How Should I Handle a Tax Windfall That I Don't Want?
If getting a huge windfall from impending tax cuts has you feeling guilty, here are some options.
Question: I’m a person blessed by considerable personal wealth, and I feel a moral dilemma about the prospect of getting an enormous financial benefit from tax cuts—on my current income and my estate after death—now being proposed by President Trump and the GOP Congress. I didn’t support Trump because I’m a fiscal conservative and a social liberal, and he is neither. I’m concerned that the proposed tax cuts—while generally beneficial to business competitiveness (especially the proposed corporate rate reduction)—will greatly exceed Trump’s planned spending cuts, swelling the federal debt. Any ideas on this?Answer:
I sympathize with your quandary. Yes, in the long run, this proposed simplifying of our arcane tax code—lower rates coupled with fewer deductions and credits—should be good for boosting economic growth and eventually raising total tax revenues. But in the near term, as you surmise, it will probably increase annual budget deficits because revenues will fall and spending cuts will be hard to achieve; Trump has many expensive plans in his pipeline.
If you feel guilty about getting a huge windfall from tax cuts that seem to be coming, and which you oppose, here are some ideas:
You can voluntarily return your tax savings to the U.S. Treasury as a tax-deductible gift to reduce the federal debt. A few hundred citizens do this annually, bringing in a few million dollars in a typical year. (For more information on contributions to reduce the public debt, go here .)
You could boost your charitable giving (also tax-deductible) by the amount of your personal tax savings, giving more to institutions that could really use your funds: medical research, local social-services agencies, struggling small colleges, school PTAs, college-scholarship programs, local performing-arts organizations, nonprofit rural hospitals, whatever.
If you, as a self-described social liberal, are concerned about Trump’s policies, you could focus your giving on organizations dealing with causes you care about, such as climate change, civil rights and racial understanding, immigration reform, and gay rights.