Punch Debt In The Face

First off, thanks for helping me host an awesome conversation yesterday about charitable gifts and taxes. Y’all were polite and cool-headed, even if you didn’t necessarily agree with the person that commented above or below you. Well played everyone, well played indeed.

Anywhoozle, yesterday a reader suggested that anyone who lists charitable gifts on their taxes is not donating out of the goodness of their heart, but for the selfish benefit of receiving a tax deduction. I can understand why the commenter thinks this.

Truth is, the deduction benefits probably do encourage charitable giving. I mean when was the last time you gave $1,000 to a business or organization that didn’t qualify for a deduction? If you’re like me the answer is almost never. Sure I give $20 here and there to a homeless person, or I might give $100 to a friend for a missions trip, but I honestly don’t think I’ve ever just walked down to my local coffee shop and been like “Hey you guys do awesome work and I want to support the business, here’s $500.”

So yes, I guess most of us probably do only give substantial financial gifts to charities that allow us to deduct that gift from our tax obligation, but ultimately I have to disagree with the sentiment.

I might be wrong, but I’d bet most people donate because they want to help someone or something out, not because they’ll get a deduction. It just doesn’t make financial sense. If I’m in the 25% tax bracket and I give $10,000 to charity over the course of the year, my maximum benefit for making that contribution would be $2,500. Why the heck would I give someone $10,000, so I can save $2,500? It clearly would be to my benefit to never make the contribution, write Uncle Sam a check for an extra $2,500, and keep the remaining $7,500.

And that is exactly the point I want to make today.

Why do people get so jacked up on tax deductions like they are best thing ever? I mean people were telling me to keep my student loans because I could deduct some of the interest on the loan. They literally were trying to convince me to keep paying $2,000 a year in interest to Sallie Mae, so I didn’t have to send the government $500. I bet some of you with mortgages have probably had similar garbage preached to you, “Don’t pay off the mortgage, you’ll lose the deduction.”

Don’t get me wrong. I love me some deductions. If you are eligible, take ‘em. Just don’t do something stupid and give Person A $5,000 so you can avoid giving Person B $1,000… Unless of course you have so much freakin’ money you like wasting it, then by all means waste to your heart’s content.

Have you been told to keep a debt around longer than you wanted because of the tax deduction? Do you regularly give significant financial gifts to non-qualified businesses or organizations? Have you ever given a gift, purely for the tax benefit?

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So information about Mit Romney’s tax return came out a couple of days ago and not surprisingly, the dude is freakin’ loaded. He made over $20,000,000 a year in 2010 and 2011. Most news stories I read seemed to only care about one thing, his effective tax rate of 15%.

Although I don’t like to identify myself with any political party (I think they’re both muy estupido), I don’t think you’ll be surprised to hear I am conservative by nature. I never drank before I turned 21, I didn’t move in with Girl Ninja until I married her, and I definitely didn’t jump on board with the Occupy Wallstreet movement.

Even though I’m relatively old-school, I understand and appreciate that you might not be. You wont see me on the street corners preaching “repent or go to hell” and it’s not very often I talk about anything even remotely political on this blog.

If I said, “I love Mit Romney”, half of you would have a hay-day in the comments section, tearing him and me apart. Likewise, if I professed allegiance to the Obama Campaign, I would expect similar reactions from the other half of you. The problem with politics today is no one is willing to have a conversation, and no one is willing to say, “You might be right.” Instead we call each other stupid, ridiculous, ignorant, and any other insult we can think of to make ourselves feel better.

Oh man, I’m on my fifth paragraph and I haven’t even gotten to what I want to talk about (sorry today’s post is going to be quite a bit longer than average). Okay here goes…..

I noticed on Mit Romney’s tax return he gave $3MM, of the $21MM he made in 2010, to his church and other charities. That means Romney gave 14% of his wealth away. I’d be willing to bet if you looked at Romney’s tax returns for the last ten years, they would all tell a similar story; He made a ton of money, and probably gave between 10%-20% of it away.

Obama’s tax returns tell a different story. In 2009 and 2010, the Obamas donated about 14% of their income to charity. Not too shabby. But if you look at his tax returns prior to becoming El Presidente (2000 to 2008) he never gave more than 6.5% to charity, and two of those years he gave less than 1% of his earnings away. Makes you wonder if he is giving more now because he knows he will get hell if he doesn’t. The Biden’s have never even pretended to be charitable givers, only donating around 1% of their income each year.

I side with the democrats in that I DO believe the wealthy have an obligation to help the less fortunate, and that they should redistribute some of their wealth to those in need, but I find it hard to take Obama (or Biden) serious when their personal actions don’t necessarily reflect the message they preach.

If they really, truly believed the wealthy have this moral obligation, why don’t they act on their own beliefs? Why wasn’t Obama donating 14% of his income to charity between 2000 and 2008? Why hasn’t Biden ever given more than 1% of his income away? Why must the government force them to do this when they are completely capable of doing it on their own?

Does anyone else at least find this a little odd? I guess the big take away from this whole situation is that the only REAL way for America to prosper is for people to THINK like Obama, but ACT like Romney. Why are politicians (both democrats and republicans) incapable or practicing what they preach?

p.s. Just to be clear, I think Romney is kind of a tool and this post is not in any way, shape, or form an endorsement for his candidacy for president. Although I do admire the dude’s commitment to giving. 

p.p.s. I realize by talking about politics today, I’m opening up a can of worms. My only request is that we do our best to keep the comments related to this topic and avoid saying things like “Obama is a Muslim that wants to murder babies” or “Romney is a Mormon whackjob who only cares about his bank account”. Comments like that provide no value and only make you (and the party you represent) look bad.

p.p.p.s. If you want to know why I said I’d bet Romney has given at least 10% to charity for the last decade, see this comment I posted below.

p.p.p.p.s. I just wanted to p.p.p.p.s. this because I don’t think I have ever PS’ed something this much

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