Deductible charitable contributions have been a part of society since the Federal Income Tax was established in 1913.
Many charitable institutions would not exist without the deduction being allowed. The IRS now allows you to deduct contributions for charitable (not political) purposes usually up to 50% of your total adjusted gross income.
Tithing, a common practice since early biblical days, generally calls for you to contribute around 10 percent of your income. Income in those days was easier to figure. If your income consisted of 100 bushels (or whatever measurement they used), you were expected to donate about 10 bushels to the church or temple. Today, you would be hard-pressed to get a consensus on how to tithe. Is it based on gross pay, take-home pay, adjusted gross income, taxable income, or something in between?
The candidates for national office this year cover the spectrum when it comes to their donations. Mitt Romney donated about 16 percent of his adjusted gross income (AGI) to charity in 2011. Barack Obama donated about 22 percent of his 2011 AGI to charity. Paul Ryan donated about 4 percent to charity and Joe Biden donated only 1.5 percent.
Joe Biden and his wife have made between $300,000 and $400,000 for years and have never done much in the way of donations. In 2011 they donated a total of $5,540, which included $1,500 to churches. Paul Ryan and his wife reported AGI of $323,000 and donations of $12,991.
This doesn’t make Joe Biden a bad guy necessarily, but it does indicate something about what is important to him and what is not.
I was able to peruse Franklin D. Roosevelt’s 1937 tax return recently. He reported total income of $93,602 and gave $3,024.50 to charity, including $2,560 to churches. An interesting note, he could not compute his taxes in 1937, due to some tax-rate changes early in the year, and enclosed a letter to the IRS that said in part:
“I am enclosing my income tax return for the calendar year 1937, together with my check for $16,000. I am wholly unable to figure out the amount of the tax. As this is a problem in higher mathematics, may I ask the Bureau to let me know the amount of the balance due.”
Clearly this president did not have a good CPA.
Thomas H. Edginton, CPA,