Michael Maiello's picture

    Your Charitable Donations Are Not A Tax

    By Michael Maiello on Fri, 08/17/2012 - 12:10pm | Politics

    One thing I missed in the "Mitt Romney never pays less than 13% in taxes" story is his explanation that if you add in his charitable donations, he's paid north of 20% a year.  I have no problem with the federal government's decision to encourage charitable giving by offering people tax deductions.  But Romney's argument here is ridiculous and, taken to the extreme, dangerous.

    Taxes and charitable donations are not the same.

    First, taxes are an obligation.  You can reduce or skip your charitable giving during a hard year.  Not so with taxes.  That's pretty simple.

    A more fundamental difference, I think, is that taxes are, to the extent possible, impartially spent for society's benefit.  We all get some miniscule say in how the money is ultimately apportioned.  We can organize against politicians whose priorities don't match our own.  We can evaluate how well government agencies assess and deal with problems.  Because we're all in it together, we can debate amongst ourselves.

    There are some great charities out there and, of course, some terrible ones.  And we will probably not all agree on which are good and which are bad.  Romney gives to his church.  I've given to theater companies.  Some of my friends give to our old high school.  Whether your priority is PBS and Public Radio or AIDs research in Africa, you have options.

    And that's just the thing -- it's not a tax because it's about your priorities, in isolation.  I tend to be sympathetic to non profit arts organizations just because so many people think that focusing charity there is frivolous, in light of other problems that we face.  So be it.  That's my bias.

    But, when we're talking about me we're not talking about much.  $500?  A thousand?  Mitt Romney's in a different world.  Bill Gates and Warren Buffett are in other worlds all together.  When you get into really big money donations, the rules change a bit.

    I give a theater company $500 and they use it to buy the lighting equipment from the show they're producing.  I give a theater company $1 million and I'm on the board and, oh, by the way, I'd really like to see some Albee this season.

    The bigger a donor you are, the more influence and control you have.  Charitable giving becomes an expression of personal will and since charities and non-profits do a lot of things in society, they can actually be a mechanism by which a very rich person can help guide society in the direction that they want it to go.  There is, in the end, an element of power involved.  Being a big donor gives your rights and privileges and influence that you don't get by being a big taxpayer.

    And, of course, there's the legacy element.  The federal government doesn't name its buildings after the biggest or most generous taxpayers.  But if you buy a new wing for the hospital or the museum, they'll name it after you, no problem.

    Topics: 
    Politics

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    I'm glad to know I wasn't the only one to catch his most recent verbal blunder .. and I suspect he isn't even aware taxes and charity aren't identical twins that anyone can easily confuse at first sight.


    by Beetlejuice on Fri, 08/17/2012 - 1:02pm

    I don't believe a mandatory tithe to Romney's religious institution is a charitable donation, I mean it is a requirement of his religion, and no one gets out of it, so it isn't charitable and it isn't a donation.

    13% is an astoundingly low number for someone worth 250 mil+, there is something quite criminal about that, even if it is legal, he isn't paying his fair share. 13% wow. Well I was talking to some teamsters about this yesterday, who began by telling me that both parties suck, and I said while that is true, both parties are not equivalent in suckiness.  Democrats will let us spend our taxes on ourselves and not just to subsidize rich people's right to have a helicopter and plane of their own, and not really have to anti up their fair share. That argument won each of them over, and half of them were avowed Limbaugh listeners.


    by tmccarthy0 on Fri, 08/17/2012 - 1:11pm

    I'm okay with calling his mandatory tithe a charitable donation since it's his choice to stay in that religion.  I see it as no different than joining a charitable board with the understanding that you have to raise or provide a minimum level of donations per year.  Nobody's putting a gun your head.  You don't have to be on the board and you don't have to be a Mormon.  In a way, I see what you're saying but that's because I think that we both personally believe that donations to the Mormon church really don't do that much good for society in general.  People's mileage will vary on such issues.

    And, yes... 13% is absurdly low.  From a pure tax bracket perspective, it puts Romney in the shoes of somebody who makes between $10,000 and $35,000 a year.  Glad you're able to win hearts and minds with that argument!


    by Michael Maiello on Fri, 08/17/2012 - 1:25pm

    For the sake of learning, I'd like to expand on this topic.  Please correct any flawed assumptions and/or data put forth....

    It's my understanding that if one does not tithe the requisite 10%, then they cannot be 'members' of the Mormon church with all the 'benefits and privileges' of full church membership.  (The veracity of the amount proffered is based on tax forms which some state one must make available to church principals and that a 'bill' is sent based on the data submitted?!?)

    Thus, is it truly a charitable donation if you receive a product/service in return?  Of course, some may assert these are in fact dues which are tax deductible to businesses if indeed the 'membership' is of some benefit and/or needed to support/sustain business operations.

    Also, is it known if these tithes are able to be funneled to the for profit businesses/enterprises that the church has holdings and/or financial interests in their portfolio?

    I'm not aware of another church that makes tithing a requirement to be a member and requires same to enjoy full benefits/privileges of the church.

     


    by Aunt Sam on Fri, 08/17/2012 - 1:50pm

    I think that, with some exceptions, a donation isn't deductible if you get services in return for it.  Lincoln Center is a non-profit.  But when I buy tickets to a show there, I don't get to write it off on my taxes because, heck, I traded money for a show.  I didn't just give money to Lincoln Center asking nothing in return.

    Now, let's say I'm on the board of Lincoln Center and I promise them $2 million  year and if I can't raise it, I'll give it to them out of my own pocket or I will step down.  Now, I do have a requirement to stay a board member and, as you might imagine, meeting this requirement might be worth it to me for a whole host of social, political, business and status reasons (I can dream, right?)

    I think the IRS says, when if I write that $2 million check to stay on the board that it's deductible.  The benefits of being on the board are not considered a service like the show that the ticket buyer was given a seat to see.  And technically, by the way, I think if I give $500 to a theater and they say, "Thanks Destor.  Here's two free tickets to opening night," I should not deduct the face value of those tickets at the end of the year.  If I accept the tickets I should tell the IRS I gave $450 (less a pair of $25 tickets).

    In any event, I don't think that the Church making it an obligation of membership matters much more to the IRS than a requirement that a board member raise a certain amount of money for their non-profit.  You want in, you play by the group's rules.  You can always not.

    I guess you also have to wonder just what benefits and priveliges we're talking about.  The right to an after life?  The right to marry in the Mormon church?  These are things of spiritual rather than monetary value that the IRS likely doesn't care much about.


    by Michael Maiello on Fri, 08/17/2012 - 2:13pm

    My understanding is that you do not get to participate in ongoing church activities, serve on committees or even attend general services.  Again, not same as any other church I'm aware of that qualifies.


    by Aunt Sam on Fri, 08/17/2012 - 3:17pm

    Certainly seems strict.  But being Mormon is ultimately voluntary, right?


    by Michael Maiello on Fri, 08/17/2012 - 4:01pm

    I don't know specifically about whether or how much of Mormon church tithing is deductible, but I have had to study these general issues for regular USPAP tests.

    Actually, as far as your questions, it's all very simple: the IRS is in charge of this, they are the boss here, they are the ones who decide all of this type of thing, like which donations are deductible and also the percentage of donations that are deductible when you get something in return for your donation. I am sure there are Rev. Proc. rulings on how much of any church donations you can take and how much, if any, are considered to be payment for services or similar to dues.

    If a non-profit or charity or religion wants donations to them to be deductible, they follow IRS rules and set up an entity to accept donations according to IRS rules, which actually can get very complicated (likewise, if they don't care/don't like the rules, or it gets too complicated to figure out which part is charitable and which part is where the donor is getting something back, they don't bother.)

    And if as a citizen, you don't happen to like the IRS giving charitable donation deduction status to any certain entity, your option is to complain about it to your congresspersons and try to get that IRS Rev. Proc. changed as regards that instance. Otherwise, it's not a democratic process, the IRS is the dictator here. (And if you are a charity or donor that is unhappy with what the dictator has ruled in your own particular case, your only option is to go to court.)


    by artappraiser on Fri, 08/17/2012 - 4:27pm

    IRS regs get into some pretty knotty issues about which part of donations are really donations, and also the value of intangibles, sometimes ridiculously so.  But to my knowledge so far they haven't gottten into the valuation of societal status so they can tax it as payment in kind. Similarly, they don't require you to get good feelings appraised for fair market value when you get them from donating, in order to require you to subtract that value from the deduction .cheeky

    As far as donors following the rules: donations of high value relative to reported income are always suspect, automatically flagged, and often challenged and audited. Donors who give a small percentage of their income get away with breaking lots of rules because the IRS does not even bother to check those deductions.

     


    by artappraiser on Fri, 08/17/2012 - 4:25pm

    The non-profit will send you a letter telling you that $450.00 of that money is tax deductible, while the 50.00 was for services-in-kind. You can legally deduct only the 450.00 if you received tickets with a face value of 50.00. That is the IRS rule.


    by tmccarthy0 on Sat, 08/18/2012 - 9:01am

    Nice blog, Destor. Great topic. I'll just note that both the Romney's have assiduously avoided using the words, "Federal"  and to my knowledge, even "Income". 


    by Oxy Mora on Fri, 08/17/2012 - 2:53pm

    Of course he was just trying to do something, anything to make it 'sound' like he paid more taxes.  And of course with the Mormon church the ten percent isn't optional so it probably 'feels' like a tax to Mitt.  One he wouldn't pay if he didn't have to and a reason for him to get his net income as low as possible so he could pay them as little as possible as well....

    And to his base that are suckers for just about everything the right feeds them... they might just walk away thinking 'really he paid 20%'...


    by synchronicity on Fri, 08/17/2012 - 1:56pm

    Yeah, but you might notice that when he talked about "charity" he didn't mention that it was all donated to the Morman Church.  

     

    LAST TIME I HEARD, THE MORMONS WERE NOT EXACTLY APOLITICAL -- GAY MARRIAGE, CHOICE, -- OH, AND THEY HAVE NOT BEEN ON THE GOOD SIDE OF RACE RELATIONS EITHER. THIS COUNTS AS A ​CHARITY????

    Anyone dispute that?  Well, let's take a look at his taxes!


    by CVille Dem on Fri, 08/17/2012 - 5:46pm

    My comments above were not directed at the Mormon religion, but rather at the 'terms and conditions' of their tithing requirements that I am not aware are mandated by any other church entity.  For the sake of the charitable tax deduction issue, I was attempting to note that since their tithing is a mandate in order to have full church membership and therefore be 'allowed' to participate in all church programs, it seems to perhaps not truly be a charitable 'donation' per se.   I reiterate that I am not aware of any other church with the same 'rules'.

    I would assert and want to discuss this no matter the religion.

    As for the Mormon church not being exactly apolitical, neither are the Catholic, evangelicals and most other of the 'mainstream' churches.  Many organized religion entities, IMO, continue to cross the line and engage in political activities and therefore, are in violation of the requirements set forth in eligibility to achieve their tax exemption status under these laws.

    However, the politicians being aware of the political power these churches now possess will not review and enact needed actions to ensure there truly is separation of church and state.

    I agree about 'looking at his taxes', and hope that there are many more blogs and published media reports about this matter.  It's troubling and again I ask, if there's nothing in his filings that are irregular then why not release them? 


    by Aunt Sam on Sat, 08/18/2012 - 1:52pm

    Joanna Brooks, a columnist at Religion Dispatches, told The Slatest that most Mormons tithe with a monthly check, but "it is not uncommon for high net worth members of the Church to donate stock in lieu of cash." Tithing, she adds, is a "benchmark of orthodoxy" in the Mormon faith and required in order to attend services in the Temple.

    http://slatest.slate.com/posts/2012/01/18/mitt_romney_stock_donations_to...

    The Mormon Church like other religious groups pays no real estate property taxes, even if they are earning revenue as commercial properties. The church pays no taxes on donations, or holdings such as stocks or bonds or any other assets.

    Read more: http://www.politicolnews.com/the-mormon-church-owns-bain-stocks-and-billion-dollar-businesses/#ixzz23vFYTeh6


    by Aunt Sam on Sat, 08/18/2012 - 2:09pm

    I think Romney was right to include it. it is an oversimplification to say that anything he gives away to charity is really about promoting himself and power. he expects non-profits to make an impact on our culture, and so he supports them. should npr be supported by tax dollars or by the people who value it. I'd say both are helpful income...and if that is true then a total of taxes and contributions for an individual should be duly noted.

    by stephen (not verified) on Fri, 08/17/2012 - 2:16pm

    Ah, but if I don't agree with Romney's charitable vision, what should it mean to me, if anything?


    by Michael Maiello on Fri, 08/17/2012 - 2:33pm

    If you prefer the alternative of direct taxpayer funding of "visions," that would mean that the equivalent of Jesse Helms and fans may get a say in what lines go into your next play. Elite educated snobs with money do sometimes have a soft spot for poor avant garde  playwrights, go figure. The Baptist Walmart worker in Montana, maybe not so much.

    Tax deductible charitable contributions are a psychological game played with the tax paying populace where they don't think of the deduction as taxpayer funding. Don't ask me why it works that way, but it does. This allows not just avant garde art to get more funding, but also things like research into rare diseases that only affect only a tiny percentage of the population. Yes, in effect, it's a  sort of "voucher" program where the individual taxpayer gets to pick where some money goes, without his fellow taxpaying citizens bitching about it.

    There is a valid argument that we should not play this game and let the avant garde and rare diseases etc. compete in the donation market with other charities for the donor dollar (and that taxes should directly fund more of the big general needs now served by popular charities) all of them unassisted by the US taxman giving a deduction.

    But as far as donations of personal property, I can personally vouch that if there was no deduction for donated artwork to museums or real property to institutions, virtually none of those donations would have occurred, that those items would  have gone to market, and the donor would have given the donee the money received from the sale for which they would get a deduction, in order to buy something similar.


    by artappraiser on Fri, 08/17/2012 - 5:02pm

    Double A, it's been too long since I mentioned how smart you are.  And, I agree with you entirely.  I commented without thinking enough when I made that quip.


    by Michael Maiello on Fri, 08/17/2012 - 9:17pm

    aw shucks blush

    But I must protest that this is not to do with natural smarts, rather, this is stuff I have basically been forced to ruminate upon for a very, very long time. Actually, I've forgotten a lot of detail that I used ta know on topic.frown


    by artappraiser on Sat, 08/18/2012 - 3:47am

    he expects non-profits to make an impact on our culture, and so he supports them.

    Absolutely, an important impact on our culture since some of that money was spent to send mormon missionaries out to convert people. Those donations are just like a tax because we'd have to fund those mormon missionaries through government programs without those donations.


    by ocean-kat on Fri, 08/17/2012 - 4:33pm

    Charity does not pay for public institutions, infrastructure, or collective solvency.

    If a rich guy is to go on and on about how their money spent elsewhere is nonetheless a benefit for the whole of society, I don't want to hear the same rich guy complain about the growing deficit ever again.


    by moat on Fri, 08/17/2012 - 5:03pm

    Stephen, there is a huge difference between a 501(c)3 not-for-profit and a religious organization. I doubt very much Romney want traditional non-profit organization to have vast impacts on our culture.  The fact is Republicans have fought efforts of non-profits, well since they veered towards extremism.  They seem to believe all charitable giving should revolve around religious orgs. If they/Romney really wanted those orgs to have impact they'd quit threatening to cut all federal grant opportunities that are administered by government agencies like NEA. But they don't, so basically they want religious institutions to have impact, not non affiliated non-profits. 


    by tmccarthy0 on Sat, 08/18/2012 - 8:55am

    To clear the air around here, Mitt Romney is just doing what any tax hating America loving  Real American would do.

    Any money of his that winds up in the hands of big government nanny state freedom destroying socialist liberals, is money he'd rather see go to some offshore tax dodging secret account. If he succeeds 100% on that mission, so what. Is it legal? Hey, in America with enough lawyering most anything may be legal.  Aside from his Dad George Romney, who wouldn't do it if they could?

    Also, Romney never served in the military. Yet, Mitt strongly and patriotically supported drafting students to go to Vietnam to fight commies.

    Did he enlist to fight himself? No. Did he forgo deferments to avoid the military? No. The fact is he admires citizens who served in the military so much he would give them vouchers for medical care.  Each of us serves our nation in different ways my friends.

    Although there are some weird offshoots of the LDS Church who still practice polygamy, when Mitt's ancestors knew the law they had the decency to leave the country rather than give that stuff up.

    Call it Love It or Leave It. Mitt loves it.  His record shows us all why.

     


    by NCD on Sat, 08/18/2012 - 12:31pm

    Your remarks about his Viet Nam hypocrisy are particularly devastating.


    by Michael Maiello on Sat, 08/18/2012 - 1:30pm

    John McCain has said we could have won in Vietnam if we took 'the gloves' off.

    I'm thinking if Mitt, George W., Cheney, Newt and Limbaugh had chosen to go to Nam, hell, the VC might have turned tail and run. Imagine the unmatched passionate patriotism of these great Americans put into action in a combat zone. It might truly have been that light at the end of the tunnel, a brilliant flame of victory, that always faded, and receded from view.


    by NCD on Sat, 08/18/2012 - 6:35pm

    Only two "young guns" short of a magnificent seven. Why, if only we had deployed these super secret weapons, today we'd be buying sneakers made Viet Nam and there would be a real Hilton in Hanoi..wait, what?

    by jollyroger on Sat, 08/18/2012 - 6:55pm

    "True combat power is arms multiplied by fighting spirit. If one of them is infinitely strong, you will succeed."-Asahi Shimbun

    It was undoubtedly a crushing blow to that war that these young Republicans, whose fighting spirit was, and still is, infinite were not there on the battlefield.

    I am glad to hear Mr. Hilton has refurbished the Hanoi Hilton, former residence of John McCain.


    by NCD on Sat, 08/18/2012 - 7:57pm

    I believe that at a reasonable premium you can get McCain 's old room, now designated "The Admiral's Suite"...the wall hooks have been refashioned into a cunning slinglike device which is deployed when it doubles as the honeymoon suite.

    by jollyroger on Sun, 08/19/2012 - 2:18am

    This might be a good time to cite an important distinction between a 501c3 and a church. Viz., the first involves asking for permission in advance, the second merely the avoidance of occasion for apology. A church enjoys the perks of tax exemption ipso facto, as it were. Gratuitously, as Autarch of The Church of the Gnosis of the New Paradigm (dba ) The Church of Christos Appolonari ("just say 'no' to Yahweh, and 'yes' to Jesus"), hence a competitor to those superstition. ridden. Yahweh cults, I will take this opportunity to alert any daggers seeking a home for their excess cash that tax deductibility is available at generous valuations pace Double A.

    by jollyroger on Sat, 08/18/2012 - 5:40pm

    Correction: Cash donations, of course, have precise valuation. We will, however, place a high value on your artwork, including those refrigerator mounted examples from your children's school projects.

    by jollyroger on Sat, 08/18/2012 - 5:49pm

    Your point is well taken Destor.

    A very wealthy man who gave something back. (I wonder, if he too was an iconoclast?)

    The Andrew Carnegie Foundation has done a lot of things to help the people.


    by Resistance on Sun, 08/19/2012 - 12:25am

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