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Charity and taxes

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  •  mlc7 
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    This may be an unusual and for some provocative question but why do people take such a pride in giving to charity and hating taxes so much?

    It may be my skewed view since I grew up in Europe where taxes tend to be higher (and social networks stronger) but aren’t we paying taxes for everyone’s benefit, to pay for roads, education, health care, clean water and environment, law enforcement, etc?  This is what makes us a civilized society and that is why we all benefit from paying taxes at some point or the other.

    All financial site teach us how to lower or avoid taxes and take great pride in giving to charities. Why is giving to charities morally higher and better? Yes you may direct your money to issues you most care about but admitting or not you also need roads, health care, social security etc.

    American love to give money but most of them don’t have enough in savings and carry large credit card debt and live beyond their means. Wouldn’t it be better to take care of those bills first before handing out checks to others?

    I would love to hear a WCI podcast with experts on this topic.

     

     

     

    #170922 Reply
     jacoavlu 
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    Maybe some feel a percentage of their tax dollars are wasted
    Maybe some prefer the “choice” inherent in charitable giving
    I haven’t heard anyone expressing how charitable giving is “morally higher and better”
    Yes it’s probably best to not charitably give money that you don’t really have.

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #170924 Reply
    Liked by mlc7
     Peds 
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    why do people take such a pride in giving to charity and hating taxes so much?

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    cause people are weird. but like being rewarded and recognized for good actions. people dont like to make less money either.

    It may be my skewed view since I grew up in Europe

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    also because you are european haha

    All financial site teach us how to lower or avoid taxes and take great pride in giving to charities.

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    yes i pay exactly what i owe, nothing more, nothing less.

    Why is giving to charities morally higher and better?

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    i dont view the govt or their programs in the same light as planned parenthood, but either way just a straw man argument

    American love to give money but most of them don’t have enough in savings and carry large credit card debt and live beyond their means.

    Click to expand…

    those classes of people are different, and definitely are not giving any significant value to charities. the only group i can think of are those in massive debt but still giving 10% to their religions.

    I would love to hear a WCI podcast with experts on this topic.

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    experts on what….exactly? and i wouldnt.

    #170955 Reply
    Liked by Tim, mlc7, Vagabond MD
    Vagabond MD Vagabond MD 
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    Earnest refinancing bonus

    I think that there is a general sense, along the political and socioeconomic spectrums, that taxes are deployed wrongly. Therefore, the more tax you pay, the greater the error. People would rather target their favorite causes, be it feeding the needy, supporting Planned Parenthood, or cash to a local private school or religious institution.

    Ironically, when we give to charity and take a tax deduction, the government is along for the ride. For my $100 contribution to the local food bank or my $250 contribution to the Crohn’s and Colitis Foundation, it’s a small deduction, not even a rounding error. But when Bloomberg contributes $1.8B for tuition support at John Hopkins, the government (aka the collective of all tax payers) is footing up to a third of it. So Bloomberg essentially unilaterally diverted hundreds of millions of government dollars to his alma mater.

    "Wealth is the slave of the wise man and the master of the fool.” -Seneca the Younger

    #170963 Reply
    Zaphod Zaphod 
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    charity certainly has a signaling aspect to it.

    likely its that we simply arent given the choice. I’d be more than happy to pay some percent more in taxes if we had free education, healthcare, retirement, etc…we simply dont have that choice and the reaction is one of feeling the need to hoard to cover those personally assumed liabilities.

    #170970 Reply
     Larry Ragman 
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    So Bloomberg essentially unilaterally diverted hundreds of millions of government dollars to his alma mater.

    Click to expand…

    I respectfully disagree with the premise of your argument. It presumes a portion of the money that he earned belongs to the government as taxes. That is objectively incorrect. It’s his money and the tax laws allow him to give it away, therefor the government has no claim.

    #170984 Reply
    Liked by mlc7
    Vagabond MD Vagabond MD 
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    So Bloomberg essentially unilaterally diverted hundreds of millions of government dollars to his alma mater.

    Click to expand…

    I respectfully disagree with the premise of your argument. It presumes a portion of the money that he earned belongs to the government as taxes. That is objectively incorrect. It’s his money and the tax laws allow him to give it away, therefor the government has no claim.

    Click to expand…

    At some level, he is earning money, and a lot of it, and by giving a slug away, it is reducing his tax burden. We are sharing in his generosity.

    "Wealth is the slave of the wise man and the master of the fool.” -Seneca the Younger

    #171048 Reply
     Larry Ragman 
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    So Bloomberg essentially unilaterally diverted hundreds of millions of government dollars to his alma mater.

    Click to expand…

    I respectfully disagree with the premise of your argument. It presumes a portion of the money that he earned belongs to the government as taxes. That is objectively incorrect. It’s his money and the tax laws allow him to give it away, therefor the government has no claim.

    Click to expand…

    At some level, he is earning money, and a lot of it, and by giving a slug away, it is reducing his tax burden. We are sharing in his generosity.

    Click to expand…

    I’m tempted just to agree to disagree, but this is a point of principle for me. His decisions are his to make. As you say, by giving it away he reduces his tax burden. If Congress wants more of his money it just needs to change the law. But if they don’t it does not raise my tax burden or yours.

    #171057 Reply
    Liked by Vagabond MD
    The White Coat Investor The White Coat Investor 
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    This may be an unusual and for some provocative question but why do people take such a pride in giving to charity and hating taxes so much?

    It may be my skewed view since I grew up in Europe where taxes tend to be higher (and social networks stronger) but aren’t we paying taxes for everyone’s benefit, to pay for roads, education, health care, clean water and environment, law enforcement, etc?  This is what makes us a civilized society and that is why we all benefit from paying taxes at some point or the other.

    All financial site teach us how to lower or avoid taxes and take great pride in giving to charities. Why is giving to charities morally higher and better? Yes you may direct your money to issues you most care about but admitting or not you also need roads, health care, social security etc.

    American love to give money but most of them don’t have enough in savings and carry large credit card debt and live beyond their means. Wouldn’t it be better to take care of those bills first before handing out checks to others?

    I would love to hear a WCI podcast with experts on this topic.

     

     

     

    Click to expand…

    This is a common view among those on the left side of the political spectrum, which obviously includes many Europeans. They feel that government does a lot of good so they feel that money that goes to government does a lot of good. On the opposite side of the political spectrum, it is felt that government is too big already, wastes a ton of money, and even does a lot of things one might not even support. For those people, paying taxes is not only mandatory, but actually doing bad, not good. They are often more religious and have been taught in church to give to charity and view leftists who see taxes as charity as just justifying their stinginess.

    From a moral perspective, paying taxes is mandatory, so why would you get any “credit” for doing something that is mandatory? Giving to charity is more “pure” giving in that it is not mandatory. You also get to decide, at least more so than when you pay taxes, where that money goes. Love the environment? Give to the Sierra Club. Love your church? Give there.

    Financial sites like mine that talk about charitable giving are making two points:

    # 1 Giving money away is good for you in that it helps you not be a miser

    # 2 If you’re going to give money away, you can give more away if you take advantage of the tax laws, essentially moving some of your taxes to charities that you support. Obviously, you’re not coming out ahead since you have to give away $10K to save $4K in taxes. But if you’re giving it away anyway…

    Hope that helps. I have no idea what kind of an expert to bring on to talk about this. I don’t think I can get Bill and Melinda.

    Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
    Helping Those Who Wear The White Coat Get A "Fair Shake" on Wall Street since 2011

    #171058 Reply
     G 
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    Sierra Club

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    Point of information:  donations to the Sierra Club are not deductible as it is a 501c4.  Although there is an somewhat affiliated foundation….

    😉

    I think you should try to get Bill and Melinda.

    #171063 Reply
     mlc7 
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    This is not a political question or a matter of being right or left. It is just looking at the facts.  European taxes are higher [https://tradingeconomics.com/country-list/personal-income-tax-rate?continent=europe] and generally speaking most countries provide much better social nets for their residents with the taxes they collect: free health care, free education, reliable retirement, 9 months payed maternity leave, affordable day care etc. Therefore, not all taxes are ‘bad’ no matter how you look at it. I am sure there are many wasted dollar here and oversees that could be applied for better use as well as inefficiencies in how governments work.

    But charities are also known to use their donations inappropriately and sometimes very little of your money actually reaches the people or things it is intended for.

    Your answer certainly explains the belief people hold when thinking about charity and taxes and that answers my question to an extend.

    In regards to experts I am sure there are social scientists that research why people give or not give to charities and for what reasons. Bill and Melinda would be a plus as well.

     

    #171065 Reply
    Hank Hank 
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    There are a variety of necessary functions of government, most of which are amongst the enumerated powers of Congress in the Constitution or were provided by state and local governments at the time of the founding of the republic.  I don’t think most folks are going to argue against courts, police, fire, local roads and waterways, etc.  We also have added a variety of things over the years.  The United States provides free education from K-12, although based on some of the written content I’ve seen on the internet and on job applications I have to wonder whether some folks bothered to make the most of those 13 years of education paid by the taxpayer.  We have “free” healthcare for the poor (Medicaid) and subsidized healthcare for the elderly (Medicare).  By the way, there really isn’t such a thing as “free” education or “free” healthcare: the taxpayers pay for it.

    While you have to pay taxes to support these causes (and many more), you also have the option to give money to charity.  You can support a variety of causes across the ideological spectrum.  If you feel like you’re keeping too much of the money you earn and you cannot find a single charity that is more efficient and more effective than the government, you are more than welcome to write a check, large or small, made payable to the general fund of the U.S. Treasury.  I assure you they’ll cash the check.

    #171267 Reply
     mlc7 
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    My question was more philosophical looking for an explanation or arguments why people feel so negative when giving taxes but opposite when given to charity. Both support common things the society needs. I suspect that the main reason is the feeling that we have control or power directing money to issues we care about when giving to charity. It also makes everyone feels good.  I do not disagree with charity donations and I am glad so many people can give, so others can benefit from it. I just tried to put out an argument why not all taxes are ‘bad’ and why some people may prefer to take care of their own bills before giving away so they don’t become a burden to society at the end.

     

    #171318 Reply
     Larry Ragman 
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    Mic7, from an American perspective in the one case the government takes and in the other an individual gives. Our cultural heritage is for individualism and against government mandates. We pay our taxes grudgingly and give to our charities willingly.

    #171321 Reply
     Kamban 
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    His decisions are his to make. As you say, by giving it away he reduces his tax burden. If Congress wants more of his money it just needs to change the law. But if they don’t it does not raise my tax burden or yours.

    Click to expand…

    I may be interpreting it wrong but I have a different opinion, especially of the last sentence.

    Let us say that HD founder earned $200M in 2018 and is expected to pay $80M in taxes on it overall. But he decides to give away $100M to NYU school of medicine to help give free medical education. So he will pay taxes only on the remaining 50%, $100M of his income and the government gets to collect only $40M whereas it has been projecting a revenue of $80M from his total income. The $40M lost by it was not earmarked by US governemtn to give free medical education but instead kept aside for building and maintaining infrastructure, help with food stamps / medicaid etc. Now they will either have to make cuts in the programs ( we can disagree on whether it is necessary or not but that is a separate discussion) or we raise taxes on the remaining people, including you and me. That might be only $.001 cent but if these donations add up and significant revenue is lost, the amount the others pay rises. So yes, it raises your and my tax burden.

    Congress should set a limit of $500 or so and make the rest of the charitable giving with after tax money.  If you are so generous to give to your favorite charity or church or school or whatever you want to give to, go ahead and give it. But give it with your after tax money. Don’t expect a tax reduction and hence loss of revenue for the government, that others have to pony up the shortfall.

     

    #171331 Reply

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