Monday, November 27, 2006

The Annual Ask (The Now-Traditional Tax Credit Column)

It's my Thanksgiving weekend special "evergreen" column, urging Arizona taxpayers to take advantage of our unusual brew of state income tax credits that allow you to make donations and receive the same amount back in a tax credit. It's philanthropy on the cheap, and I keep urging people to practice in hopes that it creates the learned behavior of philanthropy even when it isn't free.

The newspaper version of the column is available, for the next two weeks, here. And just so you know, not only will we be writing our usual checks to Devereux, the Family School, and the Clean Elections Fund, but I've got my appointment to give blood on Thursday. Cookies without guilt, too.

Holiday Greetings from State Tax Code
East Valley Tribune, Nov. 26, 2006

Each year around this time, this column reminds readers of Arizona’s surprisingly numerous ways to be generous for free. It’s a strange "generosity" that costs nothing, and like much recent legislation, you first must have money to benefit.

In addition to having cash to spare for a few months, you also must itemize deductions, and sometimes the Alternative Minimum Tax affects your results. But if you qualify and make contributions, you get dollar-for-dollar credits against your state income taxes, with your federal taxes unaffected by swapping a state tax deduction for charitable ones. And for 2006, the credit amounts for married taxpayers have increased again.

There’s a "reverse Robin Hood" aspect to income tax credits, because better-off taxpayers can take advantage, while those just getting by can’t. But that’s the way it is, so if you can, whoosh yourself through several Arizona tax loopholes before Dec. 31.


First, contribute to a "private school tuition organization" this year, and become eligible for an Arizona income tax credit in April. The credit limit is now $500 for individuals and $1,000 for married couples.

There are dozens of PSTOs in Arizona, but please consider writing your check to Schools With Heart, 1131 E. Highland, Phoenix, AZ 85014; designate your check for the Family School, a unique, progressive school serving children from diverse backgrounds.

Second, taxpayers also can donate to public schools -- although this being Arizona, of course it’s smaller than the private school credit. Single taxpayers can give and get back up to $200, while the limit for married taxpayers is now $400. You must write the check directly to the school, not to a PTO or foundation.

So contribute to the schools in the Isaac School District, 3348 W. McDowell Road, Phoenix, AZ 85009, or click here, or call (602) 455-6700. Inner-city Isaac gets only a fraction of the donations given to wealthier suburban districts while facing far greater challenges, with more than 90 percent of its students at or below poverty level and about two-thirds in non-English-speaking homes. Please make Arizona school finance slightly less perverse by contributing to Isaac’s schools, at no net cost to you.

Third, donations to charities assisting low-income residents can get another tax credit, if your gift is above your "baseline" charitable giving (what you gave to charity in 1996, or the first year you itemized). This credit amounts to $200 for single taxpayers and $400 for couples.

As a board trustee, I strongly urge you to make a free contribution to Devereux Arizona, part of the nation’s largest nonprofit behavioral health service provider. Devereux serves children in Arizona in foster care and residential programs, many of whom come from abusive or neglectful homes; that’s why they need foster care. Devereux’s "My Little Stocking" fund pays for holiday gifts for children who otherwise won’t get any. Send your check to Devereux at 11000 N. Scottsdale Road, Suite 260, Scottsdale, AZ 85254, click here, or call (480) 998-2920 ext. 1023.

Fourth, you can help fund Arizona’s system of publicly-financed elections and take the place of lobbyists and political fundraisers, at no cost to you. These limits are surprisingly high; $550 for individuals and $1,100 for couples, or up to 20% of your total state tax liability, whichever is more. Send your check to the Citizens Clean Election Fund at 1616 W. Adams, Suite 110, Phoenix, AZ 85007.


Finally, I always close by urging donations of something else that won’t cost anything -- blood. The holidays always seem to stretch blood supplies, so it’s a perfect time to schedule a donation. You can call United Blood Services at (602) 431-9500, or make an appointment online.

Don’t let December 31 come without having taken as much advantage as you can of Arizona’s unusually broad menu of loopholes and credits. Use misguided public policy to help make our community a slightly better place, at no cost to you. And maybe you’ll get into the habit of giving even when you don’t get a tax credit.


Anonymous said...

The best part of these tax credits is that they really indicate the state of affairs of Arizona politics.

Instead of paying tax to the general fund and trusting our legislators to do the right thing with our money - such as fund schools and social programs - we can pay our tax DIRECTLY to the school of our choice.

This is an end around of the previously un-constitutional property tax funding that gave wealthy areas (suprise) more money for their schools than lesser areas.

This also has a constitutional argument attached, considering that you can also pay your tax directly to PRIVATE RELIGIOUS SCHOOLS (througha School Tuition Organization). This credit is ripe for abuse, with reports from some STOs that track how many donations a student gets from friends and family, and then offers him (aha!) a scholarship!

I'm all for supporting public schools and the working poor. I'm a band geek for G-d's sake! This tax credit has averted numerous Mr. Holland's Opus-like situations in schools across the state.

I'm also fine with running an end around our legislature, who is likely to AGAIN spend a bunch of time, money, and effort on political fodder instead of actually getting work done. Actually, I'm NOT for that. I'd rather we have a legislature that the people can trust with our tax money.

I just wish we wouldn't rob our state treasury, and the decision makers that manage it, in order to put kids through private relgious schools.

Joe Thomas said...

Public and private school tax credits are a rip off.

It's pretty unbelievable that a Democrat like Sam would be advocating for them.

Guilty in my book.