Suck it rich people (or Suck it poor people)

March 25, 2009

Is Obama helping or hurting people in need? Does the government get more or less money? According to this, it’s a bad deal all around.

President Obama’s proposal to limit the tax deductibility of charitable contributions would effectively transfer more than $7 billion a year from the nation’s charitable institutions to the federal government. But the high-income taxpayers affected by the rule change are likely to cut their charitable giving by as much as the increase in their tax bills, which would, ironically, leave their remaining income and personal consumption unchanged.

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9 Responses to “Suck it rich people (or Suck it poor people)”

  1. superdave524 Says:

    Disallowing charitable deductions? I agree with you on this one, John. I don’t like that idea a bit. Adding “for the wealthy” doesn’t add anything to the conversation. As little love as I have for AIG’s executives, I don’t favor the 90 per cent tax rate on their bonuses, either. Deductions for charitable giving and hiking the rate of taxation on a very small category of income are both examples of using the tax code to promote public policy, as opposed to merely collecting revenue. I don’t have a problem with deductions for charitable giving, because it encourages charitable giving. Rich people have more money, and charities benefit more from rich people. Charities can be contrived to forment fraud (e.g. “Save the Dave”. I might need help, but I shouldn’t expect contributions to me to be tax deductible. I’m just gonna waste the money anyhow), but the focus there ought to be on the tax exempt status of charity, not the income of the giver.

    I don’t mind rewarding charitable giving through the tax code, but I hate the idea of using the tax code to punish people. I don’t favor a “flat tax” (we may part company on this one). I think income rates ought to be progressive and that the highest levels of income ought to be taxed at a higher rate than the lowest; however, targeting a very small group of people such as bonus recipients from companies that receive federal assistence is clearly punative and probably violates the constitution.

  2. superdave524 Says:

    Uh, “foment” fraud.

  3. John in IL Says:

    We do agree. We usually do, on the big points, anyway.

  4. superdave524 Says:

    Now, why can’t we get the folks in power to listen to us?

  5. John in IL Says:

    Didn’t you vote for change and hope?

  6. superdave524 Says:

    I did vote for O and change. O inherited some of the problems (Bare-naked lady, or whatever the Fed Chairman’s name is) reviewed and blessed the insurance bail-out provisions which included the AIG bonuses during the Bush Administration. O can reasonably avoid blame for that. The public works bill (misleadingly labelled a stimulus bill) is on O. I’m willing to give that one a chance because, frankly, I think our infrastructure (highways, electric grids, canals, etc) is in bad shape. It should create jobs for work that probably needs to be done. Of course, that brings about the small point of how to pay for all this work. Getting rid of charitable deductions would certainly raise revenue in the short term, but if Uncle Sam is going to have to increase the dole because of lost charitable giving, it seems like a Faustian proposition which will cost us more in the long run. It’s early yet in Obama’s term, so I’ll defer judgment on him for awhile, anyway.

  7. John in IL Says:

    The public works bill (misleadingly labelled a stimulus bill) is on O. I’m willing to give that one a chance because, frankly, I think our infrastructure (highways, electric grids, canals, etc) is in bad shape.

    Only about 10-15% of the 800B stimulus bill involves infrastructure (depending on your definition of infrastructure). I wouldn’t call it a public works bill.

    O inherited some of the problems (Bare-naked lady, or whatever the Fed Chairman’s name is) reviewed and blessed the insurance bail-out provisions which included the AIG bonuses during the Bush Administration

    The AIG bonuses were protected in BOs stimulus bill, not the original bailout bill.

  8. superdave524 Says:

    The Dailey Show had a clip from September with Baernake testifying to Congress about bonuses to insurance officials. O, perhaps, put too much trust in his Treasury Secretary.

  9. John in IL Says:

    Doesn’t that make it worse? The Treasury and the Fed (Geithner, at the time, being the president of Federal Reserve Bank in NY) knew months in advance about these bonuses. Obviously some in Congress and/or the President knew about them. How can anyone claim ignorance?


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