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This is a pretty poorly presented article. There are good points for and against DAFs but they're hard to find in here. And backing up, I feel like we don't o
by habosa 8y ago
This is a pretty poorly presented article. There are good points for and against DAFs but they're hard to find in here.
And backing up, I feel like we don't often question the idea of giving nearly unlimited tax breaks for charitable donations. The Economist did a very good job explaining the history, pros, and cons of this practice in 2012: https://www.economist.com/briefing/2012/06/09/sweetened-charity https://www.economist.com/briefing/2012/06/09/sweetened-char...
For what it's worth I donate a good amount every year to causes I care about and I am certainly motivated by the tax break. While that's rational, I do sometimes wonder about the ethical side.
After all, I am basically saying that I should get to self-direct a large chunk of my own taxes. The govt has an idea of what it would do with my income taxes but I can donate them to a cause of my choosing. And there's very little vetting about what causes count, as long as they're not for profit. I could be giving thousands to a charity that wants to give citizenship to dolphins, and depriving some good state and federal programs of those funds.
I do think that there's a good reason to give some limited deductions for charitable giving. After all the world is probably better when people give to each other, no matter the cause. But allowing someone to get a billion dollar windfall and use this tax break to redirect many millions to a cause of their choosing rather than the public is probably taking it too far.
- tonfa 8y agoDo I get it right that in the US charity donations are a tax credit, with no limits? Where I'm currently resident we simply get to deduct it from income, iirc you can deduct up to 20% of your yearly income. That might avoid the ethical concern about not paying tax.
- perl4ever 8y agoIn my experience (as a US taxpayer not a tax advisor) charitable donations in the US are a deduction from income, not a credit, up to a limit of 50% of your income, or less. However, if you donate more than 50% of your income you can carry it over for a limited number of years. It eventually vanishes, though, unlike capital gains losses.
- habosa 8y agoIt's a deduction not a credit. Up to 50% of your adjusted gross income.