Saturday, August 06, 2005

Charity donations

What is up with charitable donations being tax deductible?

Using a donation to deduct from your tax is rather like choosing how the government’s money will be spent. Now that might sound reasonable until you realise that it is like giving yourself two votes one regarding how everyone elses money is spent at an election and one regarding how yours is spent when making a donation.

Not only that but it defeats the purpose of both taxation and of donating. there is no point taking money off people for taxation purposes and then giving it back to them as a tax deduction on a charitable donation that is just money for accountants - you might as well just have slightly lower taxation and slightly higher incomes nd thus slightly higher nominal values of donations (if you so wish). Similarly donating anything other than your own money is not really donating.

It seems we create inefficiency in our system for no decent reason at all. Charities should be treated no differently from any other business if they cant survive without these effective government subsidies then they are not meant to survive.


Blogger Nigel Kearney said...

Your view is, er, uncharitable.

The reason for the deduction is that a charitable donation is treated as if you had never earned the income at all.

Let's say A takes time off work, forgoing some of his income, in order to do charitable work. B gives up an equal amount of income by making a donation. The tax deduction means they are treated the same - otherwise B would be taxed but not A.

A charity itself is not taxed on its income, so you are correspondingly not taxed on income you transfer to it.

12:58 AM  
Blogger Genius said...

yes, unashamedly uncharitable.
Charities shouldnt have "income" anyway I would have thought.

3:06 AM  

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