Right. And in theory, Since a donation of $10,000 has me out of pocket $7,200, if the tax advantage goes away, I might lean toward donating just that $7,200. Me, personally, I wouldn't change my habits, but on the margin, the deduction has an impact. As it does for any other item that the tax code favors. I don't have a mortgage "for the write-off" but my 5.25% mortgage costs me about 3.75%. This can't be ignored.
You can give all your after-tax income to charity. But then, how will you support yourself, if not on government hand-outs? If you have sufficient assets that you don't need any of your income, then give those to charity instead.
-Mark Bole
If your income is really high (say, you bet on the junk mortgage market collapse and bought a lot of out-of-the-money puts, making a billion dollars in profits), and you want to give 90% of that to charity, you can't. That is, only 50% is deductible, so you'd end up with $500 million taxable income, and only $100 million to pay the taxes on it. If it was all deductible, you'd have $100 million pre-tax and $50-something million after tax (depending on state), plenty to live on.
Seth
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