{"items": [{"author": "David Chudzicki", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852", "anchor": "fb-840729184852", "service": "fb", "text": "Adjusted gross income pretty much leaves out your e.g. Wave stock, right? Maybe you want to include alternative minimum or something.
Also, while most countries probably do have some standard definition to apply like adjusted gross income... it may not be very comparable across countries, which is tough.", "timestamp": "1484971119"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=840730616982", "anchor": "fb-840729184852_840730616982", "service": "fb", "text": "→ AGI would count Wave stock when I exercise the options, I think. Why would sooner be better? The options may not end up being worth anything.", "timestamp": "1484971447"}, {"author": "David Chudzicki", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=840730751712", "anchor": "fb-840729184852_840730751712", "service": "fb", "text": "→ I thought that the reason Alternative Minimum Tax comes up in these discussions is b/c AGI doesn't count it (even then) for some reason (but AMT does).", "timestamp": "1484971523"}, {"author": "David Chudzicki", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=840730926362", "anchor": "fb-840729184852_840730926362", "service": "fb", "text": "→ Not saying sooner is better, but I think you might be missing it altogether.", "timestamp": "1484971572"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=840731769672", "anchor": "fb-840729184852_840731769672", "service": "fb", "text": "→ Stock options and AMT is weird, I should read more and maybe 83b it.", "timestamp": "1484971857"}, {"author": "David Chudzicki", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=840732498212", "anchor": "fb-840729184852_840732498212", "service": "fb", "text": "→ \"You exercise an ISO when its value is $110 and your exercise price is $10.
You have no taxable income for regular tax purposes and $100 taxable income for Alternative Minimum Tax (AMT) purposes.\"
https://blog.wealthfront.com/exercise-stock-options-taxes/
(ISOs are what most companies use for this purpose, I think.)", "timestamp": "1484972107"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=840734104992", "anchor": "fb-840729184852_840734104992", "service": "fb", "text": "→ In that case the income shows up on your AGI when you sell the stock, though, right?", "timestamp": "1484972332"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=840734124952", "anchor": "fb-840729184852_840734124952", "service": "fb", "text": "→ You are still taxed on it eventually?", "timestamp": "1484972374"}, {"author": "Michael", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=840734464272", "anchor": "fb-840729184852_840734464272", "service": "fb", "text": "→ I think if you've held the stock for over a year, it counts as capital gains, not income.", "timestamp": "1484972508"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=840736056082", "anchor": "fb-840729184852_840736056082", "service": "fb", "text": "→ I see, and capital gains aren't income. Then I think the pledge should probably be for AGI + capital gains?", "timestamp": "1484973155"}, {"author": "Michael", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=840737897392", "anchor": "fb-840729184852_840737897392", "service": "fb", "text": "→ I don't think the pledge should include capital gains. Under some circumstances, you might incur hundreds of thousands of dollars of capital gains in a single year even if your income is much lower. The federal government doesn't treat capital gains in the same way as income and I believe there's good reason for this.", "timestamp": "1484973910"}, {"author": "Zera", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=840768775512", "anchor": "fb-840729184852_840768775512", "service": "fb", "text": "→ What's the good reason for it?", "timestamp": "1484981065"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=840821524802", "anchor": "fb-840729184852_840821524802", "service": "fb", "text": "→ My understanding was the reason for capital gains being taxed lower than regular income was a combination of \"we want to incentivize investing, because that's good for the country\" and \"rich people with lobbyists disproportionately earn via capital gains, and have negotiated a tax discount for themselves\".", "timestamp": "1485000572"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=840821614622", "anchor": "fb-840729184852_840821614622", "service": "fb", "text": "→ If you have hundreds of thousands of dollars in capital gains in one year, why shouldn't the pledge expect you to give some of it away?", "timestamp": "1485000642"}, {"author": "Josh", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=840824793252", "anchor": "fb-840729184852_840824793252", "service": "fb", "text": "→ Are you talking about realized capital gains, or unrealized? Counting realized capital gains as a form of income makes sense. Counting unrealized capital gains seems weird, since you haven't realized them, and they might go away -- unless you're going to deduct unrealized capital losses later, which I guess is fine, but seems unnecessarily complicated.", "timestamp": "1485001858"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=840824863112", "anchor": "fb-840729184852_840824863112", "service": "fb", "text": "→ I'm taking about people donating in whatever year they're expected to pay the tax", "timestamp": "1485001969"}, {"author": "Josh", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=840825177482", "anchor": "fb-840729184852_840825177482", "service": "fb", "text": "→ Ah, I see what you're saying, it's that the IRS AGI number doesn't include capital gains, those get taxed (at a different rate) separately. So, sure, I agree that AGI + capital gains is a more accurate way to say \"the income that I pay tax on\".", "timestamp": "1485002089"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=840825706422", "anchor": "fb-840729184852_840825706422", "service": "fb", "text": "→ When I get out of bed and have my laptop I'll update the post", "timestamp": "1485002171"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=840829114592", "anchor": "fb-840729184852_840829114592", "service": "fb", "text": "→ Added an update to the post.", "timestamp": "1485003611"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=840829179462", "anchor": "fb-840729184852_840829179462", "service": "fb", "text": "→ Writing the update reminded me that the FAQ explicitly excludes investment income, but I don't know why they decided to do that.", "timestamp": "1485003684"}, {"author": "David Chudzicki", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=840849863012", "anchor": "fb-840729184852_840849863012", "service": "fb", "text": "→ Inflation makes counting capital gains the way the US government does kinda sad.", "timestamp": "1485009184"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=840851225282", "anchor": "fb-840729184852_840851225282", "service": "fb", "text": "→ Yes, inflation makes things messy. But \"wherever the tax system does\" is a good shelling point, and if the pledge ends up being partly a defacto wealth tax that's OK too.", "timestamp": "1485009488"}, {"author": "Michael", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=840855052612", "anchor": "fb-840729184852_840855052612", "service": "fb", "text": "→ Someone who earns income can choose to spend it or to buy assets. If people buy assets that then incur capital gains, they're getting taxed twice on that income. That means people are incentivized to spend their money and disincentivized from investing it.
Economist Scott Sumner explains here (http://econlog.econlib.org/.../2015/09/our_bizarre_sys.html) in the last 5 paragraphs.", "timestamp": "1485010577"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=840856804102", "anchor": "fb-840729184852_840856804102", "service": "fb", "text": "→ Huh? If you buy an asset for $100 and it appreciates so it's worth $150, and then you sell it, why shouldn't we tax that $50 profit or count it as pledge income?
I see why the government might want to incentivize it by offering a lower tax rate (though they don't bring the tax rate to 0%), but that doesn't mean EA should.", "timestamp": "1485011073"}, {"author": "Michael", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=840857842022", "anchor": "fb-840729184852_840857842022", "service": "fb", "text": "→ \"The IRS assumes that the value of a future dollar is the same as a current dollar, even though that is clearly not the case.
\"To see how strange this is, consider the following analogy. Suppose you sold 100 ounces of gold for 4000 ounces of silver. Then suppose the IRS claimed you made a 3900 ounce \"capital gain\" and demanded taxes be paid on that gain. You'd probably say, \"Wait a minute, there's no gain because the market value of one ounce of gold is equal to 40 ounces of silver. So no profit was made on the transaction.\" And you'd be absolutely correct. Fortunately, the IRS isn't that clueless.
\"Except when it comes to money. Just as one ounce of gold might be worth 40 ounces of silver, one dollar today might be worth $1.05 a year from today. Suppose nominal interest rates are 5%, which reflects 2% inflation and 3% real interest rate. In that case $1.05 a year from today could be purchased for $1 today. If you invest $1 today and your asset rises in value to $1.05 after one year, you haven't actually made any gain, as the money you receive is equal in value to the money you invested. A future dollar is no more equal to a current dollar than an ounce of gold is equal to an ounce of silver. Except to the IRS.\"", "timestamp": "1485011298"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=840863899882", "anchor": "fb-840729184852_840863899882", "service": "fb", "text": "→ So, I think the US should adjust for inflation in figuring capital gains, but I don't think it should adjust for the real interest rate. Money your money makes for you is new money for you, even if it's just the real interest rate. You're still wealthier than you were.
But all this does is make the tax system function partly as a wealth tax, which I'm OK with. (Though I'd prefer for it to be explicit.)", "timestamp": "1485012671"}, {"author": "Ben", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=840889628322", "anchor": "fb-840729184852_840889628322", "service": "fb", "text": "→ (copy-paste from the other thread because I think it makes more sense to have this conversation here)
Suppose you earn $100 now, and can either spend it now or invest it, in which case it will double in 10 years time (approximately 7% annual return). This choice ($100 now or $200 later) is the efficient one, and we want our tax system to raise revenue without distorting it.
If you have a 50% tax on wage income alone, you have the choice of either $50 spending now or ($50*2)=$100 in 10 years time. The ratio between the two is the same as in the no-tax case, so our incentives haven't been affected.
Now suppose you have a 50% tax on wage income and a 50% tax on capital gains. In this case you have a choice between $50 now and $50*2 - 0.5*($50*2-$50) = $75 later. This has changed the ratio towards current consumption, encouraging consumption over investment away from the optimal level.
Basically capital gains is double taxation, because the 'income' that is being taxed was already multiplied by (1-tax) once before: when you earned it in the first place.
This is even worse if you think that positive real discount rates are unfair on future people, and we should value them the same as current people!", "timestamp": "1485019021"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=840905381752", "anchor": "fb-840729184852_840905381752", "service": "fb", "text": "→ Income tax in general is distortionary, so it's not surprising that taxing capital gains is as well.", "timestamp": "1485022241"}, {"author": "David Chudzicki", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=840907038432", "anchor": "fb-840729184852_840907038432", "service": "fb", "text": "→ Annoying to have two threads on this. Jeff Kaufman, I think your reasoning for not adjusting for real interest rate is wrong, given Ben's explanation. Sure income tax is distortionary, but capital gains in current form is unnecessary additional distortion.", "timestamp": "1485022447"}, {"author": "Phillip", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=841051404122", "anchor": "fb-840729184852_841051404122", "service": "fb", "text": "→ I believe the preferential treatment on Cap Gains is for two reasons: 1)When you buy stock at age 30 and sell it age 65 (the way most depression era folks did, unless they just left it to their children) The purchasing power of the dollar eroded by inflation meant that most of your gain wasn't real, and in many case you might have had dollar gain but a purchasing power loss. 2) Long term investment puts more capital out ther for reinvestment which until our current zero interest days was good for the economy (not clear it has an impact now).", "timestamp": "1485047504"}, {"author": "Phillip", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=841057941022", "anchor": "fb-840729184852_841057941022", "service": "fb", "text": "→ Jeff Kaufman As CPA who has worked at 6 tech start ups I can answer most question on options and taxes (nothing like personal screw ups to teach solid lessons). My short answers is if you have great faith in the company and/or the dollar amount is small take the 83B election if available. Each year your company will have to do a 409A valuation which will probably increase the delta between your strike price and the Fair Market Value, potentially exposing you to AMT if you exercise in advance of an equity event. I do not consider options as part of income for charitable purposes. When the shares are trade-able, or when you realize value from a buyout, I would then consider them , and probably donate the appreciated stock which will make a nice deduction.", "timestamp": "1485047833"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=841193639082", "anchor": "fb-840729184852_841193639082", "service": "fb", "text": "→ (copied from the other thread)
So, I think the problem is that \"capital gains\" vs \"income\" doesn't divide the cases we care about very well. For example, say I have $100k. If I buy some land, build a house, and rent it out, the rental payments I receive are income. But why should this be different from if I buy $100k of stock in a company that buys land, builds houses, keeps the rent, and becomes more valuable, so that when I sell the stock I've made some profit?
Similarly, if I join a start-up, work with them until they're acquired at which point I get a big bonus that's income. But if they instead gave me stock which turns into cash when they're acquired that's capital gains.", "timestamp": "1485087047"}, {"author": "David Chudzicki", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840729184852&reply_comment_id=841266418232", "anchor": "fb-840729184852_841266418232", "service": "fb", "text": "→ Here's my proposal. I think it probably works better than not taxing these things at all and may work better than the current system (or is at least a good step on the way to figuring out something better than the current system):
Make an exception to \"capital gains\" tax for anything where the individual's labor clearly doesn't contribute to the outcome.
For the capital gains that are left, only tax gains above the risk-free rate of return.
This isn't perfect (a component of buying and renting out a house is return on risk, and we're taxing that here because we can't distinguish it from the labor).", "timestamp": "1485105606"}, {"author": "Phillip", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840731145922", "anchor": "fb-840731145922", "service": "fb", "text": "I use my gross W2 income. I don't include income on savings since I consider all of my savings to be retirement. I also have other small amounts of income that are unpredictable which I currently don't factor in but probably should. I spend the largest portion of income on savings then taxes then perusal spending then charity.", "timestamp": "1484971680"}, {"author": "Julia", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840817163542", "anchor": "fb-840817163542", "service": "fb", "text": "Contracting income seems like it should at least sometimes count even under a loose definition - if you worked full-time as a contractor, you're technically receiving fees rather than salary or wages, but it would be silly to say you have no income. But this should probably be more clearly spelled out in GWWC's materials, and I'll work on that.
I can see how more trivial jobs like a one-off night of babysitting don't feel the same to people (and people also usually don't report them on their taxes). Maybe it makes sense to go with whatever one's local government makes you file tax on (anything over $400 in the US.) Would it seem reasonable if we spelled it out that way?
Talking about \"the government\" implies there's only one government involved here, but a lot of the headache is coming up with a system that works well across the many countries where members live.", "timestamp": "1484999028"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840817163542&reply_comment_id=840851524682", "anchor": "fb-840817163542_840851524682", "service": "fb", "text": "→ \"a lot of the headache is coming up with a system that works well across the many countries where members live\"
All (nearly all?) of these countries have some form of income tax, and I think what would be best here would be for gwwc to have guidance for each country. Like \"in the US use AGI+capital gains\", ideally with references to lines on the relevant IRS forms the way state taxes do.", "timestamp": "1485009660"}, {"author": "David Chudzicki", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840817163542&reply_comment_id=840869378902", "anchor": "fb-840817163542_840869378902", "service": "fb", "text": "→ \"If you're cheating on your taxes, use the AGI you would have reported if you weren't hiding money from the IRS...\"", "timestamp": "1485013650"}, {"author": "Frederic", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840880316982", "anchor": "fb-840880316982", "service": "fb", "text": "I think you want to make it as easy as possible for people to fulfill the pledge. Morally you are correct but from a practical standpoint you should use AGI since it doesn't require more calculation.", "timestamp": "1485016483"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840880316982&reply_comment_id=840880651312", "anchor": "fb-840880316982_840880651312", "service": "fb", "text": "→ Um, that's exactly what I was trying to say? Make it as simple as possible by telling people to use a number they already have to compute to pay their taxes.", "timestamp": "1485016552"}, {"author": "Alice", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840880316982&reply_comment_id=840886589412", "anchor": "fb-840880316982_840886589412", "service": "fb", "text": "→ Jeff Kaufman but you don't know your AGI until end of year. Donating automatically with each paycheck is simplest from my perspective.", "timestamp": "1485018190"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840880316982&reply_comment_id=840889743092", "anchor": "fb-840880316982_840889743092", "service": "fb", "text": "→ Alice: donating along with the paychecks makes sense with me, but then adjusting every year at tax time when you know your AGI to figure out if you should give more or less.", "timestamp": "1485019054"}, {"author": "Alice", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840880316982&reply_comment_id=840890561452", "anchor": "fb-840880316982_840890561452", "service": "fb", "text": "→ Jeff Kaufman this is reasonable, I do want to suggest that you may have an overestimate of typical math skills / are forgetting that a lot of people are afraid of numbers, fractions, and percents. I wonder how religions that tithe handle it", "timestamp": "1485019234"}, {"author": "Bernadette", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840893949662", "anchor": "fb-840893949662", "service": "fb", "text": "The difference between tax codes would mean that \"income\" for pledge purposes would count differently in different countries. At present I pay nearly 20% of my gross income in university fees. That's not deductible here and would be in the US.
Another example, in many countries (UK and Australia at least) the capital gains on sale of one's primary residence isn't considered income, though a second one is.
One of the things I like about \"income\" as a term, is that it isn't subject to weird loopholes and shenanigans. I'd rather there be a general term (which encourages us to be straightforward in reporting).", "timestamp": "1485019981"}, {"author": "opted out", "source_link": "#", "anchor": "unknown", "service": "unknown", "text": "→ this user has requested that their comments not be shown here", "timestamp": "1485021520"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840893949662&reply_comment_id=841072207432", "anchor": "fb-840893949662_841072207432", "service": "fb", "text": "→ University fees are deductible in the US, but they're deducted after computing your AGI, so the standard I'm proposing is the same between the countries in this case.", "timestamp": "1485049985"}, {"author": "Bernadette", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840893949662&reply_comment_id=841133699202", "anchor": "fb-840893949662_841133699202", "service": "fb", "text": "→ Wikipedia says they are deducted before computing the total for agi https://en.m.wikipedia.org/wiki/Adjusted_gross_income
But regardless of the individual case, the broader point still worries me.", "timestamp": "1485062707"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840893949662&reply_comment_id=841193439482", "anchor": "fb-840893949662_841193439482", "service": "fb", "text": "→ Ok, sorry, I think you're partly right. Reading form 8197 it looks like if your income is under $65k you can deduct up to $4k in tuition+fees. Part of why I was confused is that instead of taking this deduction I belive most people do better to take a tax credit instead, with form 8863.", "timestamp": "1485086836"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840893949662&reply_comment_id=841193479402", "anchor": "fb-840893949662_841193479402", "service": "fb", "text": "→ Here's a site taking about why you'd generally want to take the credit instead of the (above the line) deduction: https://www.1040.com/.../tuition-deduction-vs-education.../", "timestamp": "1485086888"}, {"author": "Alexander", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840902133262", "anchor": "fb-840902133262", "service": "fb", "text": "Is there some qualitative way of describing what adjusted gross income is meant to represent in spirit? That would help from the perspective of. E.g. Finding a UK equivalent.", "timestamp": "1485021723"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840902133262&reply_comment_id=840904648222", "anchor": "fb-840902133262_840904648222", "service": "fb", "text": "→ It's income from wages, tips, salary, stock grants, bonuses, and other sources, and then you deduct a few things like IRA contributions (where the money is counted as income when you withdraw it).", "timestamp": "1485022127"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840902133262&reply_comment_id=840904767982", "anchor": "fb-840902133262_840904767982", "service": "fb", "text": "→ I think AGI is the closest thing to our naive concept of income in the US tax code.", "timestamp": "1485022158"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840902133262&reply_comment_id=840912467552", "anchor": "fb-840902133262_840912467552", "service": "fb", "text": "→ Another way to think of it is, when the US states want to charge you state income tax, AGI is the figure they base their calculations on.", "timestamp": "1485023644"}, {"author": "Alice", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=840915371732", "anchor": "fb-840915371732", "service": "fb", "text": "I believe that the Church of Jesus Christ of Latter Day Saints defines the tithe from pre-tax income. And it looks like they mostly tithe on capital gains when the gains are realized.", "timestamp": "1485024380"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=841072491862", "anchor": "fb-841072491862", "service": "fb", "text": "Another tricky example: Julia and I own a house, and receive rent from tenants and housemates. One interpretation of \"income\" would be that it includes the rent payments, another would be that it doesn't, and a third (what you get from using AGI via Schedule E, and so is the standard we use) is that you count (amortized) expenses against the rental payments and the rest is income.", "timestamp": "1485050149"}, {"author": "Phillip", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=841072491862&reply_comment_id=841090929912", "anchor": "fb-841072491862_841090929912", "service": "fb", "text": "→ Jeff Kaufman I believe your method here is correct from an accountant's point of view. The same would be true for the bottom line of schedule C.", "timestamp": "1485052016"}, {"author": "Phillip", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=841072491862&reply_comment_id=841092866032", "anchor": "fb-841072491862_841092866032", "service": "fb", "text": "→ AMT is another matter some of AMT is removing preference items, such as state and local taxes from your deductions. I would would not call this income. The \"gain\" of FMV over strike price on ISO is another illusory form of income that you don't actual get and may never see. I think the important thing to do is make very clear that this is a guide to giving, and not a formula for purchasing indulgences.", "timestamp": "1485052260"}, {"author": "Ross", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=841244038082", "anchor": "fb-841244038082", "service": "fb", "text": "[epistemic status: seems right, but am made uncertain by the fact that the rest of the world seems to disagree.]
In the interests of \"X% of your life's income\" actually meaning \"X% of your life's income\", I'd like to put in a word for not counting capital gains. Here's an example:
- You earn $100, which you intend to invest as savings for {retirement, grad school, other}. You donate 10% ($10), and invest $90.
- N years later, your investment has doubled in value, and you liquidate it for {retirement, grad school, other}. You've made $90 in capital gains, and donate 10% of that, $9.
- Now you've got $171 ($90*2-$9) in {retirement, grad school, other} savings, and you've donated...
(a) perspective A: You've donated $19 and have $171 left over. You've donated 19/(19+171) = 10%, as desired.
(b) perspective B: You have $171 post-donation, compared to the $200 you'd have if you had donated nothing at all. You've donated (200-171)/200 = 14.5%.
Sanity check: the target of your donations *is* better off by at least the value of $29 today -- since they got your first $10 N years ago, and presumably that was worth at least $20 today. Intuitively, you've counted your investment returns twice -- you gave away 10% of them when you donated $10 of your original $100, and then you gave away 10% of what was left when you liquidated your investments.
Of course there's nothing wrong with donating 14.5%! But if that's what your goal is, you should say that, instead of saying a different number, and having your effective donation percentage be the unintentional result of how you're managing your personal savings.", "timestamp": "1485099838"}, {"author": "Ross", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=841244038082&reply_comment_id=841248060022", "anchor": "fb-841244038082_841248060022", "service": "fb", "text": "→ Reasons to disagree where I (think I) understand the facts of the claim, but haven't fully evaluated its impact:
- AGI is a simpler number than Net Earned Income.
- If you *didn't* donate 10% of the pre-investment sum (say, you earned it and invested it before you learned about EA, or you inherited it as a trust) and you don't donate 10% of cap gains, then you're donating *nothing* of those funds.
- Some income *is* earned in the form of cap gains -- e.g. stock options that are worth expected value at the time of vesting.
- The accuracy of a claim of X% isn't really important, and it's fine for a commitment to X% to really mean a commitment to [X% , 2X%], based on investment habits.", "timestamp": "1485100642"}, {"author": "Christopher", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=841268354352", "anchor": "fb-841268354352", "service": "fb", "text": "I always grew up with a 10% tithe calculated from gross income. I usually use my gross wages from the tax form as the benchmark. I also think it's important to think a little about what 10% means so that you aren't unfairly not counting some income, but (at least from the Bible) the spirit of the thing is more important than the letter. 9%, 12% -- it's not the end of the world, especially when the 10% also seems clearly to be a starting point, not an ending point.", "timestamp": "1485106179"}, {"author": "Julia", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=841696436472", "anchor": "fb-841696436472", "service": "fb", "text": "http://www.npr.org/.../the-tuesday-podcast-what-mormons...", "timestamp": "1485205820"}, {"author": "opted out", "source_link": "#", "anchor": "unknown", "service": "unknown", "text": "this user has requested that their comments not be shown here", "timestamp": "1486148795"}, {"author": "Jeff Kaufman", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=845254865352&reply_comment_id=845255239602", "anchor": "fb-845254865352_845255239602", "service": "fb", "text": "→ \"if you're making the pledge you shouldn't be searching for loopholes to exploit\"
My model of pledging has people being earnest and mostly altruistic at the time they make the pledge, but then their rationalizing self pushes them to be more selfish over time. A pledge that clearly spells out what it covers is better protected against future self-serving excuses.", "timestamp": "1486148993"}, {"author": "Julia", "source_link": "https://www.facebook.com/jefftk/posts/840725597042?comment_id=845254865352&reply_comment_id=845263967112", "anchor": "fb-845254865352_845263967112", "service": "fb", "text": "→ The beginning of \"Sense and Sensibility\" describes the gradual decline of a man's intended generosity toward his impoverished relatives. \"When he gave his promise to his father, he meditated within himself to increase the fortunes of his sisters by the present of a thousand pounds a-piece. He then really thought himself equal to it.\"
There's a great scene where his wife then gradually talks him out of it, persuading him that his father couldn't possibly have meant so very much, and that giving them some furniture instead would be best.", "timestamp": "1486152072"}]}