Think Tank year-end show: Santa Claus tax policy

Dec 20, 2014, 5:11 AM | Updated: 5:14 am

This week’s show presents a rare opportunity. We start out by presenting a problem, an inequity in the tax code. OK, nothing new there. But this week the problem we present is one that can be partially rectified by individual citizens acting on their own.

Our tax code is riddled with “credits” that reduce taxes for some while increasing the burden on the rest of us. There are dozens of these. Most sound reasonable enough. One particularly invidious tax credit is one that that seems good in theory is the extracurricular school tax credit. A couple may donate up to $400 to fund their kid’s class trip and get every penny back with a dollar-for-dollar reduction in their state income tax. What could be wrong with that?

The inequity is that it permits rich parents to fund their own kids’ extracurricular school trips with tax dollars while leaving parents who do not have the $400 cash or a $400 state tax liability to make a such a donation out in the cold. Almost ALL of these tax credits go to schools in wealthier neighborhoods. Poor kids’ schools get almost nothing.

The Superintendant of the Children First Academy is Jerry Lewis. He joins the show to talk about his two schools which serve mostly homeless and higher needs kids. Think they are adequately funded? I called Jerry the night before the show to confirm his attendance. He was working with a crew of volunteers to clean up one of his schools. When is the last time your school’s superintendant did custodial duties?

Jerry joins the show and tells us about some of the obstacles his kids are up against. We then discuss how individuals can partially resolve the inequity by making that $400 donation (for couples; $200 for individuals) to one of the more needy schools in the state—ones that receive almost no donations from parents who do not have that kind of spare cash. You get to play Santa Claus, and it likely will not cost you a cent.

(NOTE: two other similar credits are available: one for foster care organizations and the other for a wider range of charitable organizations. Elegible organizations are listed on the Arizona Department of Revenue’s website. And you can make the $400 [$200 for single taxpayers] donation to EACH of these. Of course, you should consult your tax advisor for verification; we do not give actual tax advice.)

Merry Christmas!

The Think Tank

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Think Tank year-end show: Santa Claus tax policy