Oaks Fighting for Tax-Exempt Status

[jay santos]

http://www.deseretnews.com/article/7...eductions.html

What I think Oaks is really saying here is that if people had to donate to charitable organizations with after-tax dollars, they would give less. The reason they would give less is that they don't value charitable giving highly enough to take the hit out of their savings or spending, so they would take the money to make up for the increased taxes out of their donations.

In other words, Elder Oaks doesn't believe charitable-givers value the services provided by the charities highly enough to maintain the level of giving by sacrificing income.

I'm struggling to say it clearly, but the point is that I think Oaks is conceding that people give to a certain pain threshold and no more instead of valuing what they get out of their church or what their community gets out of the charity to a certain level and giving that certain amount.

Of course there would be givers in both camps, but obviously Oaks thinks the pain-threshold givers are a significant number.

To illustrate: we are taught to pay tithe on 10% of our increase. Say I'm a net tithe payer and I give 10% of my take-home pay. If the law changed and there were no tax benefit to paying tithing, I should theoretically still give 10% of my take-home pay (which didn't change when the tax write-off rule changed). The charitable deduction law wouldn't matter to the Church, because they get the same amount either way.

Oaks seems afraid that instead of still paying 10% of my take-home pay, I would notice the tax hit compared with last year (before the change in law). Last year I paid $x less in taxes due to the charitable giving write-off. And so instead of paying 10%, I'm going to pay 10%-$x to make sure that my lifestyle isn't impacted.

It seems Oaks is telling us he doesn't trust us to pay an honest tithe. So he wants the government to keep the tax exemption.

Either that or he just wants us to be richer and pay less taxes. But it seems to be more than just a philosophical position on limited government. He seems worried about revenue.

You understand Economics, don't you?

If the Senate invited a well known Economist with no ties to any particular church or charity, would the Economist also make the same argument?

It's not a faith issue, here. It's a basic Economic principle.

[RobinFinderson]

You understand Economics, don't you?

If the Senate invited a well known Economist with no ties to any particular church or charity, would the Economist also make the same argument?

It's not a faith issue, here. It's a basic Economic principle.

Hmmm... that seems like a concise summation of rambam's point.

I think byu71 nailed it -- the tax deduction is social engineering. I'd be happy to get rid of it.

[jay santos]

Hmmm... that seems like a concise summation of rambam's point.

I think byu71 nailed it -- the tax deduction is social engineering. I'd be happy to get rid of it.

No that wasn't rambam's point.

This was his point.

It seems Oaks is telling us he doesn't trust us to pay an honest tithe.

[Pheidippides]

Religion should not be exempt from taxes. Religion is just another form of business.

I'd dispute this one. Another form of corporation maybe, but you have to allow for 501(c)(3) type entities that are non-profit. As long as any religion keeps to the general requirements as any other 501(c)(3), why should the treatment be different?

Okay, I'm done pretending to know anything about taxation now. I will take this opportunity to vent a little at the fact that the IRS yesterday asked us for backup documentation for all of our charitable donations for 2009. Grrrrr.

[RobinFinderson]

No that wasn't rambam's point.

This was his point.

Same difference. Oaks does not trust 'us' to pay an honest tithe because he thinks the economic principle trumps religious fealty.

[byu71]

Same difference. Oaks does not trust 'us' to pay an honest tithe because he thinks the economic principle trumps religious fealty.

I actually have a different opinion. I think those who do pay tithing for the most part, actually would continue to pay tithing.

Where the donations might suffer are in other area's. For instance donations to BYU. Perhaps fast offering, the missionary fund, boy scouts and other things the church associates with. Donating to those things are not in the "commandment" category like tithing.

[jay santos]

Same difference. Oaks does not trust 'us' to pay an honest tithe because he thinks the economic principle trumps religious fealty.

That's quite a stretch to attach that assumption to Oaks' comments.

It's an economic principle. An agnostic economist would say the exact same things Oaks says. But when Oaks says it, it's because he has not faith in the saints to pay tithing? Bizarre and extremely cynical extrapolation.

Maybe Oaks is only talking about fast offerings and other non-tithing donations.
Maybe Oaks is inserting himself into the discussion as a representative of all religions.
Maybe Oaks has 100% faith all members would continue to pay full tithe but wants to protect their interests and help them maximize their finances.

[CardiacCoug]

That's quite a stretch to attach that assumption to Oaks' comments.

It's an economic principle. An agnostic economist would say the exact same things Oaks says. But when Oaks says it, it's because he has not faith in the saints to pay tithing? Bizarre and extremely cynical extrapolation.

Maybe Oaks is only talking about fast offerings and other non-tithing donations.
Maybe Oaks is inserting himself into the discussion as a representative of all religions.
Maybe Oaks has 100% faith all members would continue to pay full tithe but wants to protect their interests and help them maximize their finances.

This is a good example of the way you can see something great or sinister in the Church depending on your perspective. Either Oaks is just looking out for the financial well-being of tithe-paying, charitable Mormons or he is worried about the Church's net worth dropping below $50 billion and the possible need to downgrade his Avalon to a Camry. (My natural inclination is to be suspicious too, obviously).

I saw this recently with respect to home teaching. Had a non-LDS friend talk about how great it was that LDS people are encouraged to make visits and be friends with each other and help each other. Another dude said how creepy it is that Mormons are always "checking up" on each other and trying to control each other/keep each other in line.

[jay santos]

That's quite a stretch to attach that assumption to Oaks' comments.

It's an economic principle. An agnostic economist would say the exact same things Oaks says. But when Oaks says it, it's because he has not faith in the saints to pay tithing? Bizarre and extremely cynical extrapolation.

Maybe Oaks is only talking about fast offerings and other non-tithing donations.
Maybe Oaks is inserting himself into the discussion as a representative of all religions.
Maybe Oaks has 100% faith all members would continue to pay full tithe but wants to protect their interests and help them maximize their finances.

Can someone else take this role on for me? Indy where are you?

[UtahDan]

Religion should not be exempt from taxes. Religion is just another form of business.

I think that is true to some degree but overlooks the benefits that religion provides to society which I do think are tangible. The most tangible benefits are the material ones and then there are other benefits that would probably be subjective to members of those churches. We can never get to the bottom of whether society benefits more from Lutheran teachings or more from Scientology for example, so the only objective measure is what material or tangible goods they provide.

I would do it this way. I would revoke the exemption and levy a tax on profit made by churches. I would give them all kinds of exemptions that would allow them to cover their costs of operation, including expansion, and reasonable savings, tax free. But anything beyond that which goes into an account or becomes an investment at the end of the day gets taxed. HOWEVER, I would then have a scaled system whereby the church would receive an exemption on that money depending on how much of it goes to charitable/humanitarian recipients, all the way up to the full amount. So if 10% of the profit goes there, you get to exempt 10% of your profit from tax. But if you spend 40% of your profit you can exempt the whole amount and keep the other 60% and not ever have that be viewed as profit again (other than interest income).

I know the devil would be in the details, but I like the idea of a system that is going to incentivize churches to spend a good hunk of their surplus every year but allows them to keep most of it if they direct their money to things that tangibly benefit communities. I realize there would also be an incentive to figure out a way not to show any profit whatsoever. But I think that could be address through careful management of the exemptions I’m talking about. Just an idea.

Oh, the other major think I forgot: if you take advantage of the exemptions you must be financially transparent UNLESS you are getting the full exemption because you max out what you are paying in humanitarian aid.

[Jacob]

How much would getting rid of the tax deduction affect charitable contributions?

Would any of you stop donating tithing or fast offerings if it was no more?

How many people say, "I wasn't going to buying a house, but since the mortgage interest is tax deductable, I'm all in." I think Freddy Mac and Fannie Mae have been much more important to home ownership than the tax deduction.

I suppose it would affect investment property which had there not been the extra incentive might have help before the housing bubble.

It also leads to impractical behavior, such as people mortgaging their house to buy a car, since home mortgage interest in tax deductible and car loan interest isn't.

All in all, I think the importance of these deductions influencing our decisions are overstated, especially for the cost to government revenue.

I still would have paid my tithing and fast offerings. I still would have bought a house. I still would have paid tuition and gone to college.

I wish they would lower the tax rate, get rid of itemized deductions and simplify the tax code.

I'm going to whole-heartedly disagree with this. You, and I, and most people actually did decide to buy our house based on the fact that the interest is tax deductible. If it weren't, then the rel cost of the house would have been greater and we may not have been able to afford the one we ended up with. It is possible that a change in the law would cause a decrease in home values to compensate. But that's not certain.

It would also not affect investment property, as interest is deductible as a business expense rather than a home mortgage interest deduction.

But I'm with you on your preferred policy. Even if they don't get rid of most deductions, they should at least greatly limit the mortgage interest deduction to no more than the median home value. Or maybe the 75th percentile, if we're being generous. IIRC Bowles Simpson limited it to a 500k mortgage. That should have been done already.

As for college, we'd see a lot fewer folks going to graduate school if subsidized loans weren't an option. We'll, this assumes folks entering graduate school are acting rationally, which is a bit of a leap.

[RobinFinderson]

I'm going to whole-heartedly disagree with this. You, and I, and most people actually did decide to buy our house based on the fact that the interest is tax deductible. If it weren't, then the rel cost of the house would have been greater and we may not have been able to afford the one we ended up with. It is possible that a change in the law would cause a decrease in home values to compensate. But that's not certain.

It would also not affect investment property, as interest is deductible as a business expense rather than a home mortgage interest deduction.

But I'm with you on your preferred policy. Even if they don't get rid of most deductions, they should at least greatly limit the mortgage interest deduction to no more than the median home value. Or maybe the 75th percentile, if we're being generous. IIRC Bowles Simpson limited it to a 500k mortgage. That should have been done already.

As for college, we'd see a lot fewer folks going to graduate school if subsidized loans weren't an option. We'll, this assumes folks entering graduate school are acting rationally, which is a bit of a leap.

One underlying economic principle: The same factors that increase charitable donations because of the exemption are also contributing to the (artificial?) inflation of home prices/value, the inflation of tuition, and the inflation of medical costs.

[Sleeping in EQ]

Isnt tax deduction a function of the government? Didn't Jesus teach to Give to Caesar what is Caesar's, and to God what is God's.?

You've missed the point. I appreciate the allusion to the scripture, though.

[mUUser]

I would still pay tithing without the current tax advantages it enjoys, but would probably effect how I pay it. IOW, I'd likely pay on net increase, not gross. Might go that route next year anyway.

[HuskyFreeNorthwest]

http://www.deseretnews.com/article/7...eductions.html

What I think Oaks is really saying here is that if people had to donate to charitable organizations with after-tax dollars, they would give less. The reason they would give less is that they don't value charitable giving highly enough to take the hit out of their savings or spending, so they would take the money to make up for the increased taxes out of their donations.

I would give less because the government by saying they want my money not a charity is saying that they (the government) can do everything the charities I support do.