“I Like To Know What I’m Talking About Before I Speak”

Ditto, Ditto, Ditto, Kathy

Dorian

He shut them down. Good for him! His tenacity is palpable. His intelligence, evident. His poise, refined. He really does inspire hope and this itself may be the one thing that boosts confidence and jolts the DOW in the right direction. Not coming across as a jackass (see previous 8 years) could be the best asset this president can offer our nation. Plus he has a good team behind him, patriots all who want to see this country succeed where others before this team sold our country to the highest bidder and could give a fig about its solvency...obviously. I don't buy the incompetance argument. Cheney knew the potential damage of his agendas and went ahead anyway with a cut and run mentality about our solvency and national standing.

Oops I got carried away. Were we talking about Obama shutting down his critics? Well, Cheney is one of them. And OH how I wish he would shut that one down hard. For about 20 to life in the pokey.

While I agree with you on the "I want to know what I'm talking about line", I couldn't disagree more on the charitable giving question. Sure, if we live in la-la land where we all live on pixie dust, then the only motivating factor to give to charity is just to help charities. But if this were the case, there would be no reason to offer a tax incentive in the first place. The fact is that despite idealistic language about what should really motivate us to give, this tax policy will reduce the number of contributions to charities, which is not a good thing. Obama cannot wish that result away by pretending we live in an idealistic world.

As for whether it's fair that richer people get to deduct more from their taxes than the middle-class for the same contributions, that's just how a progressive tax system works. You can't have it both ways. You can't have a progressive tax system designed to put most of the tax burden on the rich (and I'm not arguing it shouldn't be that way), but then also argue that we should have deductions as if we have a flat-tax. Unless your definition of "fair" is whatever penalized rich people the most. The reason rich people benefit more by giving to charity is because they would have been taxed at a higher rate for that money otherwise. By giving to charity, the government does not consider that to be part of your income, which means it is deducted from the top of your income, which means you save whatever you would have paid on taxes on that amount. That seems perfectly fair to me.

As a fundraising professional for more than 30 years I can clearly state that while donative intent is important, the charitable deduction often affects not only the size but also the timing of a major gift. However, it is not at all surprising that President Obama would cap the charitable giving deduction given the paltry level of personal giving by Obama & Biden – they only know how to give away OPM (Other People’s Money).

He said that as things stood now, someone in his own income bracket making a charitable donation got a 39% tax deduction, whereas a bus driver making $50,000 or $40,000 a year only got 28%. “I don’t think that’s fair,” he said — and the starkness of the contrast to what we just left behind made my heart soar.

It made my stomach hurl. What's wrong with deductions being made at the same level you are already taxed? Obama is just pandering and looking for a back door way to raise taxes further.

“I don’t think that’s fair,” he said — and the starkness of the contrast to what we just left behind made my heart soar.

Class warfare is never so evident as it is today. It boggles the imagination that last year I gave 23,000 dollars to charity and yet I should be penalized for doing such. That bus driver gave 23 dollars. Or 230. Or hell Ill even grant him 2300 dollars. Now let me ask. Who do you think the receiving charity is going to appreciate more? Me or the bus driver?

This is NOT about I AM BETTER then the bus driver. This is about a charity that needs money........lots of money to do what it does. The more money they get the better they do what it is they do. Facts of life 101.

This is one more case of the far left communist nut cases bringing America farther left with rules and regulations. A couple of years ago we saw and learned that they realized the way to do this was not out shouting their opponents but rather to out legislate and regulate them.

Voilla. I present one example of many 1000's to follow.

Skaredykatt while I agree with most of your comment, Obama is neither a communist nor a nut case. That kind of rhetoric is not helpful.

The charitable deduction thing makes clear the ideological difference between liberals and conservatives on taxation and whose money it actually is that we're dealing with.

Conservatives see it as the taxpayers money which is given over to government, with wealthier earners paying not only more but a bigger percentage. Deductions are given to encourage certain behaviors- govt acknowledging that it would like to take less under certain circumstances if that taxpayer uses that money for a purpose that has a societal benefit.

The higher bracketed individual is not getting a sweet deal by being 'able to deduct 39 cents on the dollar as compared to the bus driver who only gets to deduct 28 cents on the dollar.' The money was the taxpayers money to begin with, and he chose to give it to a charity. He's not getting a payment from the government of the 39 or 28 cents, he's getting to keep his own money because of the decision he made to give it to a charity. The govt in effect subsidizes the charitable giving- chipping in either 28 cents or 39 cents while the taxpayer paid either 72 cents or 61 cents, respectively. The higher bracketed individual is not getting a net benefit from the higher deduction, he's just able to spread his charitable donations further because of the extra amount that the govt kicks in.

The fact that liberals don't see this as a big deal is reflective of their underlying assumption that wage earners aren't entitled to the money they earn, but instead the money belongs to the public except what they are permitted to keep. And truly, the reason that Obama and others seem to have little concern is that they're inclined to see govt as the solution to most social problems, not charity. So if there is a drop in charitable donations but a gain in federal tax revenue, they don't see this a problem- it's almost a feature, not a bug.

Charities don't have the resources to help enough even now with government programs. If the government programs went away as some conservatives would like to see, they would truly be overwhelmed and turning away even more people.

God forbid that charitable donations should be given for altruistic reasons.

It seems to me all the wealthy whiners about reducing their tax liability should consider their position a little more objectively. If you are in the 35% tax bracket, exactly what portion of your income comes from investments? That 15% capital gains tax is pretty sweet, isn't it? It's almost like charity for the wealthy.

The difference in the proposed charitable deduction is $110 per $1000. I'll gladly trade you that $110 for a fair taxation for you sitting on your assets.

Hemm, we generally set aside a certain percentage of our income for charitable donations. I don't do it to max out my deductions- in fact, we exceed the amount we're allowed to deduct every year.

However, of the part that we can deduct, the money will go farther if we get the deduction at the higher bracket rate vs. the lower. Our net ability to donate is lessened by our overall tax liability- so if we get less of a deduction, we are giving that net difference in value to Uncle Sam instead of the charities to which we donate.

Obama went on to point out that charitable giving is going to take a hit because of the economy itself- and that's part of my point too. We won't be able to squeeze out an extra amount above and beyond our taxes to increase our overall donations to make up for the part that went to taxes instead of donation, so overall, the charities will get a little bit less from us if this goes into effect. It's certainly not going to make or break any 501(c)3's for my own family to reduce donations by that amount, but when you multiply it I doubt it will be inconsequential.

CS

It sounds to me that your and my families are similar. As you said, you regularly exceed the amount deductible, and I assume this is because your awareness of need supercedes the financial ramifications to your tax bill. For me, it is a moral imperative. One of the posts states that this perspective is to "live in la-la land where we all live on pixie dust."

What I commented upon was the calculated intent seen in some of the posts. If you can pony up $23000 for charitable donations, congratulations, but don't tell me that a $2530 difference in your tax responsibility is onerous. You're just mad that your tax plan is upset.

Also, if you can give 23k, how much of your income came from investments? That 15% tax break is just for the wealthy. I guess you can call that a liberal vs conservative approach. Liberals think the wealthy should pay fairly and conservatives believe the wealthy should keep all their money. :)

>>Skaredykatt while I agree with most of your comment, Obama is neither a communist nor a nut case. That kind of rhetoric is not helpful.

Agreed. Skaredykatt was doing just fine in his argument, until he threw in the unnecessary and inaccurate namecalling. This is part of why people cannot take the far-right wing (and the far-left wing) seriously.

Stick to the facts, and leave the mudslinging out of it. If your argument is strong and sound, then it will stand on its own without the nastiness.

I am sorry.

Call me a cynic. But I do not believe that Americans' sense of commiseration, sense of compassion for their fellow human beings will be materially affected by a few percentage points of tax "deductability."

Damn the polls. Damn the statistics. I have a higher opinion of our country and its people.

Dorian

I don't know where you're getting those numbers from Hemm. By maxing out, I was talking about the point at which the itemized deductions gets phased out. I think we usually exceed that, but to be honest I have been outsourcing my tax return to an accountant for the past few years and I'm not certain. My point remains though that the deduction isn't some sort of holy grail that we seek with our charitable contributions- I just consider it a government 'matching' of sorts.

And the fact remains that yes, it may in fact be onerous for us to make up the difference, especially since our income may well take a hit, our retirement and college funds have taken huge hits, and we feel we have to build up an increased cash reserve to cover contingencies like job loss.

And all of you can tut tut about what people morally should do, but the fact is that Obama's policy should be based on reasonable assumptions about what people WILL do, not what we think they should in an ideal world. He claimed last night that research showed that this kind of policy wouldn't effect a downturn in donations, but that doesn't appear to be factual according to this.

Although there wasn't a direct citation, this appears to be the study referenced in that NPR article I linked to above.

I believe Obama's probably familiar with it because he seemed to cherry pick one part of its conclusion in his response last night, when he said studies show that economic downturn itself is a more direct cause of decreased giving than is a change in deductibility. However, that's a bit like saying that he agrees he's kicking the charities while they're down but it's OK because he wasn't responsible for them being knocked down to begin with. And it ignores the overall conclusion of the study which was summarized:

"Our estimates suggests that if these proposals had been in place in 2006, total itemized charitable giving by households would have dropped by 2.1 percent," said Patrick M. Rooney, Ph.D., interim executive director of the Center on Philanthropy. "Charities and the public need to understand that in the current economic environment, which is creating difficulty for some nonprofits and their constituents already, this public policy change is likely to have an additional negative effect. However, changes in personal income and wealth, both of which have declined in the past year, have a greater impact on charitable giving than do tax rate changes."

"Tax incentives do stimulate more giving," Rooney added, "and the challenges facing the nonprofit sector in 2009 suggest that this might be a good time to provide additional incentives, rather than reduce the value of the tax deduction for high income households, so that the donors with the greatest capacity to give have more reasons to do so."

For all the comments about "wealthy whiners" and implications of selfishness you get to keep the most money by not giving it to charity at all. The tax break just takes the sting out of it to an extent. I'm not talking about people setting up foundations to dodge taxes, I'm talking about the "average" high income taxpayer who wants to do good by giving to charity but also likes the tax break. If he were truly greedy he would just keep the money in the first place and pay the tax.

When the government wants to encourage an activity they give tax breaks, wen they want to discourage something they tax it or remove the tax break. Obama's action will discourage giving to an extent, it can't be portrayed any other way.

I think my analogy of a government matching contribution holds up pretty well. If you work at a company which matches your charitable contributions, imagine that they announce that due to budget considerations they will no longer be doing this (or their going to only match a smaller percentage.) You might still make the same amount of charitable contributions under those circumstances, but the charities involved will end up getting less. Are you going to increase your giving to make up the difference? Probably depends on both your motivation and your ability to give even more than you previously did- neither of which can be assumed to be likely to happen in the current economic climate.

CS

I simply thought I was agreeing with your earlier comment that you thought you were probably giving more than was economically justified from a tax point of view. The numbers I used, $23000 came from Skaredykatt 's post found above.

"Are you going to increase your giving to make up the difference? Probably depends on both your motivation "

I'm one who lives on pixie dust, remember, so my giving is based upon the need I see and not calculus of maximizing tax breaks.

Remember, this discussion was not how much one should give or does give. This was a discussion of how much of a tax credit you get for your gift. Complaining about the tax credit is not the same as discussing the gift.

Oh, I see- I guess I had skimmed past Skaredycat's comment with the numbers. ;)

But what I'm trying to point out is that although some people may be capable of making up the difference with their giving if they're so motivated, some of us might not be ABLE to do so (not a question of whether we think the need is there, but a question of making sure our household is taken care of so that we ourselves won't need the charitable services down the line) and then some of the truly wealthy who probably could give more just might not be motivated (some people really do see it more as a reduction of their tax liability- I don't think that's an honorable position to take but we should look at reality, not a utopian idea of what people will do.)

CS
We give by our perception based upon our capability, of course in uncertain economic times, one must look first to care for one's family. I believe you and I see charity in the same light.


My other comments were a criticism of those who wanted to pose the question of giving in disingenuous terms.

If you give a $1000, the charity receives a $1000.
The fact you receive $110 less tax break is hypocritical. Are you now going to give less because of the lessened tax break? If you give $28k, wonderful. But don't threaten to give less for a measly $2350 tax break difference.

Those with the increased capability still need to give the same amount. The difference is a matter of cheapness.

If you give a $1000, the charity receives a $1000.

No, not really- currently, for every $650 that I give the charity gets $1000 and with the proposed change, I would need to pay a net $720 for the charity to get the $1000.

For the sake of easy calculations (and because I'd rather not be more specific) let's say we typically write checks that total $10,000. That actually means we're paying $6500 out of pocket. We'd then have to increase that to $7200 to keep apace. That may seem like an insignificant amount to you, but if we're already having to cut our budget overall for everything in order to increase cash reserves, we may not be able to do it. And as I started off saying, that $1200 difference isn't going to force any charity out of existence but when multiplied across all families like mine it could certainly start to put the hurt on organizations that are already often operating on a shoestring budget.

This policy would compound the existing problem of everyone having to tighten their belts, is all I'm saying. Sure, the very wealthy shouldn't have any problem making up the shortfall, but people like myself are in a gray area where we give a pretty reasonable amount but can't necessarily find more to give.

I'm one who lives on pixie dust, remember, so my giving is based upon the need I see and not calculus of maximizing tax breaks.

The clarify, my comment about "pixie dust" was referring to people who believe donations will not decrease due to the tax policy change, not people for whom the tax policy makes no difference. There is a difference between saying that it will affect charitable donations, and saying that it will affect my charitable donations.

I agree with CStanley here. It is not some "calculus of maximizing tax breaks" that's at work here. Like DaGoat said, the greediest thing to do of all is not give to charity at all, regardless of the tax policy. There is no net economic benefit to give to charity, so wanting to do good is the primary motivating factor to give to charity. No one is questioning that.

The fact is that the larger the tax break, the more one can afford to give to charity, because the government is subsidizing the donation. It has little to do with greed vs. charity. It just economics.