opposing cuts to deductions for health insurance premiums, to higher education expenses, and so on. Who's ox gets to be gored? Even if Congress doesn't pick which exact deductions to eliminate, opting instead to just have a cap on deductions, all groups and JOBS that benefit now from the deductions will be negatively affected.


    Why not eliminate them all instead of the crony capitalism?

    You just posted an article about the benefits of deductions on charitable donations, and now you want to get rid of all deductions? And what about deductions on children and retirement accounts and other things I didn't mention? I agree that we shouldn't be giving people mortgage interest deductions on people's second mansions, but you really don't see a problem with getting rid of all of these deductions? MILLIONS of middle class homeowners depend on the mortgage interest deduction. If we get rid of it, are we prepared for all the foreclosures and loss of property values? Do we really want another housing collapse like in 2008? Maybe going forward we can get rid of the deduction, but getting rid of it outright for existing middle class homeowners would be an economic disaster.


    There are many countries out there without the mortgage interest deduction - why should government favor one industry over another? I think it makes sense to phase it out over time - why do you suppose real estate bubbles are so pronounced in the US?

    These subsidies to buy real estate despite the fact it resulted in the financial collapse is crazy. I think a phasing out would make sense but given the people who really benefit from the deduction aren't the poor it would seem an easy target for elimination and reallocation of resources.

    This is how it starts - 'yeah let's eliminate everyone else's subsidies but keep the ones that benefit me'...

    I don't care if every other country on the planet didn't have mortgage deductions. The problem is that in the US, we ALREADY DO and have for a long time. And people already depend on it. Putting the toothpaste back into the tube is very difficult. But phasing it out slowly over time is not totally objectionable. But that wouldn't really help deal with our current budget deficit.

    And deductions on mortgage interest rates were NOT the reason for the 2008 financial collapse.

    "This is how it starts - 'yeah let's eliminate everyone else's subsidies but keep the ones that benefit me'..." That's pretty much what I was saying in my first response to your post in this topic. Once we start making exceptions.... It's a problem.
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    Nov 30, 2012 7:40 PM GMT
    sfbayguy -

    In case you haven't noticed it yet, riddler doesn't care about anyone who isn't among the wealthiest or fits within his narrow definition of "entrepreneur".

    Because of his apparent privilege, he would like the US to be a Hobbesian nightmare where financial might makes right and all the serfs beg for scraps. Of course, he would not live here - as he doesn't know - but would enjoy having non-Chinese labor to exploit.

    It's the sad outcome of a sociopathic belief system and a relative amount of privilege that's prevented him from ever being hungry.

    It's why I don't engage him anymore.
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    Dec 01, 2012 4:23 PM GMT
    sfbayguy saidI don't care if every other country on the planet didn't have mortgage deductions. The problem is that in the US, we ALREADY DO and have for a long time. And people already depend on it. Putting the toothpaste back into the tube is very difficult. But phasing it out slowly over time is not totally objectionable. But that wouldn't really help deal with our current budget deficit.

    And deductions on mortgage interest rates were NOT the reason for the 2008 financial collapse.

    "This is how it starts - 'yeah let's eliminate everyone else's subsidies but keep the ones that benefit me'..." That's pretty much what I was saying in my first response to your post in this topic. Once we start making exceptions.... It's a problem.


    Except it would help with the budget deficit if say phased out over 7 years. Deductions on mortgage interest rates contributed to the asset bubble whose deflation *was* the reason for the 2008 financial collapse. There are however a lot of things that contributed to that asset bubble.
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    Dec 01, 2012 4:24 PM GMT
    Christian73 saidsfbayguy -

    In case you haven't noticed it yet, riddler doesn't care about anyone who isn't among the wealthiest or fits within his narrow definition of "entrepreneur".

    Because of his apparent privilege, he would like the US to be a Hobbesian nightmare where financial might makes right and all the serfs beg for scraps. Of course, he would not live here - as he doesn't know - but would enjoy having non-Chinese labor to exploit.

    It's the sad outcome of a sociopathic belief system and a relative amount of privilege that's prevented him from ever being hungry.

    It's why I don't engage him anymore.


    Christian - given that you are such a large beneficiary of government largesse and exceptions to regulations, it's little wonder that you don't engage on many of these issues. Like meninlove you do seem to play fast and loose with the facts and are apparently entirely ignorant of my personal views.
  • HottJoe

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    Dec 01, 2012 5:12 PM GMT
    I haven't been on RJ in a month.... now I remember why.icon_rolleyes.gif
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    Dec 01, 2012 6:07 PM GMT
    riddler78 said
    Christian73 saidsfbayguy -

    In case you haven't noticed it yet, riddler doesn't care about anyone who isn't among the wealthiest or fits within his narrow definition of "entrepreneur".

    Because of his apparent privilege, he would like the US to be a Hobbesian nightmare where financial might makes right and all the serfs beg for scraps. Of course, he would not live here - as he doesn't know - but would enjoy having non-Chinese labor to exploit.

    It's the sad outcome of a sociopathic belief system and a relative amount of privilege that's prevented him from ever being hungry.

    It's why I don't engage him anymore.


    Christian - given that you are such a large beneficiary of government largesse and exceptions to regulations, it's little wonder that you don't engage on many of these issues. Like meninlove you do seem to play fast and loose with the facts and are apparently entirely ignorant of my personal views.


    Nope. I have a very firm grasp on your views, repugnant as they are.

    And I'm not nearly as large a beneficiary of the government as a member of the Walton family, or Jamie Dimon, or Lloyd Blankfein.

    Of course, I don't have any "exceptions" to government regulations, so I'll assume that's your typical play to argue against a strawman. icon_lol.gif