So we’d have to abolish food stamps entirely before people actually feel a need to give more to charity?
Last time we really had people starving in the streets was the great depression. The solution at the time was basically the start of all the government programs we have today.
I hope we never find out who’s right here.
This is actually a major problem for charities. There are a lot of issues with these figures, but the two most relevant: first this “overhead” percentage does not equate to efficiency. Second, if you require some set percentage figure, especially one that high, you aren’t going to ever donate to charities that are actually going to be able to grow. Charities that have that sort of ratio are so focused on keeping these “overhead” costs down that they rarely are able to actually make great strides.
This “overhead” percentage originally came about when analyzing specific discrete events. The overhead percentage was 1- [dollars to org]/[total dollars collected]. While this figure also presents comparison problems when used in isolation, it actually makes sense. A third party fundraiser throws an event, collects from patrons, spends 75% of the revenues on the cost to administer the event, so only 25% went to the charity. This is a somewhat reasonable measure of how successful the event was (again, in conjunction with other figures).
However, when looking at a nonprofit’s regular operations, this “overhead” percentage, based on an overly simplistic model of how charities used to operate (collecting and disbursing funds), is not only a problematic measure, I would argue that it’s not relevant to the question of efficiency of the charity.
As an example, if your goal is to feed the hungry, the appropriate measure of efficiency may be something along the lines of cost/person fed or cost/meal or something of that nature. Say you collect $1,000 in donations, take 5 people to a steakhouse and spend $200 each. Your charity didn’t pay out any other expenses. Your “overhead” percentage is 0. However, you fed 5 people on $1k. If, on the other hand, your “overhead” percentage is 80%, but you were able to score 20 meals for the remaining $200, isn’t that a better measure of charitable efficiency?
If any of you are keeping track of the evolution of the House tax reform proposal, the release of which is now scheduled for 9am tomorrow, as of right now the plan is expected to preserve the property tax deduction (but not the ability to deduct state income and local sales taxes), although the deduction may be capped either based on your income or may be subject to a universally applicable dollar limit. Likewise, it appears that the top individual tax rate of 39.6% will be preserved, but it won’t apply until somewhere around $1MM in AGI.
At this time it also appears that only the first $2,400 in 401(k) contributions would be tax deductible, while the remaining portion of the contribution would be made on a Roth basis.
I just read 3 articles about the impending tax reform, but none revealed any of the details as certainties. Can you link to your source? (Even though we know anything can still change between today and tomorrow.)
Sure, see WSJ’s link below (which contains additional links):
I can’t find a link to the 401(k) reporting, but it came from a similarly reputable publication.
You guys keep talking about increasing charitable contributions to help the poor if funding for US gov’t welfare programs were decreased. What about charitable contributions that go to VERY poor people (i.e. they leave the US and go to Sub-Saharan Africa)? Would a decrease in my taxes that allowed me to donate more to help fight malaria in the 3rd world not be ideal because poor people here would be worse off while much poorer people in 3rd world are helped?
I used to feel similar. The trouble is - the same as with anything - creative accounting.
One charity I donated to for a few months got in trouble for using retail value for some donated items, which made it appear that a greater value of the donations were going to the program vs. administrative expenses.
I discovered that another charity I’d donated to monthly for years was putting their expenses for their weekly nationwide conferences into “Education”. The problem with this is that a big part of the help they were supposed to be giving the poor people could properly be classified in the area of Education. Again, it made it appear that the bulk of the money was being spent directly providing for the poor, when it was actually being spent to host these conferences all year.
I could list another example that’s a little more convoluted, but I think you get the picture.
For me, it’s not whether I can deduct my donations as to whether I’ll make them, but whether I feel there’s no funny business going on with the specific charity.
Wow, that’s a lot to read, so I won’t. 
At first glance, it’s still just a bunch of what they’re considering and bickering about. I would expect that the major points they keep reporting on will be a major part of the final bill.
Not sure if it’s a vast majority, but I’ve used Charity Navigator before to look up each org.
What you describe is a good measure of efficiency, but that doesn’t mean we should completely ignore the other measure for “overhead” that you think is not relevant. If I’m donating $1 to charity, I don’t want them spending 80 cents on administration and fund raising. I don’t care how efficient they are with the final 20 cents.
Lots of good points. GiveWell.org does a good job looking more deeply than just the pure numbers on the income statement and balance sheet.
Took a look at GiveWell.org. Only had a couple of minutes, which turned into 5+. Only looked at the “Our Mistakes” section. That’s enough to make me want to spend more time evaluating them. Thanks.
Here are the latest details of the tax plan: Bloomberg - Are you a robot?
I predict this thing sinks like the Bismarck.
Early polling is very poor (only 50% of Republicans think it a good idea…closer to mid 30s support across the board). And the ugly stuff hasn’t even come out yet.
Cutting Corp taxes may be appealing to economists…but don’t see it getting a lot of regular voters excited. And most seem to realize any individual changes are going to hurt as many people as they help.
Finally to call this reform is a bad joke. They are carving in so many loopholes to win support (SALT, etc)…taxes will end up being more complicated, not less.
I have no idea whether they will be able to pass it this year, or whether they will have to settle for a rate cut while keeping the existing structure in place, but the polling numbers don’t mean a whole lot at this point. The primary reason that the polling has been poor thus far is because all the stories have been about the deductions that are being eliminated. I suspect that the polling is going to change once we find out exactly what we would be getting in exchange for giving up certain deductions. In other words, when people realize that their overall taxes will be going down, the plan will start to pick up additional support.
I agree that cutting corporate taxes won’t cause a lot of excitement on an individual level, although this is not a Republican idea and was also favored by the Obama administration. A lot will depend on the presentation, however.
Taxes shouldn’t be more complicated. Remember that they are substantially increasing the standard deduction and eliminating the state and local tax deduction, which will cause way more people to stop itemizing (I’ve read some articles that anticipate up to 60% of current itemizers to start taking the standard deduction). This would greatly simplify a huge number of tax returns. Those who still itemize will have far fewer deduction categories to worry about, and, presumably, there won’t be AMT (at least not at the same level as it is now), which would make even itemized tax returns a lot more straightforward.
EDIT:
The latest details are:
The bill eliminates an itemized deduction for medical expenses that exceed 10% AGI, the tax credit for adoption and the deduction for student loan interest. Businesses lose the entertainment expenses deduction, but the rules for business meals remain intact. Tax exempt bonds will no longer be used to build professional sports stadiums. Passive owners of pass through businesses would get the 25% rate, but for those actively involved in the business the rules would be more complex, with many actively involved people getting none of the benefit of the 25% tax rate.
WSJ’s example:
'Under current law, in 2018, a married couple with two children making $60,000 would get a $13,000 standard deduction and four personal exemptions each worth $4,150. That means they would pay taxes on $30,400 of taxable income. Their base tax bill of $3,608 would be reduced by $2,000 in child tax credits for a total income tax of $1,608.
Under the House plan, the same married couple with two children would get $3,800 in tax credits, $3,200 for the two children and $600 for the two parents. The same family would get a $24,400 standard deduction but no exemptions, for $35,600 of taxable income. Their base tax bill of $4,272 would be reduced by the $3,800 in credits for a total income tax of $472.’
I feel bad for a married couple with two children making $60k between them.
The puffery they’re using is humorous.
Under the provision, the current seven tax brackets would be consolidated and simplified into four brackets: 12 percent, 25 percent, 35 percent, and 39.6 percent, in addition to an effective fifth bracket at zero percent in the form of the enhanced standard deduction.
There’s no fifth bracket, unless there’s currently eight brackets. It’s not being “simplified”. If you’re dealing with brackets, it isn’t anymore difficult to throw an extra column into an excel spreadsheet and copy the formula.
They’re actually making the brackets a bit more complex by phasing out the benefit of the low bracket for high income taxpayers. Similar to the corporate bracket structure which goes to 35% flat rate at a certain level of net income.
They’re also using “chained CPI” to adjust amounts. Anyone know what this is? They say its a better measure of inflation than CPI, but not really inclined to trust them.
The increase in the standard deduction would achieve substantial simplification by reducing the number of taxpayers who choose to itemize their deductions from roughly one-third under current law to fewer than 10 percent under the legislation.
Another humorous characterization. If people wanted to simplify their taxes to their own potential detriment, they could already take the standard deduction and forego itemized deductions. Once again, just puffery to be able to increase taxes for the people currently on the itemized/standard deduction fence.
Only 2 sections in so far.
[quote=“Full_Disclosure, post:219, topic:1661”]
There’s no fifth bracket, unless there’s currently eight brackets.[/quote]That’s very true.
[quote]It’s not being “simplified”. If you’re dealing with brackets, it isn’t anymore difficult to throw an extra column into an excel spreadsheet and copy the formula.
They’re actually making the brackets a bit more complex by phasing out the benefit of the low bracket for high income taxpayers. Similar to the corporate bracket structure which goes to 35% flat rate at a certain level of net income.[/quote]Well, it is a simplification, although, for the reasons that you correctly identify, isn’t much of one.
What is true is that the overall individual income system is being simplified. Since they are eliminating quite a few deductions (and limiting a number of other ones, such as the mortgage interest deduction for future purchases, and the property tax deduction) and personal exemptions, but are, instead, almost doubling the standard exemption and eliminating the AMT, way more people are going to be taking the standard deduction, which is much simpler than itemizing. Likewise, those who itemize will also have simpler tax returns as there won’t be nearly as many deductions to deal with.
Many of the deductions that they’d like to limit or eliminate altogether have been on the economists’ chopping block for many, many years, as, they say, the existence of those deductions leads to undesirable behavior and/or has adverse economic consequences for the economy.
[quote]They’re also using “chained CPI” to adjust amounts. Anyone know what this is? They say its a better measure of inflation than CPI, but not really inclined to trust them.[/quote]United States Chained Consumer Price Index - Wikipedia
As you can tell from the Wiki, Obama had previously proposed using Chained CPI, so it’s not a purely Republic idea.
[quote]Another humorous characterization. If people wanted to simplify their taxes to their own potential detriment, they could already take the standard deduction and forego itemized deductions. Once again, just puffery to be able to increase taxes for the people currently on the itemized/standard deduction fence.[/quote]An overwhelming majority is getting a tax reduction, so I am not sure that I am following the criticism.
Haven’t read the whole thing yet, but people on the fence of itemized vs standard currently are likely not to see a reduction (again, based solely on the first couple sections).
Anyone find any changes to the capital gains rates? Section 1(h) currently - but at least section 1301 of the Bill explicitly does not modify that section. The capital gains rates are tied to the brackets so if they’re changing the bracket thresholds its surprising they aren’t updating the capital gains “brackets.”