The Obama Double Tax Whammy

President Obama's proposal to provide only a 28 percent benefit for charitable contributions by top-bracket taxpayers is part of a double whammy, since he proposes at the same time to raise the top bracket from 35 to 39.6 percent.  The double-barreled increase/decrease reflects a two-part strategy that is much more than a simple tax increase.  Less civil society and more government power is the result.Taken alone, an increase in tax rates would result in more charitable giving:  if one receives a 39.6 percent benefit from giving to charity, and one previously gave $1,000 at an after-tax cost of $650 (based on a 35 percent deduction), one can now give $1,076 at the same after-tax cost of $650.  In addition, higher tax rates might increase charitable contributions even beyond that, since higher rates also have a psychological effect.  When the state and federal government together take close to 50 percent of the income of top-bracket taxpayers, those taxpayers...(Read Full Article)