The media is screeching about the tax plan...

[Scout26]

More like $480. (24% marginal tax rate bracket)

From what I've heard on how it would work:
1.  You owe $20k in SALT. (might as well make them a high roller)
2.  You write a $10k check to the new "state" charity.
3.  They give you a $10k state tax credit, so now you only owe $10k in SALT, while the state has still gotten $20k.  $10k of it in 'charity', 'balance the budget' type nonsense.
4.  Because charity contributions are 100% deductible, you save $3,200 on your federal taxes.

It's changing the nature of the expense from SALT, limited to $10k, to 'charity', which is only limited to something like 50% of your income.

What a bargain !!!!  It only cost you $10,000 to save $3200 on you federal taxes !!!  Brilliant !!

[Firethorn]

What a bargain !!!!  It only cost you $10,000 to save $3200 on you federal taxes !!!  Brilliant !!

I think you're missing something here.  They're playing with categories.

You do your taxes and find that you owe $20k in income taxes (SALT).  Federally, only $10k of that is deductible.

But wait!  The state doesn't like this, so is willing to give you a break - Any contributions to charities X,Y,Z come with a 1:1 tax break!  That's right, the state will credit you 100% on your state income tax for any donations to those charities(which are totally government fronts)!

So you "donate" $10k to one of the charities.  They send you a nice receipt.  You take the state credit, reducing your tax owed from $20k to $10k.  You are out zero money.  

Total spent:  Still $20k.  $10k directly, $10k as a 'charitable contribution'.  Not a cent more.

Next, you file your federal taxes.
Deductions:  $10k SALT, $10k charitable contributions, all 100% deductible.  At a 32% marginal tax rate, this saves you $3,200.  Assuming you already have enough deductions to itemize, of course.

[MechAg94]

Sounds like the IRS needs to do something useful about the definition of "charity".  I won't hold my breathe though.

[Scout26]

Sounds like the IRS needs to do something useful about the definition of "charity".  I won't hold my breathe though.

The IRS already has pretty clear definitions of what makes a charity. 

The public support must be fairly broad, not limited to a few individuals or families.

  Also the monies "donated" cannot ultimately end up in .gov coffers. 

Plus I hope it takes any new "High Income Tax State" charities to get 501(c)(3) status as it did for the various Tea Party groups to obtain their 501(c)(?) exemptions.

[Firethorn]

Sounds like the IRS needs to do something useful about the definition of "charity".  I won't hold my breathe though.

I wouldn't either, not at its current funding levels.

Also the monies "donated" cannot ultimately end up in .gov coffers.

Is "school programs" diffuse enough, fairly broad enough, and far enough away from 'government coffers' to count as a charity?

Or, to really piss people off here, they could do this:
1.  Make Planned Parenthood(California division), which already receives state funds, one of the eligible charities that you get a 1:1 credit for.  (They could even make it 90% or so to avoid some issues)
2.  Reduce PP funding proportionally to the donations.

Result:  PP fully funded, lots of people getting big tax writeoffs.

Now, more realistically they'd make a superpac type charity system, Ala United Way.  Which will look at their total receipts and distribute it to all the charities that WOULD have gotten state money(and more), in lieu of said state money.  That way places like parks & rec aren't forgotten in favor of more known options.

Plus I hope it takes any new "High Income Tax State" charities to get 501(c)(3) status as it did for the various Tea Party groups to obtain their 501(c)(?) exemptions.

Isn't that just a matter of filing the paperwork?

Hell, going by some writeups the state could found a 'church' and sidestep everything.

Remember, I'm not a lawyer, I'm simply repeating what I've read on the news.  California, NY, and others have actual lawyers working on this.

[just Warren]

But do we really care if the Feds don't get that money?

[Firethorn]

But do we really care if the Feds don't get that money?

I care only in that it unbalances the budget even more.

[Ben]

But do we really care if the Feds don't get that money?

I don't like to see fed.gov keep taking, but I'd rather see them get it than CA. YMMV by state.

[just Warren]

My state is California and I agree I don't want Jerry and the rest that are in that hive of scum and villainy we call Sacramento to have it.

If this charity dodge doesn't work out there may well be pressure to lower the tax rate here.

I could even see a political shift as folks finally realize what living in this state costs them.

I assume there are a lot of folks that "like" social programs and eco stuff but who are not ideologically committed to them and who when they get the bill for same will say "eh, I'd rather have the cash" and if the Dems don't budge, they'll be tossed out. I can dream anyway.

[Ben]

I assume there are a lot of folks that "like" social programs and eco stuff but who are not ideologically committed to them and who when they get the bill for same will say "eh, I'd rather have the cash" and if the Dems don't budge, they'll be tossed out. I can dream anyway.

I agree with you. We have this conversation around here all the time, but I reiterate that if a good chunk of those who call themselves "progressive" had to write a check to the IRS, versus having the money taken out of their paychecks before they ever see it and then getting a "refund", there would be a lot less progressives in CA.

The same applies to health insurance and having to pay it yourself versus an employer taking care of it for you.

[MikeB]

I'm not so sure I can completely complain about the charity game. I've used the line that if someone wants to give more money to the government they are more than welcome to.

I also think people should have some choice in where their money goes if that was really part of one of these games, not that it likely would be. Some granularity in what people support in government might actually be a better judge of what people really want vs. the usual pick Democrat or Republican and dislike probably half of what both want. To pick an example from a post above it would be interesting to see how many people actually chose to contribute to Planned Parenthood - not that I think they should get any government money regardless of the whole abortion issues.

Now that only works if the "charitable" contributions are voluntary. I bet revenues would drop overall if it were.

[Scout26]

https://www.apnews.com/36e3f1155c334df98cf5db1d47ce113b?utm_campaign=SocialFlow&utm_source=Twitter&utm_medium=AP_Politics


Democrat narrative hardest hit.  The living will now envy the dead.

[just Warren]

http://www.wgrz.com/article/news/politics/ny-may-scrap-its-income-tax-for-a-payroll-tax/71-504912334

[Scout26]

http://www.wgrz.com/article/news/politics/ny-may-scrap-its-income-tax-for-a-payroll-tax/71-504912334

I could only get about halfway through that, before the self-unawareness from the D's was more then I could take.

[MechAg94]

I think the issue here is High Tax states getting a special tax loop hole to allow their residents to pay less in federal taxes.  I don't think that should be the case and I am glad it is gone. 

However, trying to disguise state taxes as charity is just more BS shenanigans and ought to be illegal.  I can also foresee that all 50 states could get in on that if it was allowed to stand. 

Why not make my local gun shop a charity and allow me to write off my purchases?  Maybe SGAmmo could set themselves up as a charity also. 

[zahc]

I think you are on to something. Give some SD classes and make it a nonprofit initiative to help women defend themselves. Of course, men are allowed too because you can't discriminate. Add a dimension of providing legal help to those in need so that even the poor can get legal representation. I would donate.

[Hawkmoon]

http://www.wgrz.com/article/news/politics/ny-may-scrap-its-income-tax-for-a-payroll-tax/71-504912334

How is a payroll tax different from an income tax ... other than calling it by another name?

[Firethorn]

How is a payroll tax different from an income tax ... other than calling it by another name?

A payroll tax is charged to the business, income tax is charged to the employees.

As a business:
Income tax:  I pay $10M out as wages, my employees pay $1M in income tax as an aggregate (some pay higher percentages, some pay lower).
Payroll tax:  I pay $9M out as wages, $1M out as taxes on the wages I paid, my employees don't need to file state income taxes.

Liberals don't like the latter idea because it makes it harder to 'incentivise' the behaviors they want.  I happen to like the idea because, like it or not, the state needs revenue, and it is a lot easier for a business to simply pay the payroll tax than to have hundreds or thousands of employees each waste half a dozen hours or so doing their state return.  Especially if it's something like 'take the sum you paid medicare tax on, appy our rate of x%, and send that to us'.

Did you know that in many countries their version of the IRS does your taxes for you, and you only have to confirm it?  Maybe send them some information for special deductions they missed?

[just Warren]

I agree it's more efficient but every person should have to personally write out a check that takes money that they've both earned and had deposited into their account out and send it to Big G.

That way we feel it more than if we never had/saw the money.

In fact, at the government end there should be an automated program that mails you a paper receipt AND a picture of something you could have bought with that amount of money. Just to twist the knife.

That would make raising taxes a lot more difficult. 

Or maybe we should have to buy gold with that money and then personally deliver it to the local tax-fortress. Staffed, by law, with the ugliest, meanest people that can be found. You get laughed at while you hand over the precious gold, get a dirty, stained and torn receipt and told to beat it before the dogs are let loose.

[Fly320s]

Or maybe we should have to buy gold with that money and then personally deliver it to the local tax-fortress. Staffed, by law, with the ugliest, meanest people that can be found. You get laughed at while you hand over the precious gold, get a dirty, stained and torn receipt and told to beat it before the dogs are let loose.

Are we talking about taxes or airlines?   

[just Warren]

In the United States it's both!

[Scout26]

 As I've posted before:

Nope.  Same Day.  You pay all (Property, Local, State, and Federal) Taxes.  To each taxing body.  They each have a rep right there in a long line of tables.  You write a check to the School District, County Board, City Board, Pension Fund, State and Feds.  Did I mention, there's no, zero, zip, nada withholding?  Right there, in full.  No EITC or other refundable tax credits.  (We'd obviously have to have a flat tax), then and only then are you handed a ballot and sent into the voting booth.

I bet we'd have balanced budgets and no debt at every level.

[Scout26]

Meanwhile, Armageddon rolls on:

https://twitchy.com/dougp-3137/2018/01/08/more-armageddon-nancy-pelosis-end-of-the-world-tax-bill-fear-mongering-takes-another-hit/

Visa​ is raising its 401(k) matching for employees in response to tax reform; company also will examine other long-term investments.