Smoke,
What if churches and all non-profits had to pay taxes?
What would that be like?
Let's take a look at this, using a flat 30% tax rate, for simplicity.
Let's pretend you want to donate $1,000 to a Missions Organization, for a particular missionary.
1. If you donate $1,000 to a mission organization... you get no deduction for that now. You have to claim that as part of your income and pay taxes on it. So that $1,000 actually cost you $1300.
2. Next, you give that $1,000 to the mission org, and they have to pay taxes on it, so they only have $700 left of the $1,000 you donated.
3. Then they give that $700 to the missionary. But this missionary may have his own private corporation set up, to protect him from liability... and so his private corporation has to pay corporate taxes... so it ends up as $490.
4. Then the pastor pays himself a check from his private corporation, so he can actually spend the money, but now he has to pay personal income tax on it... so now it's down to $343.
5. So under the "Smoke Plan" to end tax exemptions for non profits... when you want to give $1,000 to missions... it's going to cost you $1,300... and the missionary is going to end up with about $300.
But hey, maybe he won't have a small corporation set up to protect him from liability, and he'll get to spend the whole $490!
Wooo.
That's pretty great for your $1300 donation.
It's brilliant.
Brilliant.
It's brilliant to donate money, and demand everyone pay so many taxes that your donation never gets there.
Sometimes we talk a lot without really thinking things through.