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Agreed that if you pay at a higher bracket, you're going to get a higher rate benefit. And I know there are ways to maximize your benefit from this (such as contributing appreciated property), but if someone is giving tens of thousands of dollars just to get the tax benefit of the deduction, to me, that's pretty stupid if that is your only reason.

The tax benefit never exceeds what you have to give (or could have gotten in the future in the case of appreciated property). You'd be better off keeping the cash or property yourself and just paying the tax.

merlin wrote:Agreed that if you pay at a higher bracket, you're going to get a higher rate benefit. And I know there are ways to maximize your benefit from this (such as contributing appreciated property), but if someone is giving tens of thousands of dollars just to get the tax benefit of the deduction, to me, that's pretty stupid if that is your only reason.

The tax benefit never exceeds what you have to give (or could have gotten in the future in the case of appreciated property). You'd be better off keeping the cash or property yourself and just paying the tax.

I like that you twisted my point that my clients would contribute less if there wasn't a deduction to "someone is giving tens of thousands of dollars just to get the tax benefit" to suit your argument.

We do year end charitable planning for our clients SPECIFICALLY for the tax benefit. Ignoring the appreciated property opportunities, on a purely cash donation basis we have clients that want to give up to their exact 50% limit, and not a dollar more. Let's say, after tax harvesting losses, you still have a $1,000,000 of realized long term gain. For clients that have the liquidity and the opportunity, many of them would rather increase their charitable donations by $430,000 than pay the $150,000 in taxes. They've lowered their tax bill, decreased their estate, and fulfilled their charitable intent. I guarantee you that if you took away the charitable deduction, there would be an immediate reduction in charitable donations.

JCShutout wrote:How about something like this:

Between $0 and $5k/year 0%
Between $5k and $15k/year 3%
Between $15k and $30k/year 6%
Between $30k and $60k/year 9%
Between $60k and $120k/year 12%
Between $120k and $250k/year 15%
Between $250k and $500k/year 18%
Between $500k and $1m/year 21%
Between 1m and 5m/year 25%
Between 5m and 25m/year 30%
Above 25m/year 35%

No loopholes, no nothing. You make it, you pay it.

And I'll go with HJ's no loophole 25% corporate profits and pop's don't blow [expletive] up budget strategy.

What about cost of living differences (NYC vs North Dakota)? Shouldn't that be a factor? Don't some of the deductions (like on mortgages) help offset that difference?

how about if you make over 40 million a year you are shot and killed and the money goes back to the US government

$14 T in federal debt and no end in sight.

Am I the only one who thinks we are completely [expletive]?

Hungary Jack wrote:$14 T in federal debt and no end in sight.

Am I the only one who thinks we are completely [expletive]?

Honestly, I don't. It's alarming for sure, but it isn't the end. The greatest asset of this country is the ability to change, not many other countries can say that. A little over 12 years ago, we were running a surplus, we can get back there again...we just need to fix a few things. The sad thing is, we know how to fix it, we're just reluctant to fix it. If you want to stoke the economic fires again and start running surpluses, we have to do a few things.

1.) End the wars
2.) Let the Bush tax cuts expire for everyone
3.) A little inflation will go a long way with reducing our debt

This not only helps our debt but also the deficit...then we can start making cuts to programs to bring in spending.

But if you really want to stoke the economic fires of the US economy, universal healthcare. Now this is just my opinion, and many of you may be chuckling, but listen for a second. Universal healthcare levels the playing field in the business world. Large corporations can no longer use it as a tax write-off as well as a "benefit" to give it's employees. Large corporations would lose their worker's dependencies...especially during a recession. Large corporations now have to compete on salary with smaller quicker companies. Competition would soar. You might even see some lobbyists filing for unemployment. If small businesses drive growth, then give them the biggest economic boost they'll ever need...healthcare.

The only problem? Who is going to run it? That part, I haven't figured out yet...

Good points. About charitable deductions, heck, my paycheck comes from tax-deductible donations, but yeah, I'd be okay with getting rid of the deductions for charitable contributions. If people are going to stop donating because they have to pay their taxes, then that is their choice. I'd prefer that people still donate to good causes, but thats up to them.

About killing the accounting industry (or any industry), if we don't fix any problems for fear that someone will lose a job, then we'll never change or fix anything. If I'm being heartless, remember, I'm advocating what will hurt my own paycheck (non-profit).

The point about living expenses varying in different areas is a good one. Maybe tweak the numbers based on where you live year to year or something like that. I don't know the answer to deductions based on mortgages etc.

As for using "loophole" improperly, sorry. I'm a much more lazy poster than I used to be. Too busy.

Just throwing an idea out there. I know its more complex than that but I figure it might be a good start.

TimeForGuinness wrote:

Hungary Jack wrote:$14 T in federal debt and no end in sight.

Am I the only one who thinks we are completely [expletive]?

Honestly, I don't. It's alarming for sure, but it isn't the end. The greatest asset of this country is the ability to change, not many other countries can say that. A little over 12 years ago, we were running a surplus, we can get back there again...we just need to fix a few things. The sad thing is, we know how to fix it, we're just reluctant to fix it. If you want to stoke the economic fires again and start running surpluses, we have to do a few things.

1.) End the wars
2.) Let the Bush tax cuts expire for everyone
3.) A little inflation will go a long way with reducing our debt

This not only helps our debt but also the deficit...then we can start making cuts to programs to bring in spending.

But if you really want to stoke the economic fires of the US economy, universal healthcare. Now this is just my opinion, and many of you may be chuckling, but listen for a second. Universal healthcare levels the playing field in the business world. Large corporations can no longer use it as a tax write-off as well as a "benefit" to give it's employees. Large corporations would lose their worker's dependencies...especially during a recession. Large corporations now have to compete on salary with smaller quicker companies. Competition would soar. You might even see some lobbyists filing for unemployment. If small businesses drive growth, then give them the biggest economic boost they'll ever need...healthcare.

The only problem? Who is going to run it? That part, I haven't figured out yet...

I just don't see any leadership anywhere in DC. Obama is a straw man. Congress is full of fools and professional politicians. Special interests are entrenched.

Only the bond market can bring this beast to heel. And that won't be pretty.

JackofDiamonds wrote:

merlin wrote:Agreed that if you pay at a higher bracket, you're going to get a higher rate benefit. And I know there are ways to maximize your benefit from this (such as contributing appreciated property), but if someone is giving tens of thousands of dollars just to get the tax benefit of the deduction, to me, that's pretty stupid if that is your only reason.

The tax benefit never exceeds what you have to give (or could have gotten in the future in the case of appreciated property). You'd be better off keeping the cash or property yourself and just paying the tax.

I like that you twisted my point that my clients would contribute less if there wasn't a deduction to "someone is giving tens of thousands of dollars just to get the tax benefit" to suit your argument.

We do year end charitable planning for our clients SPECIFICALLY for the tax benefit. Ignoring the appreciated property opportunities, on a purely cash donation basis we have clients that want to give up to their exact 50% limit, and not a dollar more. Let's say, after tax harvesting losses, you still have a $1,000,000 of realized long term gain. For clients that have the liquidity and the opportunity, many of them would rather increase their charitable donations by $430,000 than pay the $150,000 in taxes. They've lowered their tax bill, decreased their estate, and fulfilled their charitable intent. I guarantee you that if you took away the charitable deduction, there would be an immediate reduction in charitable donations.

Listen, I'm not trying to twist anything. I have no doubt that if they took away the charitable contributions deduction, that charitable contributions would drop. I completely agree with that point. I know people who do the same thing and have the same planning and I tell them the exact same thing. I know they have their reasons, but in my view, its silly that people would give to a charity for the tax benefit (As in your example, $450k to the charity > $150k to the government.) It seems people would rather pay their money to anyone but the government, even if it costs them more. I would hope if the chartable contribution deduction went away, that people could see beyond the tax benefit and continue to give to charity.

My only real point at the beginning is that I don't view that as much of a loophole since the contributor is not getting a net benefit of the contribution. Its another example of the government trying to influence behaviour through the tax code. Its no different than the deduction of Mortgage interest. If you disagree with the policy for why these items are deductible, that's fine, but I wouldn't say that makes them a loophole. I'm not trying to be argumentative, it just goes back to my original question of what do people constitute as a loophole? I think we both agree that the tax issue is a little more complex than saying we'll close all the tax loopholes (heck, we can't even seem to agee what is a loophole ).

I think we know how to fix our debt problem, but as Guiness points out, I don't think anyone wants to do it. No one wants to pay more taxes and receive less benefits.