The government is looking for ways to make budget cuts and raise revenues. One of the ideas being floating out there is to cut back on some of the deductions that have been favorite ways for American's to save money throughout the years. These include the mortgage interest deduction and the charitable giving deduction. I understand that a person who gives nothing away and does not own a home may be totally indifferent to these deductions. For some of us though, these are important deductions, and cutting them would represent a significant financial hardship. I hope the government stays away from this way of thinking.
Squeezing the middle class?
One gets a little tired of reading articles about the middle class. Specifically, there are plenty who are pointing out that there is much governmental revenue to be made off of the middle class. This may be true on a more collective basis, but on an individual basis each of these changes can hurt a great deal. Am I grateful that I have a job and that I can get by? Absolutely. It could be much worse. However, there seems to be an assumption that the middle class is sitting on a lot of cash and that we have the financial flexibility to absorb just about anything. I wish that were true.
Homes and giving
My dwelling place is in Southern California, and in case you haven't heard, that is a fairly pricey geographic region. Mortgage interest represents a sizable amount of cash each year and it would be very disappointing to lose that deduction. In addition, I do give money to various charitable groups. I do this because I believe in their work and I want to see them succeed. However, I would be lying if I didn't admit that getting a tax break is a nice side benefit. Combining those two deductions would result in a noticeably different financial situation for me.
Impact on non-profits
In addition to my normal employment, I do some volunteer work for a non-profit organization. The idea of the government taking away the charitable giving deduction is frightening when I think about the future of that and other organizations. I am not saying that people would stop giving, but I am also not naive to the reality that some charitable giving is motivated by the tax break. Ironically, cutting the charitable giving deduction could lead to the failure of many social service organizations. If that were to occur, there might be more citizens that turn to governmental agencies for help, which would result in higher costs. Therefore, one change that is viewed as positive may eventually create a negative outcome of a different kind.
Stay away from my deductions. Please.
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- Volunteering & Philanthropy