Gulfport The recently approved tax bill is an abomination without any doubt. It’s claims of reform are a poorly crafted mask for a transfer of wealth from virtually all of us over the coming years to the coffers of the rich and corporations. Despite a couple of public relations stunts based largely on favorable tax savings when Verizon and Wells Fargo offered raises and bonuses to their workers, most economists are skeptical that any of these huge corporate savings will trickle down. Polls indicate that Americans think the bill stinks, and President Trump thinks it’s wonderful, so there we have it.
Nonetheless, one thing that is clear for individual and family taxpayers is that the standard deduction will rise for individuals from $6000 to $12000 and for couples to $24,000 beginning on January 1st, 2018. Without a doubt there are going to be some people who begin this roll with a smile on their faces.
There has been a quiet, but steady hum in the background though from charities of all places. Very little of their complaints are full voiced because the whining seems so unseemly, but increasingly some of the larger ones are wringing their hands more loudly because they aren’t happy that their appeals for tax deductible contributions will be so meaningless to those largely middle class families who might have made contributions thinking they would benefit by itemizing, but now won’t bother.
Me thinks they protest too much, even if this is only some static accompanied by the strident pitches of nonprofit public relations and marketing mavens. Particularly ironic are the voices of local community foundations since they are favored by the wealthy, who will do very well with these tax cuts, thank you so much. Itemized deductions were already largely a wealth preserve. The nonprofit Tax Foundation doesn’t mince its words on this issue, saying, “While the federal tax code generally imposes a much higher burden on high-income households, itemized deductions are an area of the tax code that mostly benefits the wealthy.”
The numbers bear that out. Only 6.5% of families making $25,000 or less itemize. According to the Tax Foundation, the vast majority don’t itemize:
30.1 percent of households chose to itemize their deductions (44 million returns). 68.5 percent of households chose to take the standard deduction (101 million returns). 1.6 percent of households had zero or negative adjusted gross income, and were unable to take any deductions. (2 million returns)
Additional research by the Foundation indicates that a majority only itemize once their income hits the $75 – $100,000 per year range, with 78.8% itemizing between $100-$200,000, and 93.5% itemizing over $200,000 per year. Pretty clear where these benefits lie. The impact of these Republican tax giveaways likely just means that more families with less than $100,000 to $150,000 won’t itemize, but those making $150,000 or more will still be doing so.
Lower income families already give a higher percentage of their incomes away according to most research, regardless of the tax benefits. Perhaps it is time for charities to start making their appeals based on their programs and benefits regardless of the supposed tax benefits, so that people give because they believe in the nonprofit’s mission rather than trying to stiff Uncle Sam. At the least they need to stop whining, because they are clearly crying wolf way too often since their rich donors will be doing very well thanks to the Republican’s special care for their interests.