Hey Guys
The question has to do with donations and taxes. Put succinctly, I hear claims of unfair advantages being gained by very wealthy individuals who donate large sums of money to 501c status entities and are able to 'get away with it.' I presume the people at Faux news are angry at them getting away with it because although they 'lose out' (excuse the HORRIBLE way of describing donations to charity haha) on income from the donation, this might be less so than if they did not donate. However looking at the federal income tax bracket, the highest is +400k. How the hell do millionaires gain from perhaps unusually large donations if marginally lower tax bracket is significantly lower than their income? I might be missing something obvious as my background is not finance, business or accounting and I'll be starting on a trading desk this time around. I ask on this forum as I've heard ib is very heavy on accounting. The only thing I know about this stuff is anecdotal, my civics teacher back in high school
"...I told them, I don't want the damn raise! The raise puts me in the next tax bracket by less than forty bucks!"
ChapelThriller
Well, considering the top rate above 400k is 39.6% (assuming they're not only getting hit also with the 3.8% Medicare surtax also), it means that for every dollar that they donate as a qualified charitable contribution, they get to shave roughly 40 cents off their tax bill. Millionaires don't really "gain" anything from doing so, but if you already planning to donate a large amount of money, it helps to also avoid being taxed on that money (although the money that you're donating may not be the same as the money you made during the year). They also get the added bonus of carrying it forward until it is used up (if you donate more than the deductible amount in the current year). Plus it helps to motivate the horribly rich people to actually donate their money, instead of blowing it on less ... charitable things.
BTW, if you're going to use political wordplay, you may want to brush up on what each side supports. I've never heard a conservative complain about charitable contributions, so I highly doubt the "Faux" News people would be angry over "rich people" donating money and getting a tax deduction. Are you sure you don't mean the people over at HuffPo/MSNBC, who prefer higher taxes on the rich?
They don't gain, also your civics teacher is an idiot, you don't pay all of your income in the "next tax bracket" only the $40 in that bracket would be taxable at that rate. They give charity because they want to, with deductions each dollar will cost you 60 cents post tax, which sounds good until you realize it was your fucking money all along.
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