Now, where do the corporations get the money to pay the taxes? The money either comes from the owners in lost profits, and so should be included in calculating their tax burden, or it comes from the customers in higher prices, in which case you should favor the repeal of those taxes.

Corporate taxes are NOT paid by the owners. They are paid by the corporation (C Corp). If a corporation is an S Corp, then the corporation pays no taxes but the shareholder pays it all as income tax and is included in the tables I linked.

In any case, that’s only PERSONAL income taxes. Since, you say, corporate taxes are paid by the owners, and not by the customers, you must also include corporate taxes in their burden. If you do not, then the money for corporate taxes must come from the customers, and so you would advocate the repeal of such taxes.

There is no punishment of the working poor. They, like everybody, gets the benefit of the standard deduction. For a married couple, that is $10,000 (for 2005). Remember, people who itemize really only get the benefit of the amount over the standard deduction. The ever-increasing standard deduction is resulting in fewer and fewer people being able to itemize. In effect the government is giving you a tax deduction for more than you have expenses for.

And it is relevant to mention that higher income taxpayers lose their exemptions. Most people who are unaware of the loss of itemized deductions are equally unaware of the loss of exemptions. Any calculation of tax has to take all relevant tax law into consideration.

I really do not see why you must punish the working poor, just to avoid having someone get back some of the money he contributes to charity. Do we not want to encourage such giving?

I was aware of the loss of personal exemptions above certain income levels, but I do not see the relevance to the subject at hand.

As for the loss of itemized deductions – that is simply a part of the income tax calculation. (AMT is a totally different tax calculation, parallel to the income tax calculation and only applicable in certain circumstances.) Try looking at the Schedule A instructions, which is the appropriate schedule for itemized deductions

(I assume since you are unaware that there is a loss of itemized deductions above certain AGI limits, you are also unaware that there is a loss of the deduction for personal exemptions above certain limits.)

I was not aware that one lost the ability to deduct charitable contributions above a certain level. (The $149,950 figure you quote is, I assume, the cut-off for the Alternative Minimum Tax?) Some deductions are lost in the AMT, but I do not see that charitable contributions are in that list (http://www.irs.gov/pub/irs-pdf/i6251.pdf).

This is even more critical for those taxpayers who lose their itemized deductions because their income exceeds certain limits. For 2005, that limit was AGI of $145,950, which, by the way, is nowhere near the income required to be in the 35% tax bracket ($326,450 for 2005 for joint returns). So it is simplistic to say that someone in the 35% bracket now receives a tax reduction of 35% for each dollar contributed, because that is absolutely not the case.

That’s why such a credit would have to be AGI-limited; otherwise, you are giving away more money to the higher income taxpayers than they would have otherwise received.

A person in the 36% tax bracket deducts a $100 contribution, and reduces his tax by $36. Somone in the 10% bracket does the same, and reduces his tax by $10, IF HE HAS ENOUGH DEDUCTIONS TO ITEMIZE.

Now, by my method, assuming the top bracket is 36%, BOTH would get a tax credit of $36. The rich person’s tax has not changed at all, but the man in the 10% bracket sees his tax go down by $26 to $36.

A deduction reduces your taxable income, while a credit reduces your TAX. Credits are, therefore, much more valuable. What you proposed – a credit at the highest marginal bracket – makes NO sense unless it is AGI limited.

No way unless this is limited by AGI. Otherwise, it will be another giveaway for the upper income taxpayers.

I propose that contributions to charities be given a tax credit (refundable) at the highest marginal tax rate.