December 12th, 2012

planet

eliminating charitable contribution deductions, ewe

First off I want to apologize for talking about tax reforms right now, I swear if I hear the term "fiscal cliff" one more time on the radio I'm going to find an actual cliff to jump off of.

What got me thinking is that they're talking about eliminating more deductions and that makes me sad, because we just bought a house not-quite three years ago and we pay a LOT OF MONEY in mortgage interest, before the house we rarely itemized our returns. So I didn't used to care about deductions.

You could argue that the times in my life when I didn't care about deductions were the times when I was poor... a kid just starting out in the world, single, not a homeowner... I'm trying to keep that in mind. It's only in the last few years that I made enough money to buy a house and give a lot more to charity so that, combined, these factors got me past the standard deduction.

But I digress.

You all know I'm kinda on the left and all for raising taxes on the rich. I don't mean to oppress them, I just want to make it fair, I'm for raising capital gains back to Reagan's levels and definitely think we should raise the social security cap because WTF is with income over $110,000 being totally exempt from social security taxes? Seriously WTF? I have to pay way too much into this crappy system that I hate, all year, in every paycheck... everyone else should too!

But anyway they're talking about getting rid of the deduction for charitable contributions because rich people make huge contributions and get huge tax breaks for it.

Here's the argument: Let's say you make $50,000 a year and you make a $3000 donation to a charity (go you!). Since the top portion of your income is taxed at 15%, you will save $450 on your taxes.

Now let's say a 1%-er who makes $375,000 makes the same $3000 donation. Since the top portion of her income is taxed at 33%, she will save $990 on her taxes... over twice as much as you.

So is that unfair? Should we dump both deductions?

The problem for me is that $450 is kinda a lot of money to someone who only makes $50,000 a year... 0.9% of your income, but the $990 is only 0.2% of the $375,000 person's income. Yes, it's more money for the federal government if we tell both people to pay up, but the 99%-er is the one who I think will feel it, right?

I kinda think we should keep the deduction around. Maybe I'm biased because, statistically, I guess I'm kinda rich... not even close to being in the top 1% but I'm in the top half. Or maybe my math is off. Or maybe I just don't like change.