Charitable deductions can be biggest dodge

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Charitable deductions can be biggest dodge

IslandPacket
info@islandpacket.com
Published Friday, November 16, 2012   |  246 Words  |  

Well, it's back to gridlock in Washington with President Barack Obama continuing to push for a tax increase on the "rich," while the Republicans opt for no tax increase.

How about taxing the really rich rather than taxing small-business entrepreneurs who want to be rich? One option might be to raise the definition of "rich" from $250,000 to $500,000 or $1 million. At least such a compromise would be a first step.

On the other hand, why not tax rich people? Warren Buffett, the multi-billionaire, says it is unfair that he pays taxes at a rate that is lower than his secretary's. Maybe such a distortion exists because Buffett gave $30 billion to charity. In other words, Buffett will dodge a $15 billion estate tax when he goes to heaven, taxes that you and I will have to make up for. He also gets to use a portion of that $30 billion to lower his current tax payments. These deductions will probably last for his lifetime and lower his tax liabilities.

Deductions that reduce his taxes have to be made up by you and me. Consider this deduction in light of the growing number of wealthy who agree with giving away half of their fortune to charities -- the great tax dodge of our lifetime. Obama's tax-the-rich plan is actually a wealth transfer from entrepreneurs to the Buffetts of the world, who are the rich.

Tom Nugent

Hilton Head Island