taxes

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.

 

Most Popular

How a Third Stimulus Check Could Differ From Your First and Second Payments
Coronavirus and Your Money

How a Third Stimulus Check Could Differ From Your First and Second Payments

There's going to be a big push for a third round of stimulus payments. But the amount and eligibility rules for your third stimulus check could be dif…
January 12, 2021
Where's My Stimulus Check? Use the IRS's "Get My Payment" Portal to Get an Answer
Coronavirus and Your Money

Where's My Stimulus Check? Use the IRS's "Get My Payment" Portal to Get an Answer

The IRS updated its popular online tool so that you can track the status of your second stimulus check.
January 9, 2021
When Could We Get a Third Stimulus Check?
Coronavirus and Your Money

When Could We Get a Third Stimulus Check?

It's clear that President-elect Joe Biden and others in Congress are going to push for a third-round of stimulus checks, but it might be a while befor…
January 11, 2021

Recommended

12 IRS Audit Red Flags for Retirees
retirement

12 IRS Audit Red Flags for Retirees

Seniors Beware: Your actions can increase the chances of the IRS giving your tax return a closer look.
January 14, 2021
22 IRS Audit Red Flags
tax returns

22 IRS Audit Red Flags

There's no sure way to avoid an IRS audit of your tax return, but these red flags could increase your chances of drawing unwanted attention from the I…
January 12, 2021
Charitable Tax Deductions: An Additional Reward for the Gift of Giving
Tax Breaks

Charitable Tax Deductions: An Additional Reward for the Gift of Giving

Because of the worldwide pandemic and related restrictions, your donations to charity are needed more than ever this year. And, with charitable tax de…
January 9, 2021
Joe Biden's Tax Plans for the Next Few Years
Politics

Joe Biden's Tax Plans for the Next Few Years

With control of both the House and Senate in Democratic hands, Joe Biden will be able to get more of his tax agenda through Congress. Here's what coul…
January 7, 2021