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Charles Krauthammer (WP Op-Ed): How the super-committee can strike a Grand Bargain


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As a person who is directly and indirectly benefited by charitable deductions, I hope they stay in. :) But more importantly, he followed that up with this:

Your preferences will be different. So will the super-committee’s. It doesn’t matter.

That was the best thing I read in that article. It stayed true to big picture.

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Why exclude charitable deductions if there are corresponding cuts?

if you believe in a cause you will fund it with your tax savings.

Because most people are directed by self-interest. I bet if you remove charitable deductions, you would see a phenomenal drop in giving... esp. corporate giving.

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Because most people are directed by self-interest. I bet if you remove charitable deductions, you would see a phenomenal drop in giving... esp. corporate giving.

Don't want a hijack, but as I said...it is not very charitable to give when you take from others.

It is simply Corps or individuals directing sums to special interests at a cost to the taxpayers .

To me it goes back to the basic justification for taxes being ignored

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Don't want a hijack, but as I said...it is not very charitable to give when you take from others.

It is simply Corps or individuals directing sums to special interests at a cost to the taxpayers .

To me it goes back to the basic justification for taxes being ignored

It may not be charitable in the sense of nobilitiy, but can you really argue that millions or even billions of donations are written primarily for the tax deduction? Whether political donations are charitable donations at all is a different argument, I agree.

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That's one way to look at it. Krauthammer offered up a solid rebuttal in his article:

subsidizing private charity — donations to institutions chosen by the citizens, not the state — disperses power and strengthens civil society, the principal bulwark against state domination.

Its a minor investment toward a major check against state run charity.

Regardless, I also agree with him that we don't need to agree on the details as much as the big picture. Compromises toward that picture would have to happen on every single issue.

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Another thing I would look at is churches, on th elocal level for land taxes and on the federal level anything above 5 percent that does not go into operational expenses of the church and to help others, and that does not mean for instance funneling money into a hospital or some other investment and saying it is helping the poor

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I don't think much of his rebuttal or his Madison reference

Eliminating the approx 30 cents on a dollar subsidy of charitable deductions in no way prevents true charitable giving....and as Bur mentioned it is billions of dollars at play

I just find it curious most don't mind this subsidizing directed not by voters or their representatives that started as a salve for higher tax rates

http://www.taxpolicycenter.org/taxtopics/encyclopedia/Charitable-Deductions.cfm

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My problem with using tax deductions for the purpose of encouraging behavior isn't that the government is encouraging the behavior. But rather, it's a problem with the nature of tax deductions.

You can think of things like the charitable deduction as a deal, in which the government tells an individual that if he performs some desired action, then the government will subsidize his action.

Nothing necessarily wrong with that, and it occurs in many variations. For example, it's how the interstate highway system got built.

My problem with the "subsidy" being in the form of a tax deduction, however, is that what it also means is "and if a rich person performs the action, then his subsidy will be bigger."

If I donate to the Salvation Army, the government doesn't give me any subsidy at all. I have no income right now, therefore I'm in a 0% tax bracket.

If Joe McDonald's donates to them, he gets a 10% subsidy.

If Bill Gates donates, then for every dollar he donates, he gets a subsidy of 35 cents.

Should the government really be subsidizing Bill Gates' charity at three times the rate it subsidizes Joe McDonald's? I realize that Bill may donate 10,000 times as much money. But when he donates 10,000 times the money, should he receive 35,000 times the subsidy?

(I see the same problem with the mortgage interest deduction. The richer the taxpayer, the bigger a subsidy he gets. (Not just bigger in dollars. Bigger as a percentage.))

I don't see a problem with the government subsidizing these behaviors. I see a problem with the rich getting a bigger subsidy.

Make it a tax credit, and that problem goes away.

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good explanation Larry,

the deductions are ripe for influence abuse and basically inequitable in practice

Of course we start with a inequitable tax system

---------- Post added August-7th-2011 at 08:55 AM ----------

True enough, but the fact that gov't's encouraging the behavior is a problem in and of itself :2cents:

Not so much back in the day,but certainly in the present system where we have expanded govt's role in welfare,healthcare and human resources ect.

Need to make up your minds on govt's role...if we are running a charity and societal support group,there is no need to give deductions.

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Now, a couple of other points, though.

1). Another way of looking at tax deductions is to consider them a tax on people's "profit".

If a taxpayer makes $100,000, but he has $75,000 in medical bills, then he isn't really "living the $100,000 lifestyle".

By a similar note, is the fact that children reflect a government subsidy to encourage people to have more children? Or is it a recognition that those people have a higher cost of living?

2). I don't have a problem with the government helping homeowners make the transition from renting.

I think I'd like to see a ceiling on the mortgage deduction. And make it a credit as opposed to a deduction, to get rid of the "rich people get a bigger subsidy" effect. But I don't want it to go sway.

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I'm for eliminating all deductions and charging either a flat percentage across the board or a consumption tax.

I still think you need progressive tax rates but VAT taxes are a good idea sure they drive up prices a little bit but they also make sure everyone pays into the system.

I think funding medicare and medicaid through a vat forumula espicially on certain food and beverage items is a good, people call this a tax on the poor but they are the ones who the social safety net is set up for and if their behaviours put more of a strain on the system then paying more in should not be a problem.

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It should all just be simple and equal.

Not really because not everyone benefits equally and the lower your income the greater percentage you use of it for day to day living.

There are some taxes or deductions everyone should pay in the US for instance medicare and social security

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I am blown away that Charles Krauthammer (CHARLES KRAUTHAMMER!) wrote an article outlining a path toward debt reduction and not one person in the tailgate has slammed it yet, left or right.

If his outline can make it past this little hornet's nest, its got to be a good one.

It seems certain folks from both sides are more reasonable when they re writing or on certain outlets, when they get on the more partisan forums ie evenings on MSNBC or FOX they play to their audience a little more.

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