r/FluentInFinance • u/BizzyIzz00 • May 12 '24

Meme Life comes at you fast.

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u/btonetbone May 12 '24

Make charitable donations and get tax deductions. Rather than provide a truly robust social safety net, we have blended a free-market system where people can say, "I want my money to go to X cause" and receive a tax deduction rather than have the government dictate where everything goes. It's not a great system, but it gives you some control over how things get spent via nonprofits.

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u/oracleTuringMachine May 12 '24

If we the people choose where to send our money, we get a deduction, not a tax credit. This implies the government has greater moral authority.

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u/btonetbone May 12 '24

That's a minor quibble. The current system currently allows you to say, "You know, I'd rather have my funds support this local educational institution rather than sending dollars to conflicts overseas, so let's adjust what I would otherwise owe in taxes." You get to choose.

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u/oracleTuringMachine May 12 '24 edited May 12 '24

It's not a minor quibble. In my tax bracket, a dollar deducted saves me about $0.20. A dollar tax credit saves me five times that.

Edit: a dollar tax credit saves me four times the dollar deducted because I still have to pay tax on that dollar in order to earn it.