By taxing food and clothing, you’re also saying the government doesn’t want us to buy that, but we do, so there you go. It’s not always a social agenda with the government, even if it sometimes seems like it is.

What inflation? You see any inflation out there in the past 6 months? Seriously, though: the ranges change regularly, but $250K is still not anywhere close to the current median income for households in the USA, so I’m not really worried about that. AMT will get them first anyway.

As for your final question: yes, that’s an interesting game to play, but just as people were predicted to change their driving habits at $2.50/gal, it turned out that it took until it reached $4/gal before anyone got out of their cars. Sometimes we’re all like the joke about boiling frogs (you put them in cold water and turn on the heat and they don’t notice until it gets really hot). Anyway, 5% isn’t going to be the number that will affect behavior, and I’m guessing that those who want to give will give even if it wasn’t deductible. Some people are just like that.

Relax and enjoy life. Stop worrying so much about taxes. People got rich when the top tax rate was 70%. They just didn’t spend like mad mall zombies then.

Suffice it to say that you don’t really appreciate the fact that peoples’ action DO occur at the margin.

If you think the deduction limit on charitable contributions will stop at folks making >$250k/yr., you aren’t a student of history. Government doesn’t do a little of anything.

By increasing taxes on these contributions, the government directly says “we want people to make fewer charitable contributions.” Remember the adage about if you want less of something, tax it.

In addition, you don’t appreciate that inflation will force more and more people into that $250k bracket over time. Then what will your response be?

One final question: If people are absolutely not deterred by a 5% difference, what is the precise level at which they are deterred from giving? Is it 80%? Or would 50% do it? Or is it just 20%? Is it the same for everyone (as you suggest it is)? The answer is “no”. It occurs at the margin.

Be safe in picking up your kids. I hope your vehicle meets the upcoming CAFE standards and that you don’t have a carbon footprint on which you will soon be taxed.

While true, it ignores the basic point that when you eliminate or reduce the deductability of charitable contributions for people, those individuals by definition have *less money to be able to give*. You cannot give at the same level when you have to hold back additional money to pay higher taxes because the government reduced the deductability of a contribution.

This really doesn’t make as much sense as you’d like it to, because it would only apply to couples making more than $250K taxable income and would only adjust the rate by deduction rate by 5% for those couples. If it was 100% or for people under $250K, your statement makes perfect sense. I can only tell you based on my experiences and the experiences of those around me who are at the same financial level (yes, we do talk about these things) that that 5% doesn’t mean anything once you get to that level of income. That’s not what keeps us giving or not. It’s the unpredictable nature of our own income streams that affects us, not the level of deductibility of our charitable contributions.

Off to pick up kids. Have a great day!

I re-read my comments and found nowhere that I wrote that “a particular economic theory applies in all circumstances.” Please don’t put words in my mouth as that is not sanitary.

Regarding your Canada example, you cannot compare one country’s rate of home ownership (or any other thing) to another’s–then explain it by a single variable unless other variables are held constant. Economists use the term ceteris paribus–other things being equal. The deductability of home mortgages may be one variable but there are many others. Home size, home value, other tax rates, and the cost of money are but a few examples. But would you suggest that the U.S. end mortgage deductions–and that in doing so it would have no effect on the economy? Or on mortgage delinquencies? Or personal bankruptcies or foreclosures? Should we do this in our current economic times?

The problem is that politicians and bureaucrats encroach on the private sector. One says we should scale back (on the road to eliminating) charitable deductions. Another person says eliminate mortgage interest deductions. Another wants to save the environment by having a “tax and trade” (or cap and trade) scheme that raises utility rates by “only” 40%. Still another politician wants to reinstate taxes on groceries while another raises taxes on cigarettes, alcohol, and even speeders. Still another wants to raise taxes on capital gains, income, and dividends. Collectively, these ideas take a huge toll on people while separately they may look (to some, at least) harmless. I believe it was Herman Talmadge who famously said “don’t tax you, don’t tax me. Tax that man behind the tree.”

Raising the hurdle rate on either businesses or individuals is dumb in any economic climate but is especially shortsighted at present. Google “tax on yachts backfired” and you’ll be reminded of when politicians were going to raise revenue for the Treasury by taxing yachts purchased by “the rich.” The result was that the yacht industry suffered substantially, many workers lost their jobs, and the Treasury’s take of revenue declined because fewer boats were sold and there were fewer workers around to pay taxes. Plus, these displaced workers consumed social services at a higher rate. And this happened under G.H.W. Bush.

I understand basic economics and I believe Mr. Obama and the Democrats do too. The difference is they love power more than they love liberty and free enterprise while I do not.

Let’s not incrementalize our way to becoming a poorer people.

However, just because you postulate a particular economic theory doesn’t make it automatically true in all circumstances. See “supply-side economics” (worked great when the top tax rate went from 70% to 39%, but did not work when it got lowered from 39% to 33%).

On the other hand, poll after poll about people and their giving indicates that they do it not because of the tax deduction, but because it makes them feel better. A minor adjustment to the tax code isn’t going to suddenly change that feeling.

Think of it this way: you know how precious home ownership is here, right? And that there’s an argument that has been stated that if you take away the mortgage deduction that home ownership levels would drop and kill the real estate industry and builders? Still with me? Did you know Canada does not have a mortgage interest deduction for their tax code AND their home ownership levels are the same as ours?

Not every social good is driven by a favorable line in the tax code, just the same as not every possible evil in the universe will come if we adjust the tax code to raise more revenue.