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Tax credit for charitable donations?

Tax credit for charitable donations?


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Kandahar

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I'm just brainstorming here...this idea just popped into my head a couple hours ago, so it's probably not completely thought-out. Maybe you folks can tell me the flaws with this plan (or if you like it).

Conservatives often say that government social programs are not as efficient as private charities. Liberals often counter that while that may be true, there simply aren't enough charitable donations, and we need taxes to compel people to give. I was thinking that maybe there is a way to combine the strengths of both ideas.

Currently, charitable donations in the United States are treated as TAX DEDUCTIBLE. This means that for every $1 you spend on charity, your tax burden is lowered by 10 to 35 cents (depending on your tax bracket). What if instead you received a TAX CREDIT for charitable donations? This would mean that for every $1 you spend on charity, your tax burden would be lowered by $1.

As I see it, most people would choose to give their ENTIRE tax burden to charity rather than to the government. Thus, private charities would be able to more efficiently allocate the resources than government social programs, and people would still be compelled to give back to society. Obviously there would need to be some exceptions for things that the non-profit sector CAN'T handle (e.g. military, police, courts, administrative) that would still need to be taxed.

I'm wondering what you guys think of the idea. Please point out any reasons it wouldn't work and/or ways that it could work even better.
 
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rathi

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The biggest flaw is that money is not going to end up in places where it is needed. For example, the sewage treatment charity is going to bemassively underfunded, while the save cute animals group is going to have more money than it could ever need. The public is far too easily manipulated and would inevitably send all their money to trendy and popular causes while ignoring vital ones.
 

Kandahar

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The biggest flaw is that money is not going to end up in places where it is needed. For example, the sewage treatment charity is going to bemassively underfunded, while the save cute animals group is going to have more money than it could ever need. The public is far too easily manipulated and would inevitably send all their money to trendy and popular causes while ignoring vital ones.
That's definitely a problem...however, I think Congress is quite adept at misallocating money as well (e.g. too much to agriculture subsidies, not enough to economic stimulus).

I was thinking of applying it more to social programs (e.g. social security, Medicare, unemployment insurance, food stamps, non-military foreign aid) that typically benefit people in need. What if people could allocate their social program taxes to a charity of their choice, and they still paid taxes as normal for public services like sewage treatment?
 
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rathi

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That's definitely a problem...however, I think Congress is quite adept at misallocating money as well (e.g. too much to agriculture subsidies, not enough to economic stimulus).
True, but but is more the magnitude at which congress plays with money. The rely on the fact that the federal budget is so large that skimming off a few million here or there won't noticed among a budget of trillions. They might take 5% of the sewage treatment budget for some pork project in their district, but they are mindful that taking too much will break the system and draw attention to their misdeeds.

I was thinking of applying it more to social programs (e.g. social security, Medicare, unemployment insurance, food stamps, non-military foreign aid) that typically benefit people in need. What if people could allocate their social program taxes to a charity of their choice, and they still paid taxes as normal for public services like sewage treatment?
So what, a charity just springs up over night complete with the organizational system that is capable of handling the healthcare needs for millions of seniors? The odds that a private charity will instantly form for every basic social need, be well organized enough to handle the issue, and somehow receive enough funding every year despite a completely random revenue stream are terrible. Maintaining stability is a primary benefit of social programming, and you undermine that motive by making the system so chaotic.
 

Gipper

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I support it wholeheartedly - to an extent. Rathi does show a clear market failure when funding is given power to the giver instead of the taker. We need some level of taxation to ensure the services that most of us take for granted are still allocated to the general populace. However, I would like to see more private charity incentivization through the use of a pure credit. This way, you can make it as close to a la carte as humanly possible, like maybe you'd rather see money go to the United Way than freely given to Israel.

Tax money should go to national defense, infrastructure, and a few other public goods that clearly cannot be compensated through the private sector. Everything else, let the people decide how their money is spent.
 

MaggieD

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I'm just brainstorming here...this idea just popped into my head a couple hours ago, so it's probably not completely thought-out. Maybe you folks can tell me the flaws with this plan (or if you like it).

Conservatives often say that government social programs are not as efficient as private charities. Liberals often counter that while that may be true, there simply aren't enough charitable donations, and we need taxes to compel people to give. I was thinking that maybe there is a way to combine the strengths of both ideas.

Currently, charitable donations in the United States are treated as TAX DEDUCTIBLE. This means that for every $1 you spend on charity, your tax burden is lowered by 10 to 35 cents (depending on your tax bracket). What if instead you received a TAX CREDIT for charitable donations? This would mean that for every $1 you spend on charity, your tax burden would be lowered by $1.

As I see it, most people would choose to give their ENTIRE tax burden to charity rather than to the government. Thus, private charities would be able to more efficiently allocate the resources than government social programs, and people would still be compelled to give back to society. Obviously there would need to be some exceptions for things that the non-profit sector CAN'T handle (e.g. military, police, courts, administrative) that would still need to be taxed.

I'm wondering what you guys think of the idea. Please point out any reasons it wouldn't work and/or ways that it could work even better.
I think it's a positively AWFUL idea.

#1 -- That tax credit is YOUR/OUR money.
#2 -- The government will not be short-changed, for heaven's sake. Taxes will just be raised in other areas to compensate.

I can't understand what in the world you're thinking.
 

roguenuke

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I misunderstood the question. I didn't read it right until after I voted. I don't think this is a good idea. There are plenty of people who are just barely making it themselves, who cannot afford to give how much they owe in taxes to charity. But there are a lot of rich people who would give to the charity of their choosing, which may not actually help society as a whole. And the government still has to be paid for. I don't see that happening if the majority of people are giving to charity. Military operations cannot be paid for through charity. Education cannot be completely paid for through charity. There are many other examples of things the government does that can't be paid through charity.
 

tacomancer

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I think its a good idea as long as there is an upper limit to it. If not, than expect government debt to go way up. Plus a good number of charities are pretty much useless.

One other thing is that it would definitely have to be a charity and not simply a nonprofit.
 
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Harry Guerrilla

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This kinda thing can be crappy.

When I was younger and Dvd players had really started to hit the market, I went to the salvation army, where I had a friend who worked there.
Someone had dropped off a couple of almost brand new DVD players, in my excitement I picked them up for a song, only to find out that they were both broken.

The dude gave them for charitable reasons and as a tax write off.
 

Kandahar

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#1 -- That tax credit is YOUR/OUR money.
So?

MaggieD said:
#2 -- The government will not be short-changed, for heaven's sake. Taxes will just be raised in other areas to compensate.
Not necessarily. If private charities had more money, it would reduce the need for some government social programs (and thus reduce the need to tax).

MaggieD said:
I can't understand what in the world you're thinking.
Just a brainstorm...chill out.
 

Kandahar

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I misunderstood the question. I didn't read it right until after I voted. I don't think this is a good idea. There are plenty of people who are just barely making it themselves, who cannot afford to give how much they owe in taxes to charity.
I meant that they would be giving it to charity INSTEAD of to the government...not in addition.

roguenuke said:
And the government still has to be paid for. I don't see that happening if the majority of people are giving to charity. Military operations cannot be paid for through charity. Education cannot be completely paid for through charity. There are many other examples of things the government does that can't be paid through charity.
What if it was just limited to the types of things that charities typically DO fund (e.g. anti-poverty initiatives, health care, foreign aid, housing, food, etc), and government still taxed people enough to provide the basic public services (e.g. military, education, infrastructure, etc)?

I don't know if it would work...just a thought. Some of those programs probably require more coordination than others.
 
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MaggieD

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So....it's just another way of redistribution of wealth.

Not necessarily. If private charities had more money, it would reduce the need for some government social programs (and thus reduce the need to tax).
Our taxes are never going to be reduced. If you think government has any intention of becoming smaller, no matter WHAT we do, you're wrong.

Just a brainstorm...chill out.
Whew. I thought you'd been elected to Congress., ;-)
 

Kandahar

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So....it's just another way of redistribution of wealth.
I don't believe I said it wasn't...or that I even view "redistribution of wealth" as a problem in the first place. I'm confused as to what your point is. Are you saying redistribution of wealth is bad? If so, how is it related to this idea? This doesn't increase anyone's tax burden, it just changes who is receiving the money.

MaggieD said:
Our taxes are never going to be reduced. If you think government has any intention of becoming smaller, no matter WHAT we do, you're wrong.
That's mainly because people recognize that certain problems need funding to solve them, and at the present time, government is the only viable vehicle to fund them. That's not necessarily unchangeable though. By making charities a viable vehicle to fund anti-poverty initiatives (for example), it would reduce the need for government to do so.
 

TurtleDude

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I support it wholeheartedly - to an extent. Rathi does show a clear market failure when funding is given power to the giver instead of the taker. We need some level of taxation to ensure the services that most of us take for granted are still allocated to the general populace. However, I would like to see more private charity incentivization through the use of a pure credit. This way, you can make it as close to a la carte as humanly possible, like maybe you'd rather see money go to the United Way than freely given to Israel.

Tax money should go to national defense, infrastructure, and a few other public goods that clearly cannot be compensated through the private sector. Everything else, let the people decide how their money is spent.
I fully support complete tax deductions for charitable giving. If you have 200K in income and you give 100K away its rotten that you should be taxed at 200K or even 150K when your income is actually 100K after the giving. Of course the obamunists want to make you pay some taxes on income you do not have--charity is anathema to the hard left

and I note that a recent study found that conservatives give more to secular (and of course religious) charities than similarly situated liberals and when liberals give its often to think tanks that study poverty and advocate more socialism rather than to institutions that actually help people (such as the Shriners, the Red Cross, etc)
 

rathi

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and I note that a recent study found that conservatives give more to secular (and of course religious) charities than similarly situated liberals and when liberals give its often to think tanks that study poverty and advocate more socialism rather than to institutions that actually help people (such as the Shriners, the Red Cross, etc)
You can find "studies" that show liberals/conservatives/libertarians/atheists/Druids are of course more generous than the evil other guys. It is nothing more than a pathetic exercise in ego stroking.
 

Kandahar

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and I note that a recent study found that conservatives give more to secular (and of course religious) charities than similarly situated liberals and when liberals give its often to think tanks that study poverty and advocate more socialism rather than to institutions that actually help people (such as the Shriners, the Red Cross, etc)
And this is relevant to the topic of this thread...how?
 

TurtleDude

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You can find "studies" that show liberals/conservatives/libertarians/atheists/Druids are of course more generous than the evil other guys. It is nothing more than a pathetic exercise in ego stroking.
conservatives aren't the ones trying to get rid of charitable contributions by ending tax breaks

conservatives push charities, liberals push government
 

TurtleDude

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And this is relevant to the topic of this thread...how?
its relevant because some want to end tax deductions for charitable giving and that was one of the choices

you did read the poll didn't you?
 

Kandahar

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its relevant because some want to end tax deductions for charitable giving and that was one of the choices
I didn't ask anything about whether liberals or conservatives donate more money. Can you make it through a single post without being a partisan hack?

TurtleDude said:
you did read the poll didn't you?
It's my poll, dip****.
 

TurtleDude

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I didn't ask anything about whether liberals or conservatives donate more money. Can you make it through a single post without being a partisan hack?



It's my poll, dip****.
No Sh1t sherlock

that's why I asked

remember, I ask questions I already know the answer to

and speaking of partisan hacks
 

Kandahar

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No Sh1t sherlock

that's why I asked

remember, I ask questions I already know the answer to

and speaking of partisan hacks
The question is about whether making charitable donations a tax credit would be a good idea from a policy standpoint. Not about whether liberals or conservatives give more money to charity. If you want to start a thread on that topic, go do it somewhere else and let the grown-ups talk about the subject at hand.
 

TurtleDude

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The question is about whether making charitable donations a tax credit would be a good idea from a policy standpoint. Not about whether liberals or conservatives give more money to charity. If you want to start a thread on that topic, go do it somewhere else and let the grown-ups talk about the subject at hand.
Oh I see, you are a grown up because you are a liberal and I am not because I don't buy into that illness

OK

but its a great idea to allow tax deductions for charitable contributions because tax deductions LESSEN THE COST OF CONTRIBUTIONS and when you LESSEN THE COST OF SOMETHING you tend to increase people engaging in that activity
 

Kandahar

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Oh I see, you are a grown up because you are a liberal and I am not because I don't buy into that illness
Nope, I'm a grownup because I often post threads about policy ideas to get critiques from reasonable people, and offer my own thoughts on political policies that others advocate. Whereas all of your posts consist of bitching about "Obamunists" and "the hard left" and "liberal illness" and whatnot.

TurtleDude said:
but its a great idea to allow tax deductions for charitable contributions because tax deductions LESSEN THE COST OF CONTRIBUTIONS and when you LESSEN THE COST OF SOMETHING you tend to increase people engaging in that activity
Well actually I was talking about making tax deductions into tax credits (which would be even better from the taxpayers' perspective), but close enough. At least you're actually discussing the topic now. ;)

I agree, I think we'd see a lot more charity if people could get tax credits for their contribution. Rathi and Gipper raise valid concerns about questioning whether people are capable of allocating the money effectively, noting the need for an exception for public services.

I'd want to phase it in slowly to see what happens rather than doing it all at once.
 
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MaggieD

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I don't believe I said it wasn't...or that I even view "redistribution of wealth" as a problem in the first place. I'm confused as to what your point is. Are you saying redistribution of wealth is bad? If so, how is it related to this idea? This doesn't increase anyone's tax burden, it just changes who is receiving the money.
We have quite enough redistribution of wealth, thank you. It's not bad....it's overwhelming our budget. My point is that if people want to give to charity, let them give to charity and take the tax deduction...not receive a full tax credit for doing so. There's nothing hard to understand about that. Our taxes will not go down....they will go up exactly proportionately to the taxes the government loses by allowing this hair-brained idea, should you ever get elected. ;-)

That's mainly because people recognize that certain problems need funding to solve them, and at the present time, government is the only viable vehicle to fund them. That's not necessarily unchangeable though. By making charities a viable vehicle to fund anti-poverty initiatives (for example), it would reduce the need for government to do so.
The government would be funding them through tax credits. Another political football.
 

Kandahar

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We have quite enough redistribution of wealth, thank you. It's not bad....it's overwhelming our budget. My point is that if people want to give to charity, let them give to charity and take the tax deduction...not receive a full tax credit for doing so. There's nothing hard to understand about that. Our taxes will not go down....they will go up exactly proportionately to the taxes the government loses by allowing this hair-brained idea, should you ever get elected. ;-)
I'm not following your logic...You're saying that wealth redistribution is overwhelming the budget, but there is no hope at ever changing that and therefore this is a bad idea? :confused:

MaggieD said:
The government would be funding them through tax credits. Another political football.
The government wouldn't get to decide where the money went. Each individual could give to a charity (or multiple charities) of his/her choice, and just write it off their taxes. It couldn't be a political football if the government had no control over it.
 
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