[lmm]

I don't necessarily want it to go away entirely, but the tax breaks should be abolished. It's particularly offensive to see the state and local tax deduction (money that actually goes to help one's fellows in the ways they see fit, without being beholden to the whims of the "donor") capped while 503c "donations" remain an unlimited deduction.

[gruez]

>It's particularly offensive to see the state and local tax deduction (money that actually goes to help one's fellows in the ways they see fit, without being beholden to the whims of the "donor") capped while 503c "donations" remain an unlimited deduction.

The point of charitable deductions is to incentivize certain types of behavior (ie. charitable donations). On the other hand the SALT deduction is effectively the federal government subsidizing high-tax jurisdictions at the expense of low-tax jurisdictions. The first seems far more defensible and in line with the federal government's mission[1], than some sort of mechanism to pad the finances of certain states. This doesn't necessarily exclude redistribute policies by the federal government entirely, but doing it by tax rate is baffling no matter how you look at it.

[1] and no, this argument doesn't work for the SALT deduction because state/local taxes aren't optional

[Spooky23]

Not really. Flyover and southern states in particular mooch off of the productive locales.

So not only do I need to pay more taxes for the US government to fund almost double my states pro rata aid to places like West Virginia and Mississippi, but I get to pay even higher taxes because my locality actually provides things like sound education.

You know what, I think we should exercise the people’s desire for small government and relocate military bases to the places that pay for them.

[gwbrooks]

> So not only do I need to pay more taxes for the US government to fund almost double my states pro rata aid to places like West Virginia and Mississippi, but... (snip)

Wouldn't the most effective solution be to reduce the number of things the federal government does? Rich blue states make their choices and keep more of their revenue within state boundaries and residents of red states get to decide if they like their current choices lower (or no) federal subsidy.

Practically speaking (not politically speaking), that seems like a point the left and right should be able to agree on.

[Spooky23]

I’d prefer to live in a modern society where we get to share the immense wealth of our nation in a way that promotes the general welfare.

I’ve run into so many people in my time who’ve had to suffer in various ways because of senseless circumstances. One person lost their home due to a medical condition and the associated costs. Had it happened 6 months before his employee health plan changed, his family’s life would have taken a dramatically different path.

[inglor_cz]

My European experience says that even relatively small countries the size of Mississippi themselves have a fair share of folks kvetching that the richer parts subsidize the poorer parts. Few places are small or homogeneous enough not to experience that. A continent-wide country like the US can hardly escape the same.

It is even worse if there is an ethnic difference in the mix (e.g. the Flemish vs. the Walloons in Belgium).

Also, I wonder whether New York / California liberals would really welcome soldiers among them and whether the military could recruit enough people there. Amazon got kicked out from New York for being too capitalist.

It definitely seems to me that the coastal elite wants a strong military to protect their trade empire, but preferrably located far away and with someone else's kids doing the dangerous parts of the job.

[corrral]

A crucial (though obviously not the only!) purpose of the US military is to provide a jobs program with nearly European/white-collar-US level social benefits (healthcare, college, retirement, even housing) to people with few options. It stands to reason this means volunteers disproportionately come from states with weak economies.

[anamax]

> I get to pay even higher taxes because my locality actually provides things like sound education.

Which your area benefits from....

[yial]

I’m not sure about the wealth of the country , but many people still don’t have running water or plumbing.

https://www.washingtonpost.com/national/after-generations-of...

That’s a problem that seems to Mostly being addressed by nonprofits very slowly, and not the government …

[gruez]

> Not really. Flyover and southern states in particular mooch off of the productive locales.

Addressed in my original comment (although it was edited in a few minutes after initial posting so I'll let it slide):

>This doesn't necessarily exclude redistribute policies by the federal government entirely, but doing it by tax rate is baffling no matter how you look at it.

[kortilla]

> I think we should exercise the people’s desire for small government and relocate military bases to the places that pay for them

Do you know what military bases do? They aren’t there to protect just a local region.

[nosianu]

But that's not the point. Aside from what military does when military does something, military installations are a huge factor in the areas where they are. When Trump threatened to remove US military bases from Germany - where I live - the main issue here in Germany was the significant economic impact on those local areas, often in less developed more remote regions.

https://www.dw.com/en/german-towns-face-economic-hit-should-... -- "German towns face economic hit should US troops go"

Much of the military is used by politicians as an economic tool for certain regions, independent of their fighting value.

So, you certainly have a mostly local economic impact of military bases.

https://www.areadevelopment.com/siteSelection/june09/militar...

https://www.tpr.org/military-veterans-issues/2020-06-22/texa...

OPs flippant comment reminds me of the equally un-serious suggestion I read somewhere, some time ago, that people should pay for their jobs so that it can be made visible how valuable they think a job is.

[User23]

Your offer is acceptable.

[lmm]

Tax deductions shouldn't be incentives for random policy ideas, they should keep the tax system fair by taxing people on income that really is theirs to dispose of freely. The fact that people don't have any choice about whether to pay state or local taxes is precisely why they should be able to deduct them from their federal taxes.

[gruez]

>Tax deductions shouldn't be incentives for random policy ideas

Taxes are one of the main ways the government tries to influence behavior (eg. sin taxes, green energy incentives). What do you suggest should take their place? Or do you think that government shouldn't be in the business of influencing behavior entirely?

[lmm]

If the government wants to pay people money out of the general taxation fund to undertake certain behaviours, let it do so directly, where we can see it and account for it, rather than through deductions.

[cycomanic]

That's actually a very good point. Tax deductions in contrast to direct payments typically favor high income individuals over poorer people. At the same time for the government to get the greatest impact of your policy, which typically means influencing the behavior of the maximum amount of people. Again this would point to targeting the poor&middle class.

[sokoloff]

One of the largest* tax deductions comes from the paying of people’s wages for jobs. That’s a tax deduction where the economic benefit of the overall transaction goes much more to the wage recipient than to the entity taking the deduction.

It seems unreasonable for employers to not be able to deduct that amount and for the government to somehow pay them a fraction of what it costs to employ people.

* - I suspect it’s the largest overall, but didn’t have time to do the research to satisfy myself that it’s the single largest, but it’s clearly one of the largest.

[winstonewert]

Well, you do have a choice, you could move to a lower tax jurisdiction. Different jurisdictions provide different trade-offs in terms of the tax burdens and services rendered. You can move to a jurisdiction that provides your preferred trade-off.

Furthermore, there are lot of costs which you arguably can't avoid: food, medical, housing etc. Should you be able to deduct those off of your federal taxes as well since you can't really dispose of that income freely?

[lmm]

> Well, you do have a choice, you could move to a lower tax jurisdiction. Different jurisdictions provide different trade-offs in terms of the tax burdens and services rendered. You can move to a jurisdiction that provides your preferred trade-off.

If you take that attitude then that invalidates the original argument - in that case, surely it's just as reasonable for the federal government to incentivise local mutual support cooperatives (which is what high-tax jurisdictions ultimately are) as it is to incentivise 503cs.

> Furthermore, there are lot of costs which you arguably can't avoid: food, medical, housing etc. Should you be able to deduct those off of your federal taxes as well since you can't really dispose of that income freely?

Yes, absoutely! The fact that you can't do that unless you structure yourself as a business is one of the great injustices that leads to the rich paying a much lower real tax rate than the poor.

[renewiltord]

States' rights require states' rights to their money. Federal income tax should be near zero and the Senate representatives should offer treaty money.

Enough theft from my pocket. I'll fund my fellow man. But to fund a man who calls himself my enemy and removes my freedom: it takes a Big Government fanatic to require that.

[s1artibartfast]

That’s funny, I feel the exact opposite for the same reasons. I think charitable donations are far better than taxes because the donors get to direct where the money goes and have say over its use.

Those giving up their money are in the best position to ensure it is used towards the ends they want. I think direct oversight is a positive attribute and useful in ensuring the altruistic goals are effectively met.

I also oppose local tax deductions despite standing to benefit greatly.

[lmm]

"The ends they want" - as opposed to the ends the recipients want (as expressed through an admittedly imperfect democratic system) - is exactly what I object to. Most "donations" are made to advance a personal agenda at least in part; even when the donor sincerely believes they're doing what's best for people, that's usually a reflection of their personal politics and you'll often find other people believing the exact opposite. It's fine to fund personal causes, admirable even, but you shouldn't be given a tax break for it.

[cherrycherry98]

This seems to assume that the government is benevolent, whereas private actors are not. I have come to view government programs with the perspective that they are intended primarily to benefit the politicians efforts to become reelected. They can claim to be saving the world, but with other people's money. Some good may come of these efforts but I don't view them as inherently virtuous. You argue that private actors let personal politics dictate how they direct their funds, if the alternative is allowing politicians to do so, I don't see how that is much better.

I am perfectly content with private actors deciding how best to use their own money for philanthropic purposes. It leads to a more diverse set of approaches. If there are people that believe in one thing and others that believe the opposite they should both be allowed to fund what they think is right without a democratic majority stifling minority points of view.

I do not have a point of view on whether it is worthy of a tax break.

[lmm]

> This seems to assume that the government is benevolent, whereas private actors are not.

Not so much benevolent as accountable. The government, for all its faults, has a huge edifice of checks and balances, and while the gears grind slowly they do limit how far astray things can go. A private 503c is a real wild west in comparison.

[rufus_foreman]

If a charity to which I contribute does a single thing I don't like, I can decide to never give them another penny.

If the government doesn't do a single thing I like, more than half my income still goes to taxes each year to fund the government (income, property, sales, etc.), and there is nothing I can realistically do to change that.

Which one is accountable?

[lmm]

When we're talking about something that's supposed to support a whole community, being "accountable" to the whims of one individual is not a meaningful level of accountability. Changing government policy requires broad consensus from many people, which is exactly as it should be.

[barry-cotter]

> Not so much benevolent as accountable.

Remind me. Who was fired for Waco? Who at the CDC was fired for stopping the Seattle Flu Study from testing for COVID, or for banning commercial labs from testing for it while their own lab reported all samples as positive because of contamination?

[jdminhbg]

This would be a more convincing argument if government assistance to the poor were in the form of some kind of UBI that its recipients could actually use as they wanted, rather than the current situation where it's a hodgepodge of social engineering programs filtered through layers of patronage jobs for administration.

[wolverine876]

> it's a hodgepodge of social engineering programs filtered through layers of patronage jobs for administration

Can you back that up? I know people who were in poverty and very much support many of those programs as lifesavers. It's wealthier people, who have no experience of them, who I see disparaging them.

Also, the criticism is cliche - I haven't seen much evidence of it. While nothing is perfect, the civil service in most advanced countries, including the US, are not patronage jobs; they are protected from such hiring and firing corruption. I know civil servants and they did not get the job through patronage and take their public service and professionalism very seriously. It's very easy to smear all those people in a few words.

[jdminhbg]

> very much support many of those programs as lifesavers

That doesn't really address the issue though, does it? Food stamps are better than nothing, but they do not in fact allow recipients to spend the assistance as they see fit.

It's fine to be in favor of social engineering programs, but it's not consistent to then complain that philanthropists' charity comes with strings attached. The government's charity does as well.

[wolverine876]

> It's fine to be in favor of social engineering programs, but it's not consistent to then complain that philanthropists' charity comes with strings attached. The government's charity does as well.

I don't know what you mean: This doesn't seem to fit the common definition of social engineering, or we could call stop lights and tax forms social engineering; so I can't say I'm in favor, against, etc. And 'strings attached' is much too vague, as everything has strings attached (e.g., legal requirements); the question is the degree and who the strings serve.

[lmm]

> a hodgepodge of social engineering programs filtered through layers of patronage jobs for administration

That's somewhat true as a description of the average government programme, but it's far more true as a description of the average 503c.

[gruez]

>It's fine to fund personal causes, admirable even, but you shouldn't be given a tax break for it.

How does this argument work for other deductions that also allow you to "fund personal causes"? For instance, the IRS allows you to deduct interest paid on student loans. I can get student loans to study anything I want, and doing so is arguably used to to advance my "personal agenda" (eg. getting a phd in economics so I can work in a thinktank). Should I be worried that the action was a "reflection of their personal politics" and therefore not get a tax break for it?

Feel free to repeat this argument for other deductions that the IRS offers: https://www.irs.gov/credits-deductions-for-individuals

[lmm]

Yes, most deductions should be abolished. Payments to 503cs are one of the ones that take the most out of the public purse though, AIUI, since even the richest people don't pay a huge amount of student loan interest.

[solveit]

Would you be happy with government-designed (so presumably democratic) tests and quotas for which charities get the tax breaks?

[lmm]

That's a start, but for me to be "happy" I'd want there to be similar level of accountability and safeguards from bottom to top. So those charities would need to be subject to the same kind of legal rules as a government agency - FOIA, equal protection clause, that kind of thing. And there'd have to be a similar culture of holding them to account. (Like, counterintuitively I'd be happier if I started seeing a lot more news reports of charities wasting funds, because that would suggest that reporters at least cared enough to investigate)

[gruez]

Isn't that already the case? You can't set up a charity to throw parties for yourself, for instance.

[lmm]

You pretty much can, if you can afford the O(1) legal costs to get it approved and set up. An "art museum" set up next door to the "donor" and open only by appointment with the "donor"? Perfectly legitimate according to the IRS.

[JumpCrisscross]

> An "art museum" set up next door to the "donor" and open only by appointment with the "donor"? Perfectly legitimate according to the IRS.

Source? Most fundraising events have a deductible and non-deductible portion of the ticket price because the IRS does not look fondly on such practices.

[daniel-cussen]

You know what could be good, these charities talk about stories, not their statistics. Maybe they could humanistically keep records of their stories, like use a good system for that, maybe part digital, but with paper, so they can be read.

Like the complaints at Liga Chilena Contra la Epilepsia, they just have a Sugerencias y Reclamos book, which you can read (though they told me it is not for me to read). You can see for instance that they addressed one complaint they got a lot, which was the lack of cashiers, so in fact with their remodel five years ago they changed it completely so they now have up to 8 cashiers at a time, and short wait times. My favorite Chilean pharmacy, I'll repeat here the comment I left for that charity: "Un siete!"

[wolverine876]

> even when the donor sincerely believes they're doing what's best for people ...

They are wealthy people who have no experience or knowledge of what people without wealth need.

[exlexer]

To be fair, that also describes a large portion of politicians.

[wolverine876]

I don't agree. Politicians aren't perfect, but they hear from their constituents a lot, especially the unhappy ones.

[analog31]

I've thought about this in the context of charities, since the US is a highly charitable country, with popular distrust of the government, yet is relatively impoverished compared to some other advanced countries. From the viewpoint of the beneficiaries of charity, who I presume are the poor, do they tend to be better off in countries where they are heavily supported by private charity, or in countries where taxes pay to support generous public institutions?

[s1artibartfast]

I think this is a faulty premise. The US is actually quite heavily taxed, at a level greater than most of the OECD and many European countries, Especially in nominal dollars collected, but also as a percent of GDP, or when adjusting for local costs (PPP).

In the US, when you add federal, state, and local revenue, about $8.3 trillion dollars are collected in taxes and fees. The GDP of the US is $20 trillion, so 40% of every dollar produced goes to the government.

This is about $25,000 of tax per person, or $32,000 if you only count adults.

My personal thought is that the main difference between the US and countries with generous public institutions is not the amount of tax revenue collected, but the percent of that revenue effectively spent on said institutions.

[ars]

The tax break is only around 20% of the donation. Even if the donated money is not spent as perfectly as you would like, there's 5 times as much of it.

[s1artibartfast]

Exactly. You would have to believe that taxes do 5x more public good per dollar than charities.

With defense spending, pet projects, and incompetence, it is hard to make a case that they are on parity.

[mercutio2]

Huh? My marginal tax rate is ~45%. I get way more than a 20% benefit from 501c3 donations.

I get to avoid capital gains on the donation of appreciated assets on top of that.

For whom is the benefit only 20%?

[ars]

Long term capital gains tax is 15%. The vast majority of these are against capital gains, not income.

[lmm]

The tax break for SALT works exactly the same way, no?

[vmception]

donations aren’t limited, they are capped via a %

the salt is called via a $

different political things, but the salt cap was a punitive thing purely for you to have resentment about where you live, it’s interesting that instead you got resentment for non profits

republicans want you to have resentment at high tax states run by democrats, so that you consider regime change in that state