Tuesday, November 01, 2005

Tax Code Irony

Yesterday in tax we learned that you can claim a charitable deduction for giving to your church. That's good, but it only kicks in if you itemize your deductions in lieu of the standard personal deduction taken by three-quarters of the country. See, only the richest one-quarter of Americans actually make enough money to forgo the standardized deduction and do this itemization.

What ends up happening is that the charitable giving of most of the country receives no recognition, and more importantly, no de facto subsidy from the federal government. At this time I'd also like to note that the poor give a larger fraction of their income to charity than the rich do (I read this in The Atlantic once, here's another instance "On average, the nation's richest 1% -- who own two-fifths of U.S. wealth -- donate just 2% of their incomes each year, vs. 6% for families in the bottom income bracket."). I'm inclined to think this is why we see a few marvelous Anglican churches with empty pews and dozens of ramschackle Pentacostal churches packed to the rafters. If we take O'Connor's point of view from the 10 Commandments cases that our country has succeeded by promoting widespread competition for religion, this differential in subsidy is blatantly wrong.

President Bush promised to fix this disparity, but he promptly forgot that campaign promise. And I have yet to see a tax reform group actually represent the interests of the poor in Congress. I find it quite unlikely then that this latest round of tax reform will deliver a fix to this flagrant giveaway to elite, self-interested "giving."

Grrrr. It's too early in the morning to get this worked up. I guess I'll just end with a story.

Mark 12:
41 And Jesus sat over against the treasury, and beheld how the people cast money into the treasury: and many that were rich cast in much.
42 And there came a certain poor widow, and she threw in two mites, which make a farthing.
43 And he called [unto him] his disciples, and saith unto them, Verily I say unto you, That this poor widow hath cast more in, than all they which have cast into the treasury:
44 For all [they] did cast in of their abundance; but she of her want did cast in all that she had, [even] all her living.


Blogger PG said...

I agree that the failure to credit everyone for their charitable giving is inequitable, but I don't understand how you would change the tax code to fix it. I haven't taken any class dealing with taxes, but...

The standard deduction is meant to be a simplifying measure. If someone prefers to itemize (which actually I thought everyone did once they got a mortgage, and while obviously those with lower incomes are less likely to be homeowners and thus less likely to have mortgages, and the government already subsidizes homeownership at the expense of renters), he can do so. Otherwise, he's opting for a standard deduction that he thinks will be larger than an itemized one.

11/07/2005 7:22 AM  

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