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If I had to guess why there's so little money in politics I'd guess it's because there are more efficient ways to spend the money. Political contributions righ

If I had to guess why there's so little money in politics I'd guess it's because there are more efficient ways to spend the money. Political contributions right now seem to function mostly as a tax avoidance strategy. These donations are effectively free. A company or wealthy individual can either pay taxes or donate the money to a "non-political" think tank to promote policies they'd like to see. Convincing someone to influence elections is easy if they'd pay it in taxes anyways. I'm guessing it's difficult to convince someone that their post tax money is most efficiently spent influencing the political system. One last note, there's also many other types of interactions companies have with the government. There's state level, regulatory bodies, local and county influences. Companies interact highly with the government at the local levels because they're easier to manipulate than the federal government.

wcarss 7y ago
It sounds like you're suggesting that every dollar donated to a non-profit entity results in a dollar less of payable taxes -- I'm not aware of a country with a tax/donation trade-off like that, but would be interested to hear about it if you do. The best deal that I'm aware of is a reduction in your reported taxable income equal to the donation, resulting in a savings of the affected tax bracket rates * the dollars donated per bracket, but even that kind of thing is somewhat limited as far as I'm aware (eg up to x% of income is allowed per year). I might have just misunderstood you -- either way, curious if you know something about donations I don't or had a different idea in mind!
- ipython 7y ago
  You can get close by purchasing tax credits in some states - see for example https://www.capfin.net/blog/a-powerful-charitable-donation-option-for-virginians https://www.capfin.net/blog/a-powerful-charitable-donation-o...
andyjsong 7y ago
Not sure about companies, but as an individual, political contributions are NOT tax-deductible.[1] On a personal note, I like Andrew Yang's approach to wash out special interest groups and lobbyist with "democracy dollars" [2] of $100 for every citizen. Apparently it's been working in Seattle, but would love to hear from any Seattlites on the progress of the program. [1] https://blog.turbotax.intuit.com/tax-deductions-and-credits-2/are-your-political-campaign-contributions-tax-deductible-11380/ https://blog.turbotax.intuit.com/tax-deductions-and-credits-... [2] https://www.yang2020.com/policies/democracydollars/ https://www.yang2020.com/policies/democracydollars/
- dumbfoundded 7y ago
  Technically, they are not political contributions. They are donations to non-profits like Americans for Prosperity. Legally a non-profit can use 49% of their money to influence elections directly and the other 51% can push individual issues that are very politically charged.
  - andyjsong 7y ago
    https://www.dropbox.com/s/8bo0ard89lf94bw/Screenshot_20190920-234938.png?dl=0 https://www.dropbox.com/s/8bo0ard89lf94bw/Screenshot_2019092... Almost right, Americans for Prosperity are a non-profit, but it's not tax deductible. That being said I know most church donations are tax deductible and I've read that they lobby. While not all of your proceeds will go to political campaigns, at at least it will be tax deductible. Better yet, just start your own church super PAC and have it focused solely on politics. Then you get captial efficiency and tax deductions.
- loeg 7y ago
  Dunno about anyone else in Seattle, but I've never used my democracy vouchers.
wahern 7y ago
> These donations are effectively free. A company or wealthy individual can either pay taxes or donate the money to a "non-political" think tank to promote policies they'd like to see. That's not how deductions work. A donation costs the donor much more than the tax reduction. All a deduction does is reduce your adjusted gross income, not literally offset the nominal sum you pay in taxes. Say my top marginal tax bracket is 20%. If I donate $100 then it's costing me precisely $100. If I don't donate then I'm on the hook for $20 ($100 * 20%) in tax. $100 > $20. This presumes the $100 is earned income, and that the donation is in fact tax deductible. If neither of those hold then the relation is $100 > $0. People have similarly mistaken ideas about so-called write-offs: https://www.youtube.com/watch?v=XEL65gywwHQ https://www.youtube.com/watch?v=XEL65gywwHQ
- dumbfoundded 7y ago
  This is correct. Money becomes slightly leveraged. If your tax rate is 37%, you effectively get spend to $1.37 for every $1 you remove from your taxable income. There's also estate taxes where you can create a foundation for large estates to avoid the ~16% tax rate. These are often used to fund political goals.
  - wahern 7y ago
    > you effectively get spend to $1.37 for every $1 you remove from your taxable income But it's still an expenditure, and a bad one at that. Imagine you can spend $1 in the stock market or burn $1.37. Which one would you do? The very point of the article was that if political expenditures actually provided a substantial return we should see orders of magnitude more political expenditures. Estate tax avoidance is also a little misleading because you're only avoiding the estate tax, not income tax. Any money you move into a tax-exempt foundation would have already been taxed as income. So whether you shift it into your foundation or simply spend it all immediately by donating it to existing tax-exempt entities, what's the difference? In no situation does donating money either save you money or come out equal to not donating. Donating always costs you money, period. Your original point was that "donations are effectively free", which is categorically wrong.
- 7y ago

wcarss 7y ago

It sounds like you're suggesting that every dollar donated to a non-profit entity results in a dollar less of payable taxes -- I'm not aware of a country with a tax/donation trade-off like that, but would be interested to hear about it if you do. The best deal that I'm aware of is a reduction in your reported taxable income equal to the donation, resulting in a savings of the affected tax bracket rates * the dollars donated per bracket, but even that kind of thing is somewhat limited as far as I'm aware (eg up to x% of income is allowed per year). I might have just misunderstood you -- either way, curious if you know something about donations I don't or had a different idea in mind!

ipython 7y ago
You can get close by purchasing tax credits in some states - see for example https://www.capfin.net/blog/a-powerful-charitable-donation-option-for-virginians https://www.capfin.net/blog/a-powerful-charitable-donation-o...

andyjsong 7y ago

Not sure about companies, but as an individual, political contributions are NOT tax-deductible.[1] On a personal note, I like Andrew Yang's approach to wash out special interest groups and lobbyist with "democracy dollars" [2] of $100 for every citizen. Apparently it's been working in Seattle, but would love to hear from any Seattlites on the progress of the program. [1] https://blog.turbotax.intuit.com/tax-deductions-and-credits-2/are-your-political-campaign-contributions-tax-deductible-11380/ https://blog.turbotax.intuit.com/tax-deductions-and-credits-... [2] https://www.yang2020.com/policies/democracydollars/ https://www.yang2020.com/policies/democracydollars/

dumbfoundded 7y ago
Technically, they are not political contributions. They are donations to non-profits like Americans for Prosperity. Legally a non-profit can use 49% of their money to influence elections directly and the other 51% can push individual issues that are very politically charged.
- andyjsong 7y ago
  https://www.dropbox.com/s/8bo0ard89lf94bw/Screenshot_20190920-234938.png?dl=0 https://www.dropbox.com/s/8bo0ard89lf94bw/Screenshot_2019092... Almost right, Americans for Prosperity are a non-profit, but it's not tax deductible. That being said I know most church donations are tax deductible and I've read that they lobby. While not all of your proceeds will go to political campaigns, at at least it will be tax deductible. Better yet, just start your own church super PAC and have it focused solely on politics. Then you get captial efficiency and tax deductions.
loeg 7y ago
Dunno about anyone else in Seattle, but I've never used my democracy vouchers.

wahern 7y ago

> These donations are effectively free. A company or wealthy individual can either pay taxes or donate the money to a "non-political" think tank to promote policies they'd like to see. That's not how deductions work. A donation costs the donor much more than the tax reduction. All a deduction does is reduce your adjusted gross income, not literally offset the nominal sum you pay in taxes. Say my top marginal tax bracket is 20%. If I donate $100 then it's costing me precisely $100. If I don't donate then I'm on the hook for $20 ($100 * 20%) in tax. $100 > $20. This presumes the $100 is earned income, and that the donation is in fact tax deductible. If neither of those hold then the relation is $100 > $0. People have similarly mistaken ideas about so-called write-offs: https://www.youtube.com/watch?v=XEL65gywwHQ https://www.youtube.com/watch?v=XEL65gywwHQ

dumbfoundded 7y ago
This is correct. Money becomes slightly leveraged. If your tax rate is 37%, you effectively get spend to $1.37 for every $1 you remove from your taxable income. There's also estate taxes where you can create a foundation for large estates to avoid the ~16% tax rate. These are often used to fund political goals.
- wahern 7y ago
  > you effectively get spend to $1.37 for every $1 you remove from your taxable income But it's still an expenditure, and a bad one at that. Imagine you can spend $1 in the stock market or burn $1.37. Which one would you do? The very point of the article was that if political expenditures actually provided a substantial return we should see orders of magnitude more political expenditures. Estate tax avoidance is also a little misleading because you're only avoiding the estate tax, not income tax. Any money you move into a tax-exempt foundation would have already been taxed as income. So whether you shift it into your foundation or simply spend it all immediately by donating it to existing tax-exempt entities, what's the difference? In no situation does donating money either save you money or come out equal to not donating. Donating always costs you money, period. Your original point was that "donations are effectively free", which is categorically wrong.
7y ago