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The charitable Tax debacle


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Showing 1-25 of 27 posts in this discussion
Initial post: 17 Apr 2012, 10:36:28 BST
Ok, so I'm thoroughly confused by the reporting of this and the concomitant outrage.

1) If I understand the tax incentive correctly, it is impossible as a rich person to be better off by giving to charity, what in effect happens is that if someone in the 45% tax bracket donates money to charity, the tax they would have paid on it goes to the charity instead of the government.

2) We have for many years incentivised charitable giving, at some expense to the treasury. Now we can't afford to give so much so we are capping the amount the government can give to charities chosen, not democratically, but by the wealthiest people in the country.

3) Nothing in this plan prevents the government giving money to those charities that are deemed worthy of the funding.

What's the problem?

Posted on 17 Apr 2012, 10:46:59 BST
gille liath says:
Afraid I don't understand what point you're making or which side you're on. Me, I'm actually with the Tories on this one. Firstly, these people described in the media as 'philanthropists' are not philanthropists if they're only willing to give at the taxpayer's expense. And secondly, all kinds of things can be charities. If what they're giving to is things like art galleries, theatres or private schools - a lot of us would say it's more important to pay the taxes that go towards basic services for people.

In reply to an earlier post on 17 Apr 2012, 10:55:18 BST
Ok, to your first point.

They are philanthropists. Say they give 100,000 to a charity. They are £55,000 poorer, and the government gives £45,000 to the same charity.
This is still philanthropis, you're £55,000 worse off to make the charity better off. And I think the government should incentivise charitable giving, especially in the wealthy, but full tax deductability is something we can no longer afford.

To your second point, yes there are bad charities, but whether or not we incentivise charitable giving through tax incentives or not, there will be charities that get through the net that aren't particularly beneficial to the public. If you'd like to create a two tiered system of "Charities" which are not tax deductable "and charities for the general benefit" where we do provide tax incentives for giving, i think the extra administrative costs would outweigh any potential benefit.

In reply to an earlier post on 17 Apr 2012, 11:12:16 BST
TomC says:
"whether or not we incentivise charitable giving through tax incentives or not, there will be charities that get through the net that aren't particularly beneficial to the public. "

Just because it's difficult to draw a line doesn't mean we should not attempt to draw it. Let's take an example; Eton College is a charity. Let's consider the case of a chap who went there and as a result has attained a privileged position in public life. (I'm not thinking of anyone in particular, obviously.) This chap considers it only right and proper that Eton should prosper so that it can provide his son with the same advantages that he had. Due to our generosity as taxpayers, he can donate £55,000 by choice - which he considers money well spent - but we between us are forced to donate another £45,000 which I would argue not only does us no good, but is directly opposed to our interests.

In reply to an earlier post on 17 Apr 2012, 11:14:54 BST
Another example of an un-democratic democracy.

In reply to an earlier post on 17 Apr 2012, 11:16:42 BST
That's a fine argument Tom. Except for a couple of things.
WE are not forced to donate £45,000, we are forced to donate 7 thousands of a penny.
We do benefit from incentivising charitable giving, essentially we're paying some money to encourage others to give.
Problems with the assigning of charities are a seperate debate. I do think that charitable status is too easy to acheive. But why is the poor work of the chartities commission a reason to be up in arms about changing an incentive to philanthropy?

In reply to an earlier post on 17 Apr 2012, 11:17:22 BST
gille liath says:
Well, there's something fishy about it to say the least, if (as the charities are claiming) they're not willing to make donations unless they get tax relief on it.

In reply to an earlier post on 17 Apr 2012, 11:18:02 BST
gille liath says:
What is?

In reply to an earlier post on 17 Apr 2012, 11:19:35 BST
gille liath says:
The point is, should the money go to Eton rather than to improving the standard of state education? Clearly not. It absolutely ludicrous that private schools can have charitable status. It dates from a time before universal education, and should have been done away with long ago.

Posted on 17 Apr 2012, 11:23:06 BST
Last edited by the author on 17 Apr 2012, 11:25:45 BST
"WE are not forced to donate £45,000, we are forced to donate 7 thousands of a penny." - Thats not the right way to look at it. Its a bit like saying its ok to up fuel price cus its only an extra penny.

In reply to an earlier post on 17 Apr 2012, 11:25:03 BST
"What is?" - Tax payer not having a say in the Charity hand outs from gvmt.

In reply to an earlier post on 17 Apr 2012, 11:25:44 BST
TomC says:
"WE are not forced to donate £45,000, we are forced to donate 7 thousands of a penny."

The point is one of morality, not of arithmetic.

In reply to an earlier post on 17 Apr 2012, 11:30:11 BST
Why is it not the right way to look at it? Breaking these numbers down into the human element is exactly the right way to do it. Although I will admit I didn't multiply that up by the number of top rate tax payer to make the number starker.

Posted on 17 Apr 2012, 11:31:46 BST
Because, those 7 thousands of a penny add up and equate to a much larger more alarming figure, money that could be used elsewhere.

In reply to an earlier post on 17 Apr 2012, 11:40:35 BST
Then take it up with the charities commission, petition your MP. It's a whole other issue.

This particular tax incentive is based on the premise that charitable giving is good and that encouraging the wealthiest 1% of the country to spread their wealth rather than hoard their wealth is good.

I, broadly, agree with both those points. Do we need to refine charitable status? Sure, loads of things are charities which ahve no right to be.
Do we need to make sure we can afford the incentives offered? Sure we do. I actually think this cap is not a sensible measure.

someone earning £160,000 would pay about £65,000 in tax & NI giving them a take home pay of £95,000 [pension not included]

If that person gave "£50,000" to charity, they would pay only £41,500 in tax & NI (so the government pays £23,500 to charity) and take home £68,500 (so the individual has paid £26,500 to charity)

I think a better reform to the system would be a lowering of the incentive, Rather than full tax deductability, halving the tax or quartering it, still provides an incentive to charitable giving, but at a much lower burden to the tax payer.

In reply to an earlier post on 17 Apr 2012, 11:41:07 BST
gille liath says:
No - I agree with RG that the principle of tax relief on charitable donations is a sound enough one; and btw, it is also available at lower rates of tax. The real problem is with what we claissify as charity.

In reply to an earlier post on 17 Apr 2012, 11:45:06 BST
Last edited by the author on 17 Apr 2012, 11:45:45 BST
gille liath says:
I believe the govt is considering that.

I basically agree with what you're saying, but there's no simple way to reform the whole charity system - whereas this is a simple and achievable change. I also feel there's more to this issue than meets the eye, something we're not being told; the mechanism perhaps being abused in some way for tax avoidance purposes.

In reply to an earlier post on 17 Apr 2012, 11:57:18 BST
The abuse comes from people giving to charities run bytheir friends where they feel direct benefit from the charity. Again, it's not a problem with the incentive per se, just with the charity system.

In reply to an earlier post on 17 Apr 2012, 12:17:30 BST
RABB says:
My aunt runs a branch of SANDS, a stillbirth and neo-natal charity. If I (my partner) were to become affected by the issues they deal with and I make a substantial donation claiming tax relief, is there a problem?

People are always going to be committed to causes that affect them personally, there's nothing particularly wrong with that.

In reply to an earlier post on 17 Apr 2012, 12:23:09 BST
Maria says:
That is a very good point. One of the charities I support is because of meeting the people who run it, and another is due to having similar interests. Surely it is only natural that we support those charities in which we have an interest in some way. Otherwise we wouldn't bother giving.

Posted on 17 Apr 2012, 12:26:25 BST
Last edited by the author on 17 Apr 2012, 12:36:24 BST
"People are always going to be committed to causes that affect them personally, there's nothing particularly wrong with that." - No theres deffo not, but why should the tax payer match the donation?

In reply to an earlier post on 17 Apr 2012, 13:19:14 BST
It's slightly different from the case I was espousing but all fo these things are in grayscale and a million miles from the tax system.

Posted on 17 Apr 2012, 22:19:47 BST
Spin says:
There are many ways to avoid tax, so I think someone who chooses to give to a charity genuinely wants to be charitable and the tax issues are merely a favourable bonus. In fact, I support tax breakls for those who give to charity rather than to those hiding their money in investment funds, oversas companies and the wifes bank account.

Posted on 17 Apr 2012, 22:27:15 BST
Spin says:
If a person donates 1 million pounds to charity and gains a £50, 000 tax break, who benefits? Obviously the charity, an under-resourced community service. Who cares if it is a tax-break for those who have more money than you? Who will you contact when you are physically or mentally ill? The charity, to help you, or the donor, who let that help be possible? If, when you are ill, you care more about how much tax people pay then you have serious problems.

In reply to an earlier post on 18 Apr 2012, 02:26:22 BST
Molly Brown says:
Why? Surely giving to charity isn't mean't to benefit YOU, it's mean't to benefit the charity. Why should there be any tax relief, the size of your donation is a matter of conscience, especially if you have more than enough already. I doubt whether small donators to charities claim tax relief on what they give, or even think about it. They just give. As regards Eton and Liam Fox's bogus Charity Status on a right wing think tank, why the hell are organisations like this getting charity status in the first place. Did Liam and his mates have to pay back the tax relief they got for about 8 years before such status was taken away? I doubt it.
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Discussion in:  politics discussion forum
Participants:  8
Total posts:  27
Initial post:  17 Apr 2012
Latest post:  18 Apr 2012

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