[EL] Tax Credits/Deductions for Campaign Contributions

[Ellen Aprill]

A reminder about tax credits vs tax deductions that might be useful for
those who took tax long, long ago.

A deduction by its very structure favors those with higher taxable incomes
and thus with higher marginal tax rates (the rate on the next taxable
dollar).  If a taxpayer's marginal tax rate is 35%, deducting $100 saves
$350 in taxes.  If the taxpayer's marginal rate is 15%, a deduction of $100
saves $150 in taxes.

In contrast, a credit of, say, $20 for each $100 spent, saves both of these
taxpayers the same amount of tax, $20. As Dan notes, that $20 will be a
larger percentage of the taxes owed by the taxpayer with the lower income
and lower marginal rate.

  Ellen
-------
Ellen P. Aprill
John E. Anderson Professor of Tax Law
Loyola Law School
919 Albany Street
Los Angeles, CA 90015
213-736-1157



On Tue, Jul 24, 2012 at 3:15 PM, Dan Meek <dan at meek.net> wrote:

>  Oregon has produced a table showing use of its political tax credit by
> income level.  See *oregon*.gov/DOR/STATS/*tax*-*expenditure*-*report*-2011-2013.shtml,
> page 197.
>
> Yes, higher income persons use the tax credit more often.  But lower
> income persons get a larger percentage change in their taxes.
>
>   Dan Meek
>  503-293-9021 dan at meek.net 866-926-9646 fax
>
> On 7/24/2012 2:44 PM, David Adamany wrote:
>
> Thanks for several posts with valuable information on tax credits and
> deductions for campaign contributions.   The earlier studies showed use was
> very heavy among higher income taxpayers and much lower among lower income
> taxpayers.   These differences were much great than, for instance,
> differentials in voting turnout between various income groups.   Can anyone
> shed light on whether any of the plans mentioned in recent posts tend to
> diminish disparities in political activities between high and lower income
> strata?  Thanks again for helpful responses.
>
>
>
>
>
>
> David Adamany
> Laura Carnell Professor of Law
> and Political Science, and
> Chancellor
> 1810 Liacouras Walk, Ste 330
> Temple University
> Philadelphia, PA 19122
> (215) 204-9278
>
>
>
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