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> People get receipts for charitable contributions precisely so they can deduct those amounts from their taxable income. I don't understand how this is conside
by aninhumer 11y ago
> People get receipts for charitable contributions precisely so they can deduct those amounts from their taxable income.
I don't understand how this is considered tax avoidance? It's not like you get more money this way, you just get to give slightly more to charity than you might otherwise, which is the point of the deduction.
- hsitz 11y agoIt's tax avoidance because if you hadn't gifted that $100 to charity then your taxable income would have been $100 higher and you would have paid higher taxes. You "avoided" paying tax on the amount that you gifted to charity.
- umanwizard 11y agoBy that definition, taking a lower-paying job is "tax avoidance" in exactly the same way.
- hsitz 11y agoNot really. Taking a lower-paying job not only avoids taxes, it lowers your income (both pre-tax and after-tax). With charitable giving you can avoid taxes but still retain exactly the same after-tax income (assuming that you were going to gift to charity regardless of whether you got deduction or not). That is, you can gift $100 to charity, deduct the gift, and so avoid (say) $30 in tax. In this case the gift to charity effectively results in you having $100 less than before. Or, for same net result to you (minus $100), you could gift (after-tax) dollars to charity, say $70, and pay the $30 in taxes that you avoided in previous scenario. Only in second case you ended up giving only $70 to charity, because $30 goes to government. In first case you gave all of the $100 outlay to charity, avoided the $30 tax.