Wednesday, March 25, 2009

The Barack Obama Doll

When you pull its string, it says, 'Math is hard'.
In that sense, what it would do is it would equalize -- when I give $100, I'd get the same amount of deduction as when some -- a bus driver who's making $50,000 a year, or $40,000 a year, gives that same $100. Right now, he gets 28 percent -- he gets to write off 28 percent. I get to write off 39 percent. I don't think that's fair.

That is, of course, the flip side of progressive income tax schemes. High income people pay higher marginal tax rates and thus have higher incentives to donate to charity as a result. Obama seems to be decrying the unfairness of higher tax rates to people who pay lower rates.

But, it gets worse for Obama as the questioner follows up:
QUESTION: It's not the well-to-do people. It's the charities. Given what you've just said, are you confident the charities are wrong when they contend that this would discourage giving?

OBAMA: Yes, I am. I mean, if you look at the evidence, there's very little evidence that this has a significant impact on charitable giving.

About the evidence, Obama is wrong--as Tom Maguire has noted--there is such evidence.

However, this morning in the NY Times, carries an open letter that says that ain't Jake:
...I have decided to donate 100 percent of the effective after-tax proceeds of my retention payment directly to organizations that are helping people who are suffering from the global downturn. This is not a tax-deduction gimmick; I simply believe that I at least deserve to dictate how my earnings are spent, and do not want to see them disappear back into the obscurity of A.I.G.’s or the federal government’s budget.

....On March 16 I received a payment from A.I.G. amounting to $742,006.40, after taxes. In light of the uncertainty over the ultimate taxation and legal status of this payment, the actual amount I donate may be less — in fact, it may end up being far less if the recent House bill raising the tax on the retention payments to 90 percent stands. Once all the money is donated, you will immediately receive a list of all recipients.

It would only be far less if Obama gets his way and reduces the deduction for charitable deductions, because Mr DeSantis can, as of the law now, donate the entire amount of the bonus prior to taxes. But, it seems that confiscatory taxes do have the expected incentive, contrary to what the President said in his news conference.

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