Buying a herd of goats for a village in Africa is useful and its charity.
It depends. If you are a crazy cat lady and you have a lot of pets and you organize an animal shelter so you can deduct all the cat food and pet care items you buy, then you are not donating money to a charity. If you donate money to a charity that you are otherwise not associated with, then that is pretty clearly charity.
Feeling good is not what I think disqualifies a donation from being charity. Deriving other benefits is what disqualifies it from being charity.
Well, then we agree. Perhaps I should clarify why I am ranting. My neighbor buys all her daughter’s girl scout cookies so that her daughter doesn’t have to go around trying to sell them and then she acts like she is engaging in charity.
I think they are limited to deducting the price they paid (and even that can be challenged if the comics were worth significantly less than what the comic store paid for them).
Otherwise every business would max out their charitable giving every year with in-kind donations of some horribly marked up item.
Its not taxing them on charity, its taxing them on income and telling them that charity like most other forms of spending is done with after tax income.
Because the charitable deduction is not an above the line deduction. If you do not itemize (you take the standard deduction), then your charitable giving is not deductible.
65% of taxpayers do not itemize. This same 65% donates a larger percentage of their income than the other 35% that do itemize.
If I donate a million dollars to my local art museum, I am essentially getting the federal government to subsidize the local art museum $350,000. But when the average American donates money to NPR, they don’t get a tax deduction and are effectively supporting NPR with after tax dollars.
About a third of Americans itemize deductions vs about 5% who file for AMT.
I’m not anti-charity, I just think people should pay for their charitable spending. If someone gives their church, or a scout troop, or whoever else got the Secretary of State’s office to approve their application, $1000, great. But that gift should cost them $1000, not cost them $750 and everybody else a share of the remainder.
When my daughter sold cookies, I’d buy all the troop extras (they used to sell them only by the case to the troops - and you always had extras - if you had a late cookie booth, you could, and I did, get stuck with cases of cookies) and donate them to the food shelf.
Granted, we also bought cookies to hang onto - those were not vaguely charitable - well, except that I almost never buy cookies, so I was doing something I normally don’t normally do to support Scouts. But Second Harvest would usually get three or four cases of cookies.
I never buy wreaths at Christmas time, I think they are a waste of money - except for several years when a friend was running an inner city Boy Scout troop for disadvantaged immigrant kids - then I bought wreaths. Was that charitable?
No one would have to care whether other people thought their donations were charitable, or self-serving, or supporting worthy or reprehensible causes, if those donations were never tax-deductible, and always anonymous.
But you’d have a lot fewer donations. Arts organizations might need to shutter. Food banks would have less food. Women’s shelters wouldn’t be able to provide necessities.
And then, those needs - if they are needs - would get filled in by something else - tax dollars. Maybe we don’t need arts organizations if they aren’t self supporting - the ones that aren’t can disappear - but we do need food banks and women’s shelters - or something to fill those needs. Unless you think that Ayn Rand’s ideas are the epitome of civilization.
The AMT might kick in but that does not eliminate the tax incentive for charitable donations.
To grossly simplify things, the AMT sets a floor effective rate that you cannot go below through the use of itemized deductions. So the top marginal tax rate is 39.6%. You cannot use itemized deductions to reduce your EFFECTIVE tax rate below 28%. However there are some things that aren’t counted against you in this calculus. Charitable deductions is one of them.
"AMT may be avoided by staying out of the $150,000 to $415,000 income range.[79] For example, a taxpayer might be better off realizing a $1 million capital gain all in one year rather than dividing it into two or three years.
For taxpayers who owe AMT, IRA (Individual Retirement Account)/Qualified plan contributions, charitable deductions and home mortgage interest (but not “hard money” refinancing interest) are especially valuable. They reduce tax liability by the full TMT effective marginal rate of 32.5% or 35% (for those in the AMT exemption phase-out range)[80] plus the full state income tax marginal rate.[81] This may be quite a bit better than under the regular tax.[82]
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The charitable deductions along with prefere4ntial capital gains and dividend rates really are good for everyone in theory but really mostly good for the rich in practice.
Its the secretary of Treasury. The secretary of state is supposed to approve pipelines being built by people who donate to their charitable foundation (see how I bring it back to charity?).
Buying the cookies was not charitable. You were supporting your daughter’s girl scout troop. Giving them to the food pantry was more charitable. It is about as charitable as giving your old coats and sweaters to the homeless shelter.
Right now, private individuals are directing the spending of tax revenue through the charitable deduction. We have federal programs (like SNAP and WIC) to deal with the vast majority of food need. We have federal programs to fund women’s shelters (Violence Against Women Act). Sure charitable donations are useful to making these places a but this is part of the civilized society we are buying with our taxes.
If anonymity or not being able to lay off part of the cost of his/her gift is a deal-breaker for someone, then they will donate less, no doubt, but perhaps then there’s a better word for the transaction than “charity.” Women’s shelters and aid to the poor/disadvantaged should be paid for with taxes and whatever additional contributions individuals want to make-at their own expense. But deciding to sponsor the upcoming ballet season, or buying a new wing for one’s church, or any other deductible cause, shouldn’t be allowed to affect the amount of tax dollars allocated through democratic process. How anyone could conflate this with Ayn Rand is beyond me.
Because the boys are supposed to be learning something about business. Sales for kids organizations should be teaching skills and concepts (like profit margin and cost of good sold) in addition to just raising money.
But also as a civilized society, we’ve decided to underfund these and encourage altruism through a charitable deduction on our taxes. As a government, we have often argued that private charities do a better job with some of these populations than the government can.
(Personally, I don’t believe that, I’d like to see the government fund these things with tax dollars - but until the government steps in to buy my local museum art, refresh the Science museum and fully funds the local food shelf, its what we’ve got).
The Secretary of Treasury is the one that approves their status as a charitable organization to whom you can make tax deductible contributions. I don’t really think anyone gives a shit whether a state approves an organization as a non-profit.