Hooohooo!!! :))
I do agree with dstark that this is semantics we are talking about.
Hebegebe,
Not really.
The government uses the tax code to spend. As another poster wrote, the government uses tax expenditures. That is how a lot of government spending is done today. Through the tax code.
I am fiscally conservative. Not fiscally conservative like the guys who talk in the media. I am actually fiscally conservative. 
The Koch Brothers say tax expenditures are $1.4 trillion a year. This study says the same. Since the Koch brothers give to George Mason, maybe this is where the Koch Brothers get their information. 
Not all government spending is wasteful.
If you are interested, You can start on page 7.
A trillion little subsidies…
http://mercatus.org/sites/default/files/TaxExpenditures_Horpedahl_v1-0.pdf
Wait…this is a summary…
"You donate $60,000. Your taxes decrease $24,000.
Your net cost of the donation is $36,000."
No, the amount that I am taxed on goes down by $60,000. But I still had to earn that money in the first place, which is the part you keep missing.
“Other taxpayers make up the other $24,000. Or the deficit increases…”
Your thinking scares me. Do you think when my tax return comes in showing my (hypothetical) $60,000 donation and the IRS takes that off the top of what I’m taxes on, that all of a sudden other people get tapped for extra money? Gee, who do they tap? My neighbors? Do they tap 24,000 people at $1 apiece? The government now has less tax revenue from ME but they aren’t upping other people to “fill the gap.”
I didn’t miss what you said I missed.
You are receiving a tax expenditure when you donate. That’s a subsidy. That’s a fact.
Now you want to argue that you should get the tax expenditure because you made the income. That’s your opinion. I am not missing this. I said this issue was complicated from the beginning.
When is enough, enough? I am using Yale as an example but when is Yale going to have enough to stand on Its own two feet. It has a $25 billion endowment and it doesn’t pay income taxes on the income. The donors get a tax deduction. It owns $2.5 billion worth of property and doesn’t pay any property taxes on this. Yale receives hundreds of millions of dollars of direct federal subsidies every year. Yale is a private institution. There are public institutions that are starving for money.
Society does not have unlimited resources or money. This is one of the best choices for the money?
There seems to be agreement that endowments are being publicly subsidized. If that is a subsidy, then so why are the tax payers subsidizing religious organizations in exactly the same way?
I think you are trying to stir up trouble. 
Great. That makes two of us.
But your approach to the problem, and the paper you referenced, still assumes that government is still entitled to the first X% of everything and that any deductions are distortions to be eliminated. That is your view, and perhaps in certain echo chambers it is automatically assumed to be “correct” one.
An alternate view is that donating $60K to specified charitable causes yields more benefit to society than giving $24K to the government.
Same reason as above. Religious organizations are a tremendous benefit to society, and I say this as an atheist.
@hebegebe, the federal government has spent about 18 percent of gdp, not including increasing tax cuts, during our whole adult lives. Spent more during a financial crisis.
Look it up. Look and see who the big spenders are.
Then we have state, county, city governments. Special districts that have to be funded.
So…starting at zero is not fiscally conservative. The federal government’s spending isn’t even close to zero. There are bills to pay.
I think only one of us is fiscally conservative.
Suppose I’m a retired investor. I make a good income, including $60K/y as taxable dividend income. I send quarterly tax payments to the IRS. I work it out to never get tax refund checks.
Scenario A:
I donate my $60K dividend income to Northwestern University, enough to cover the full COA of 1 low-income student for 1 year. That $60K, all of it, is no longer available for my use.
Scenario B:
I keep $36K from my copious dividends and send the remaining $24K as part of my quarterly tax payment to the IRS.
I pay less tax if I chose Scenario A, but I have $36K more net disposable income if I chose Scenario B. I don’t “get back” any part of my Scenario A donation … unless I first make the $24K tax payment in one quarter, then make a $60K donation in a subsequent quarter, then deduct the donation the following year, then receive a $24K refund for my overpayment. In that case, I’m still out $60K not $36K. I had to make the $24K payment, from my dividend income, to get back the $24K refund. Meanwhile, I’ve also lost some earnings on the $24K I loaned (interest free) to the IRS.
Many people must imagine they are getting a discount on their charitable donations when they receive refund checks from the IRS. As I see it, they are just getting back their excess withholding.
The reason that the voters of New Haven and CT have shown little interest in finding ways to tax Yale… despite the fact that many policy gurus have tried- is that as the largest employer in the state, the biggest source of R&D innovations focused on life sciences, cancer research, etc, and the engine behind the redevelopment of New Haven and West Haven (where the new science campus- including the nursing school is located)… the voters believe that Yale does its fair share for the public good. Its museums are free- not just one day a week, not just to someone with a Yale ID- but free. It provides millions of dollars of discounted and free medical care to the indigent at both its main hospitals and its satellite operations. Its employees (and students, but they come and go) provide hundreds of thousands of volunteer hours for organizations which help recent immigrants learn English, less recent immigrants study for their naturalization exams, public health interventions, reading and writing tutoring in the New Haven public schools, not to mention sitting on hundreds of board seats for both big and small not-for-profits in the region.
YOU may resent Yale and its deep pockets. But the residents of New Haven County and CT know that without Yale, tens of thousands of jobs would head elsewhere and the core of the city would be depopulated. And since the employees of Yale pay taxes on their earnings- and homeowners in New Haven pay property taxes, you’d find it hard to find someone who truly believes that Yale’s employees get a free pass.
If you want to hire a lobbying firm to figure out which buttons to push to get the citizens to care about how the endowment funds going untaxed be my guest. Right now CT is dealing with the loss of GE corporate headquarters… which is giving its citizens a good lesson in what happens when an employer picks up and leaves. Not pretty.
@tk21769, Those scenarios are not the same. They aren’t similar to each other.
They are not the scenario we have been talking about.
Do you have the mistaken impression that you are telling me something new here?
@hebegebe, You want to start at zero.
The default is around 18 percent.
And actually I am wrong. Government receipts are around 18 percent. Spending is higher.
You are mistaken about that… I could respond in detail about the critical roles of the Federal government (including some you might be surprised I support) but then this will devolve into a political discussion.
Ok.
Nice post 110, blossom. And who is this author kidding? The major private universities in the Chicagoland area - U of Chicago, Northwestern and to a lesser extent DePaul and Loyola - bring tons of jobs to the area, bring students who spend money (where would Lincoln Park be without DePaul?), bring revenue via sports events and theatrical events and lectures, and do much the same kinds of things as Yale does for New Haven. There would be huge “holes” in downtown Chicago if NU or U of C were to up and disappear.
“There would be huge “holes” in downtown Chicago if NU or U of C were to up and disappear.”
To be fair, that’s also true of businesses like United, Walgreens, Kraft, etc., and I still expect them to pay taxes.
@dstark #111
@dstark #90
And that’s what I’m talking about in #109.
We could change the code to eliminate the deduction. So instead of paying a deductible $60 donation to UChicago and zero income tax on that, maybe I’d still make a $36 non-deductible donation to UChicago along with a $24 income tax on the original income. From a completely selfish perspective, either way, I’m out $60. From a public policy perspective, which is a better way to channel the $60? The donation is more direct and efficient. That’s $24 less the government has to figure out how to spend (and administer), because that decision already was made by a taxpayer (a College Confidential Senior Member no less) who earned the money and has a vested interest in seeing it put to good use.
If we want to continue having a progressive income tax system with a complex system of credits/exemptions/deductions, then charitable contributions are a pretty good thing to incentivize, IMO. If I had perfect confidence the government would use that $24 well, I might feel differently. If I looked closely at what $24K buys for a student to attend a top state university for a year, then at what $60K buys for a student to attend a top private university for a year, maybe I’d conclude the $24K is a better value. Or not. I like having that choice.
You write as if being a College Confidential Senior Member is a good thing. It may just mean a person has written too many posts.
I know the government gets a bad wrap. Sometimes it is deserved. But…our taxes pay for social security, medicare, medicaid, defense, infrastructure, cleaner air and water, the FDA, our legal system, grants and loans to students, grants which helps fund research for both public and private universities including Yale, helps pay for the education of medical students, etc.