Tax deductions should not be based on loyalty. There are social costs when there are tax deductions. The social benefits should be very high when giving out tax deductions.
People who are loyal can give to institutions whether there are tax deductions or not.
If Princeton receives $100,000 in government benefits per student while a student at a public college receives $10,000, is that really good public policy?
Gosh, you’re onto something, dstark. Maybe when I’ve saved $60k for a year of my child’s college education, I should be required to spend only $30k and spread the remaining money across other people’s kids.
For that matter, shouldn’t that be the case if I pay for private music lessons, sports lessons, etc? Why should the children I designate be the only recipients of my generosity?
Show me a public college which is only getting a 10K subsidy per kid.
This is a claim I’d love to see. Public colleges have access to bond markets when they want to build a new dormitory or labs which can be triple tax free depending on the state. Wow, that’s a valuable public subsidy. And in many states has led to HORRIBLE public policy decisions, like emphasizing basketball stadiums over libraries. Public colleges aren’t paying taxes on their real estate holdings (easy to forget that), are first in line at the state legislature for construction and rehabbing of the highways that lead to their often rural and underutilized regions and campuses. Public colleges get the public to subsidize construction of the airports that serve their region so they can recruit faculty who don’t want to live in a corn field which is an 8 hour drive from the nearest big city.
I’d LOVE to see the 10K per kid analysis. You can start with Alaska? Their state U system is imploding now that the public subsidies which supported their expansion are going away due to the price of oil. Let’s see the 10 year trend line on THOSE public policy decisions… a sparsely populated state, with remote rural areas, and what it takes to maintain a public university system with public funds?
Start there.
You have it backwards.
You give a school $60,000. Then you deduct $60,000 on your tax return. If your marginal tax bracket is 40 percent, you get back $24,000. You only pay $36,000 on your $60,000 gift. Other taxpayers pay $24,000.
You are asking other taxpayers to fund 40 percent of your gift. Is that the best use of taxpayer money?
I posted a link earlier in this thread that addresses your points in post 82.
“That’s where the money is because the schools do an exceptional job of commanding loyalty among their alums.”
That, and they have a more affluent group of alumni. They can take some, but not all, of the credit for that.
“You give a school $60,000. Then you deduct $60,000 on your tax return. If your marginal tax bracket is 40 percent, you get back $24,000. You only pay $36,000 on your $60,000 gift. Other taxpayers pay $24,000.”
Sigh. Who broke their back to earn the $60,000 in the first place? Clue: Me.
I hope your back heals.
Tax free bonds were mentioned…
I wanted to buy tax free bonds from private institutions like Stanford or Yale but the yields were too low.
Here is an article about Yale and a bond offering.
“You give a school $60,000. Then you deduct $60,000 on your tax return. If your marginal tax bracket is 40 percent, you get back $24,000. You only pay $36,000 on your $60,000 gift. Other taxpayers pay $24,000.”"
I didn’t “get back” $24,000 when I paid my kid’s $60,000 tuition/room/board. I think you’re a little confused as to how this all works. If anything I had to make over $100,000 to have the disposable income to pay the $60,000. I certainly hope you don’t give tax advice for a living.
I am talking about charitable contributions and how it relates to private schools.
I am talking about charitable contributions. Gifts. We give gifts. We pay tuition.
No. You aren’t going to get back $24,000 if you pay tuition.
Yes. You may have to make over $100,000 in taxable income to pay the $60,000 in tuition/room/board etc
What I wrote is correct in regards to “giving”. You can talk to your CPA. You can actually get a larger tax deduction if you gift a school appreciated assets. Again, talk to you CPA.
^^I think dstark was using the word “give” to represent 'donate, and for which the giver/donor received nothing in return.
Paying your kid’s tuition bill is not the same as giving/donating. It’s paying a bill for which you/your kid received a service.
For many yes, but then many others receive tax-free inheritances from the 'rents.
When you take a deduction, either as a charitable or business expense, you don’t “get the money back”. All you do is lessen your tax burden for the year as you don’t pay income taxes on the charitable or business expense.
That’s semantics @Zinhead.
Your out of pocket costs are the same.
No. Zinhead is right.
Your out of pocket costs are the same.
If we’re talking about charitable donations, you don’t “get back” $24,000.
When you donate the $60K to a presumably worthy cause, you keep nothing and “get back” nothing, although (quite fairly) you are taxed only on your remaining income. True, the government does not receive the $24K it would have if you hadn’t donated anything. But then, if the cause was indeed worthy, benefits are delivered that tax dollars no longer need to buy.
Omg…
You donate $60,000. Your taxes decrease $24,000.
Your net cost of the donation is $36,000.
Other taxpayers make up the other $24,000. Or the deficit increases…
Northwestern receives $60,000.
The donor out of pocket cost is $ 36,000 on a $60,000 donation.
Taxpayers make up the difference of $24,000 or the deficit increases. I guess the government can sell assets to cover the $24,000. The government can spend $24,000 less elsewhere.
You might lose a tiny bit on the tax deduction…Schedule A, there are calculations that have to be done. Depending on income, the $60,000 tax deduction may be a little less.
Better now? 
dstark,
Your statements depend upon your belief that the government is entitled to take the first cut of everything a person produces. However deductions imply just the opposite–in this case the government is NOT entitled to the money you earned and then gave away.
Whether you call that a subsidy or not, seems to depend upon whether you believe that people serve the government, or the government serves the people.
Stark, not better now because you are assuming that the donor wouldn’t opt to do some other tax shelter with the money if the charitable deduction weren’t available.
So government STILL loses out; but the money goes into a “less socially advantageous” bucket than supporting higher education.
Do you want folks creating more off-shore, highly leveraged/highly tax-sheltered vehicles? No? Well then allow folks to make charitable contributions which are tax-advantaged.
You are also assuming that government spending is a fixed cost- so that a dollar less in revenue means that either the deficit increases or that “taxpayers make up the difference”. It is a choice to spend more every single year- by the federal government, by your state legislature, by you as a household. Make different choices.