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Post by Christine on Apr 15, 2017 8:25:37 GMT -5
It seems to me rather paradoxical to hold a position that taxes are bad because "evil government" and also that everyone should be equally taxed by "evil government." Declaring that taxes are theft, and then complaining that everyone is not stolen from equally is sort of odd. I'm always amazed that consistency in principles confuses some people. As always, I'm arguing for equality under the law and against cronyism used to benefit some people at the expense of others. One can, at the same time, be opposed to taxation and to the political carving out of exceptions so that some people bear the burden and others are exempted. I'm not going to pick sides based on which particular industries are the beneficiaries of politically-granted privilege. That's paradoxical to me. Consistently opposing politically-granted privilege is not. Oh, I'm not confused. I understand your position perfectly. I do think you could make your points more realistically if you didn't constantly refer to taxes as "theft at gunpoint" and to nonprofits as recipients of "politically granted privilege." So, I was kinda sorta making fun of you. But I'm glad it gave you something to rant about this morning.
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Post by Amadan on Apr 15, 2017 8:45:20 GMT -5
I'm always amazed that consistency in principles confuses some people. As always, I'm arguing for equality under the law and against cronyism used to benefit some people at the expense of others. Other people's principles are not inconsistent just because they're different from yours. And "equality under the law" is a stupid argument against tax-deductible charitable donations. You might as well argue that everyone should be taxed a flat rate of $1 million per year. Or that everyone should be able to vote and sign contracts, regardless of age. That would be equality under the law too. You are severely abusing the meaning of "equality." It does not mean "The law does not recognize differences in individual situations." So you consider the local food bank an industry being granted political privileges, and it's unfair that money I give to them is not taxed, but money I spend at Walmart is? Okay, we can have the Walmart debate again, but even if we conclude that Walmart is a net good, that is not the reason why charities aren't taxed and for-profit corporations are.
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Post by Deleted on Apr 15, 2017 8:49:51 GMT -5
And with that, Amadan joins the ranks of the cognoscente! (Never mind me. This is how mods have fun. Sad, isn't it?)
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Post by Don on Apr 15, 2017 19:09:38 GMT -5
A church holds a bake sale. The cost to make a cookie is $0.10. They sell each cookie for a $1.00. The gain from each cookie is $0.90. That is about making money, right? The proper question is, what is the is money spent on, not, are they trying to make more money? I don't know enough about what this Ivy League actually spends money on, and I'd likely agree with the rest of your objections, fwiw. But I still maintain that you are looking at the investment aspect of it, and the "worth" of nonprofits in general, in the wrong way. In your church example, then, I guess the proper question is "are they raising money to feed the homeless, or to support actions to defund Planned Parenthood?" I see no way to avoid the political implications when you have gatekeepers deciding what organizations qualify for privilege.
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Post by Christine on Apr 15, 2017 20:13:33 GMT -5
Actually, the "gatekeepers" prohibit 501(c)(3) organizations from political activities. Endorsement of a political candidate is clear grounds for losing 501(c)(3) status. Using funds to influence legislation (e.g., defunding Planned Parenthood) must be an insubstantial portion of all activities, "insubstantial" being generally understood to mean around 5%.
That doesn't mean a church can't use 100% of their funds to make and display posters of two-year olds with the caption MOMMY PLEASE DON'T KILL ME, which is but one of a myriad of reasons why I don't think religious organizations should automatically qualify for 501(c)(3). Churches don't actually have to be charitable at all, they just have to qualify as a religious organization.
Not sure if this is common knowledge, but churches generally don't even have to file 990s, a form that every other nonprofit has to file with the IRS as well as make available to the public. Churches fall under 501(c)(3) for other-than-charitable reasons -- perhaps because of the whole keeping government out of religion thing.
At any rate. For any good idea, there are those who will circumvent the intent and abuse it for selfish or nefarious reasons. That doesn't mean the good idea is a bad idea. As far as I can tell, Don, your argument against nonprofits basically consists of various versions of "it's not fair." Meh.
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Post by Amadan on Apr 16, 2017 10:02:06 GMT -5
Actually, as much as I disagree with efforts to defund Planned Parenthood, "Feed the homeless" or "Help refugees" is no less political than "Stop abortion."
I personally would like to see religions lose their tax-exempt status. (There I go agreeing with Christine again.) But not because some of them advocate positions I disagree with.
You're being very cagey, as you often are, Don. Please clarify your position: (1) Do you believe there should be no non-profit organizations that get tax-exempt status? (2) Do you believe there should be no such thing as a tax-deductible contribution?
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Post by robeiae on Apr 16, 2017 13:43:32 GMT -5
Sign me up for (1). I've been saying that forever. And I'm 100% on board with religions losing their tax-exempt status across the board. If I can't have (1), pulling the rug out from under religions would at least be something.
But back to the endowment fund stuff:
Seriously, if you're trading stocks and bonds, buying and selling mutual fund shares, investing in gold, or pretty much anything else, you should be paying the same tax rates that everyone else is paying. Nobody should be riding that train for free. There's no valid justification for it whatsoever, imo.
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Post by Christine on Apr 16, 2017 15:10:15 GMT -5
I feel like I'm missing some crucial piece of your logic on this.
Why shouldn't nonprofits invest excess funds*? Why shouldn't investments be a source of increasing funds*?
What if a nonprofit cancer research organization gets a $5 million dollar grant for a 5-year project? What should they do with excess funds in years one, two, three, etc.?
If a nonprofit shouldn't invest funds, what are, to you, acceptable alternative sources of generating funds*? Should it be contributions/grants only? Should excess funds be held in non-interest bearing escrow accounts? Why do you view investment returns, when the returns will be spent on qualified nonprofit activities, as different from... asking people to give money?
*tax free, in case that wasn't obvious
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Post by Don on Apr 16, 2017 15:19:40 GMT -5
Actually, as much as I disagree with efforts to defund Planned Parenthood, "Feed the homeless" or "Help refugees" is no less political than "Stop abortion." I personally would like to see religions lose their tax-exempt status. (There I go agreeing with Christine again.) But not because some of them advocate positions I disagree with. You're being very cagey, as you often are, Don. Please clarify your position: (1) Do you believe there should be no non-profit organizations that get tax-exempt status? (2) Do you believe there should be no such thing as a tax-deductible contribution? Cagey? One can, at the same time, be opposed to taxation and to the political carving out of exceptions so that some people bear the burden and others are exempted. I'm not going to pick sides based on which particular industries are the beneficiaries of politically-granted privilege. That's paradoxical to me. Consistently opposing politically-granted privilege is not. What's cagey about that? I have no problem interpreting that quote to indicate I would answer Yes to both of your questions. YMMV, of course. I think politicians have proven time and time again that they are totally inept at social engineering, just as they are at economic engineering. And tax code manipulation is an attempt at both. That's because societies and economies are not mechanical, they are organic. They are no more amenable to central control than the weather.
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Post by robeiae on Apr 16, 2017 17:16:04 GMT -5
I feel like I'm missing some crucial piece of your logic on this. Why shouldn't nonprofits invest excess funds*? Why shouldn't investments be a source of increasing funds*? What if a nonprofit cancer research organization gets a $5 million dollar grant for a 5-year project? What should they do with excess funds in years one, two, three, etc.? If a nonprofit shouldn't invest funds, what are, to you, acceptable alternative sources of generating funds*? Should it be contributions/grants only? Should excess funds be held in non-interest bearing escrow accounts? Why do you view investment returns, when the returns will be spent on qualified nonprofit activities, as different from... asking people to give money? *tax free, in case that wasn't obvious They can invest. I never said that they shouldn't be allowed to do that. But they should have to pay the same required taxes on investments that everyone else pays, imo. Why? Because maintaining the system costs money. Running the SEC costs money. Running the Federal Reserve costs money. So what if the funds come from a non-profit? What's the logic behind them not paying their portion here? It's not like the taxes are outrageous. If they were, no one would invest, no one would make money. A non-profit doesn't need a leg up here.
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Post by Christine on Apr 16, 2017 17:51:26 GMT -5
Maintaining everything costs money.
Should the Girl Scouts pay taxes on the cookies they sell because they use roads and bridges to transport themselves and the cookies to public venues?
You've said you don't think nonprofits should exist. Fair enough. But I still find it odd that investment as a means of increasing funds galls you so much. You haven't really explained why. If I were to speculate, I'd say it's the amount of money involved that bothers you more than anything. There's just something about a successful nonprofit that gets to people. If they're not begging for money, struggling to keep volunteers they can't pay, and doing nothing but fundraisers, then they don't deserve to be classified as nonprofits.
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Post by Christine on Apr 16, 2017 18:15:02 GMT -5
Here's another way of looking at it: an individual invests in the stock market. He makes $10,000. He donates $10,000 to charity. How much tax does he pay on the $10,000 gain?
Zero. None. Nada.
It actually could be more of a tax benefit for the individual, if he has other income taxed at ordinary rates. He gets a deduction for the contribution at his effective rate, whatever that may be, but which is likely to be higher than his capital gain rate.
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Post by Amadan on Apr 16, 2017 18:29:39 GMT -5
What's cagey about that? I have no problem interpreting that quote to indicate I would answer Yes to both of your questions. YMMV, of course. I think politicians have proven time and time again that they are totally inept at social engineering, just as they are at economic engineering. And tax code manipulation is an attempt at both. That's because societies and economies are not mechanical, they are organic. They are no more amenable to central control than the weather. Politicians are no more inept than anyone else at devising public policy, and probably less inept than most people. What you call "social engineering" is what all governments must do as a necessity. Outside of your fantasy world in which there is no government and communities don't exist above the level of a local village (yet can still somehow maintain an advanced industrial civilization), governments exist, and will exist, and must exist, and therefore things need to be paid for, and therefore there will be taxes, and therefore a tax code will have to be designed and implemented, and everything at that point is quibbling over the details. You want there to be no taxes - I accept that there should and will be taxes, and that being the case, I don't have a problem with incentivizing some behaviors and disincentivizing others. Throwing up your hands and despairing that it's simply impossible for any government to manage such a thing ignores reality.
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Post by robeiae on Apr 16, 2017 20:16:51 GMT -5
You've said you don't think nonprofits should exist. Fair enough. But I still find it odd that investment as a means of increasing funds galls you so much. You haven't really explained why. If I were to speculate, I'd say it's the amount of money involved that bothers you more than anything. There's just something about a successful nonprofit that gets to people. If they're not begging for money, struggling to keep volunteers they can't pay, and doing nothing but fundraisers, then they don't deserve to be classified as nonprofits. 1) It doesn't "gall" me, I just don't think it makes any sense. 2) Yes I have explained why, in a very matter-of-fact way: people investing via things like the stock market need to know that the system works and has oversight, so they should--all of them--pay the taxes needed to support the same. Simple stuff, not sure what part of that you're not getting. So your speculation is completely wrong. In contrast, the justification for why they shouldn't pay taxes is what, exactly? Some nebulous idea about how not taxing them serves a higher purpose? Please. We're not talking about taxing them out of exist, just having them pay the same taxes that everyone else is supposed to be paying. All those big-time investors who aren't non-profits still can make a boatload of money in the markets, do make a boatload of money, even with these taxes (they're hardly onerous). For the record, I don't like any of the loopholes used by corporations or anyone else to avoid paying these sorts of taxes.
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Post by Christine on Apr 16, 2017 20:37:34 GMT -5
The justification is that they are contributing to education, scientific research, art, the poor/disabled ... things that, face it, a lot of people don't really feel the urge to promote or invest in. Things that aren't for the most part "profitable," monetarily and/or immediately. There's not likely to be financial return for an investment in an elementary school, or cancer research, or, well, anything having to do with arts, veterans, developmentally challenged kids, whatever.
Nonprofits do not personally or corporately benefit from contributions or gains. The funds are used for nonprofit activities. No one is enriching themselves, pocketing the money, unless they're breaking the rules... or unless you view the salaries of the admins as enrichment, which is a fair point but a drop in the bucket, I think. And they pay taxes on their salaries, just like the CEOs of corporations who make 10-20 times what they do.
The government is, at least in theory, not taxing such endeavors because such endeavors are part of why government exists: for the good of society when it isn't profitable. Free enterprise takes care of the monetary part; government's job is to ensure other stuff doesn't fall through the cracks in everyone's pursuit of the almighty dollar. Nonprofits do government's "job" for them to a certain extent. And a lot of times, they can do it better because they're specialized in one area or another. Why should government tax that?
Honestly, this rationale that nonprofits need to pay tax because "people need to know the systems works" and everyone needs to support "the system," i.e., the SEC, has me scratching my head.
ETA: And to revisit my original point: in a nonprofit, there is no profit. The funds all go to the 501(c)(3) purpose. No individual or entity is benefitting, other than the beneficiaries of the nonprofit for the charitable purpose. When the IRS levies tax, they levy tax on the "net" -- revenue minus expenses. The profit. The amount that goes to the shareholder, partner, member, to do with as he pleases. Nonprofits don't do what they please with the "net" in any given year. The net is just a fund, to be spent (potentially invested in the interim) on the 501(c) purpose.
You didn't address my point about the individual who makes a profit in the stock market and donates it all to charity. There's no tax on that profit. It's the same thing. If you're against nonprofits having nontaxable gains on investments, logically you must also be against tax deductions for individuals who donate their own profits to charity.
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