Retiring the Public Debt

[rowyn]

I knew that you could donate to the federal government, but I just found out today that you can make a donation to reduce the public debt. It’s even tax-deductible! Which may seem nonsensical (if I wanted to give more money to the federal government, why would I turn around and give them less money?), but I can see how one might feel that reducing the debt is a more worthy goal than funding the federal government in general. They even take credit cards. (Slogan: Increase Your Own Debt to Pay Off Ours! … maybe not.)

Anyway, I thought it was neat.

Comments

[duane-kc.livejournal.com]

I like T-bills, myself. "Loan us your money, and we'll pay you money, which we will then go ahead and take away from you at tax time, at a higher rate than usual, because it's not income, it's capital gains!"

[rowyn]

I think what the government pays you is income. If you sell the treasury bond to someone for more than you paid for it (which can happen if interest rates fall), though, that's capital gains. O:)

[tuftears.livejournal.com]

Wait, I'm not clear on this, I thought capital gains were taxed at a lower rate than normal income, like 20% versus 35% at the top end?

[rowyn]

The last I heard was 15% flat rate for capital gains (which could conceivably be above one's marginal rate, depending on one's bracket). But there's been lots of talk about changing that, and I dunno if they have or not.

[tuftears.livejournal.com]

That sounds right!

Close enough

[telnar.livejournal.com]

That's close enough between now and 2012 for anyone whose ordinary income tax rate is above 15%, but those with income below that probably don't owe any capital gains tax at all on long term gains.

After 2012, lots of things will change including the expiration of all rates set in the 2001 tax bill and extended for 2 years in the fall of 2010 (the "Bush tax cuts"), and a 3.8% Medicare surcharge applying to capital gains as well as ordinary income above a threshold. For good measure, there are likely to be tax laws which apply to 2013 which don't exist yet.

[shockwave77598.livejournal.com]

As I recall, it's only half deduction and is considered Charity. If you had a 1000 dollar tax debt, giving 1000 to the debt relief would knock it down by 500 or so. So it's a poor way of lowering your taxes.

Worse than that, actually

[rowyn]

The tax code treats it like a charity. Meaning, if you itemize your deductions, you can deduct it and not have to pay additional taxes on the money you gave to pay down the debt. For most people, that works out to getting 15%-35% of whatever amount you donated taken off your tax bill.

As with a charity, you'd mostly be doing it because you think it's a good idea.

86656556

[bhpfxykegiua.livejournal.com]

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