Interesting "fact" heard this a.m.

[El_Gato]

I had Bill Bennett's morning show on while driving to the store this morning.

I didn't catch a source for this comment (don't know if he offered one or not) but I found it interesting:

Mr. Bennett stated that statistics show that among the 50 states, NO "blue state" ranks in the top 25 in per-capita charitable giving.

Haven't thought about this enough to derive any particular explanations/conclusions, but I simply found it interesting...

[Cat Grad]

Yeah, interesting. Along the same line, as I recall, the Rockerfeller's bailed the country out during the depression of 1896 with zero interest loans. Some of our modern day "philantropists" would do well to take some history lessons. Notice all the working stiffs contributing more than they should while our elite only contribute if it's tax deductible

[Grizlaw]

That is an interesting statistic. One thing I would be interested in seeing, though, is a breakdown of the types of organizations that people in various states contribute to.

Without claiming to truly "know" any of the following, this is my theory: the statistics cited were probably taken from statistics kept by the IRS or state tax authorities for deductions claimed for contributions to charitable organizations. Because of that, the statistics would include contributions to churches and other religious organizations. Because it is likely also true that, on average, "red states" have a greater percentage of regular church-goers than "blue" states, and regular church-goers contribute to their churches on a weekly basis, it would stand to reason that, on a per capita basis, their taxpayers would claim greater deductions for contributions to charitable organizations. It would be interesting to see how the statistics would change if contributions were broken down by different types of organizations (i.e. should an unsolicited donation to the Red Cross for tsunami relief be viewed the same as your weekly contribution to the church you attend?)

By the way, just so nobody reads this the wrong way, I'm not bashing religion in any way; I am a somewhat regular church-goer myself. I'm just offering my theory, and suggesting that the statistics might not indicate a true difference in the generosity of red-staters vs. blue-staters.

[SonomaCat]

For anyone with any degree of wealth, charitable contributions are not tax deductible (itemized deductions are phased out at a relatively low income level). So the rich people who do make contribtuions are generally not doing so for tax-motivated reasons.

Besides, charitable giving as a tax avoidance scheme is an ineffective method. The deduction just makes it a little easier to swallow.

I have seen per capita contribution rankings that have Utah at the very top (donations to LDS), and several of the poorer southern states quite high as well (likely primarily due to donations to churches coupled with extremely low per capita incomes and cost of living).

[SonomaCat]

That is an interesting statistic. One thing I would be interested in seeing, though, is a breakdown of the types of organizations that people in various states contribute to.

Without claiming to truly "know" any of the following, this is my theory: the statistics cited were probably taken from statistics kept by the IRS or state tax authorities for deductions claimed for contributions to charitable organizations. Because of that, the statistics would include contributions to churches and other religious organizations. Because it is likely also true that, on average, "red states" have a greater percentage of regular church-goers than "blue" states, and regular church-goers contribute to their churches on a weekly basis, it would stand to reason that, on a per capita basis, their taxpayers would claim greater deductions for contributions to charitable organizations. It would be interesting to see how the statistics would change if contributions were broken down by different types of organizations (i.e. should an unsolicited donation to the Red Cross for tsunami relief be viewed the same as your weekly contribution to the church you attend?)

By the way, just so nobody reads this the wrong way, I'm not bashing religion in any way; I am a somewhat regular church-goer myself. I'm just offering my theory, and suggesting that the statistics might not indicate a true difference in the charitability generosity of red-staters vs. blue-staters.

Of course, these kinds of topics generally lead to a discussion as to whether or not the federal government should be in the business of subsidizing churches (including Scientology, Church of Satan, etc.) by making payments to those organizations tax deductible. The deliniation between a tax deductible chuch and a non-deductible payment to any other kind of social or fraternal organization is a fine line, especially since the chuch doesn't have to show any kind of charitable purpose.

This has opened the door to the government subsidizng the accumulation of a lot of wealth by many organizations and people (L. Ron Hubbard, Mormon Church, etc.).

It's an interesting philosophical question, but not one that any politician is going to touch.

[Hell's Bells]

For anyone with any degree of wealth, charitable contributions are not tax deductible (itemized deductions are phased out at a relatively low income level). So the rich people who do make contribtuions are generally not doing so for tax-motivated reasons.

Besides, charitable giving as a tax avoidance scheme is an ineffective method. The deduction just makes it a little easier to swallow.

I have seen per capita contribution rankings that have Utah at the very top (donations to LDS), and several of the poorer southern states quite high as well (likely primarily due to donations to churches coupled with extremely low per capita incomes and cost of living).

i question any giving of charity if it is tax deductible and you claim it on taxes. this is because that defeats any motivation of giving anything to charity if you are only going to get it back. Giving should be a sacrifice not a temporary loan

[SonomaCat]

For anyone with any degree of wealth, charitable contributions are not tax deductible (itemized deductions are phased out at a relatively low income level). So the rich people who do make contribtuions are generally not doing so for tax-motivated reasons.

Besides, charitable giving as a tax avoidance scheme is an ineffective method. The deduction just makes it a little easier to swallow.

I have seen per capita contribution rankings that have Utah at the very top (donations to LDS), and several of the poorer southern states quite high as well (likely primarily due to donations to churches coupled with extremely low per capita incomes and cost of living).

i question any giving of charity if it is tax deductible and you claim it on taxes. this is because that defeats any motivation of giving anything to charity if you are only going to get it back. Giving should be a sacrifice not a temporary loan

I agree with you to some degree, although if someone donates to a church or charity and deducts it on their tax return, they are at most only getting about a third of the money back in the form of reduced income taxes. If it was instead a dollar for dollar credit, then I would completely agree with your post.

[Hell's Bells]

For anyone with any degree of wealth, charitable contributions are not tax deductible (itemized deductions are phased out at a relatively low income level). So the rich people who do make contribtuions are generally not doing so for tax-motivated reasons.

Besides, charitable giving as a tax avoidance scheme is an ineffective method. The deduction just makes it a little easier to swallow.

I have seen per capita contribution rankings that have Utah at the very top (donations to LDS), and several of the poorer southern states quite high as well (likely primarily due to donations to churches coupled with extremely low per capita incomes and cost of living).

i question any giving of charity if it is tax deductible and you claim it on taxes. this is because that defeats any motivation of giving anything to charity if you are only going to get it back. Giving should be a sacrifice not a temporary loan

I agree with you to some degree, although if someone donates to a church or charity and deducts it on their tax return, they are at most only getting about a third of the money back in the form of reduced income taxes. If it was instead a dollar for dollar credit, then I would completely agree with your post.

was in a hurry posting that....you get the jist of my point bac and i will venture that you agree with me 100 percent

[Grizlaw]

i question any giving of charity if it is tax deductible and you claim it on taxes. this is because that defeats any motivation of giving anything to charity if you are only going to get it back. Giving should be a sacrifice not a temporary loan

I agree with you to some degree, although if someone donates to a church or charity and deducts it on their tax return, they are at most only getting about a third of the money back in the form of reduced income taxes. If it was instead a dollar for dollar credit, then I would completely agree with your post.

To add to this -- given that the tax benefit is not dollar-for-dollar, I think it's fair to say that no one makes contributions to charity strictly for the tax benefits. (It's true that some contributions of non-cash assets are tax motivated, although to the extent the assets would otherwise be waste, I would argue that's not a negative thing from a societal standpoint.)

As BAC said earlier, there are far better ways to creatively avoid taxes than to make charitable contributions.

[Hell's Bells]

i question any giving of charity if it is tax deductible and you claim it on taxes. this is because that defeats any motivation of giving anything to charity if you are only going to get it back. Giving should be a sacrifice not a temporary loan

I agree with you to some degree, although if someone donates to a church or charity and deducts it on their tax return, they are at most only getting about a third of the money back in the form of reduced income taxes. If it was instead a dollar for dollar credit, then I would completely agree with your post.

To add to this -- given that the tax benefit is not dollar-for-dollar, I think it's fair to say that no one makes contributions to charity strictly for the tax benefits. (It's true that some contributions of non-cash assets are tax motivated, although to the extent the assets would otherwise be waste, I would argue that's not a negative thing from a societal standpoint.)

As BAC said earlier, there are far better ways to creatively avoid taxes than to make charitable contributions.

are most of them illegal???

[Grizlaw]

are most of them illegal???

Yes, at least arguably...

This discussion is venturing into waters that are more complicated than I have time to discuss right now, though. Perhaps over a beer sometime...

[SonomaCat]

There are a lot of legal ways to creatively reduce your taxes, but most are only worth the time/legal fees if you have a lot of taxes to save.

The IRS has actually been cracking down pretty hard on the potentially illegal tax shelters, and their efforts essentially cost the Bill Simon the governnor's office in CA and gave Gray Davis part of a second term.

[Hell's Bells]

are most of them illegal???

Yes, at least arguably...

This discussion is venturing into waters that are more complicated than I have time to discuss right now, though. Perhaps over a beer sometime...

ill take ya up on it

[SonomaCat]

Curiosity got the best of me, so I did a google search. I think I found the source data that Bennett probably used. It was cited by Malkin last year, and looks like it has hit every conservative blog since. Here's the link:

http://www.catalogueforphilanthropy.org ... ?year=2003

If you hit the link on there that says "2003 Generosity Index.xls" it takes you into a cool excel sheet with the raw data.

Here's where we can see how the stats get skewed. This data only includes contributions for people who itemize on their federal tax returns (generally implies wealthier people). In states like MS (number one on the list), this is a very small percent, and as their state taxes are small and their real estate is cheap (states taxes, mortgage interest and charitable contributions are the most common itemized deductions), only the biggest dollar contibutors from the state of MS are included in the survey.

On the other hand, high-income and high-tax states like NY and CA have a much higher percentage of people who itemize, so the population captured by the survey is much larger, so it stands to reason that the per-capita donations would be lower.

I know this gets very murky stat-wise, but after looking at the methodology for this survey, I am certain that it isn't representative of a true "per capita chartiable giving," as it appears on the surface.

It's a propoganda piece, like most stats. Ironically, I think it is propoganda pulled together by a Northeast blue state group to shame their own residents into contributing more, and the conservatives discovered it and ran with it.

All this ranking really proves is the that it bears out the known fact that a sample of high income and high cost of living population will come out mathematically lower than a low income and low cost of living population due solely to the mechanics of the Form 1040. It doesn't indicate anything about the true giving tendancies of people in those populations, however.

[Cat Grad]

I understand you deal with this daily BAC; however, the truly rich "give" through their "foundations" which are nothing more than tax hedges.

[SonomaCat]

I'm actually not familiar with the term "tax hedges," except in terms of some corporate currency-related matters. What does that mean?

The rich do use foundations for their charitable giving, but in terms of offsetting their taxable income on their individual returns, I don't think foundations on their own help them out particularly. I have seen a lot of very rich people's returns who have large charitable foundations, and they just end up with huge charitable contribution carryovers that they will likely never be able to use.

Their income hits their individual return, but they can't deduct their contributions on their individual return.

Of course, when they start structuring stuff legally to move the income around to various entities, then you might be able to utilize some tax attributes that might otherwise get hung up indefinitely.

In general, though, rich people don't get to deduct charitable contributions against their individual taxable income.

[BobCatFan]

I am not surprised by that fact. I find from my experience doing charity work, the conservative to liberal ratio is about 4-1 in favor of conservatives.

[SonomaCat]

I am not surprised by that fact. I find from my experience doing charity work, the conservative to liberal ratio is about 4-1 in favor of conservatives.

Yeah ... except that I just explained above that it wasn't a fact, but rather a statistical sleight of hand, and that the trend was nothing more than proving that the red states in question have low per capita incomes.

And if you do charity work in Montana, where there are roughly 4 times as many conservatives as liberals, I wouldn't be surprised by your observations.

I have personally seen lots of very generous people in my experiences from both sides of the philosophical divide (done lots of rich people's tax returns), and have never noticed any real trend in giving between conservative or liberals (and you can get a pretty good idea of a person's politics by doing their returns).

[Bleedinbluengold]

I'm so sick of hearing the term, "Red States...Blue States", I could puke. For crying out loud, it's not as if everyone is a replublican or democrat in any particular State.

I wonder if there is any better way to cause a greater divide?

[El_Gato]

Bobcats & Grizzlies?