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

[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.