Because you're better off taking the standard deduction so you have no tax incentive to make charitable contributions.

Yes, that I knew. I would not summarize that as

> only high-income people can make tax-free charitable contributions

Okay, so you can donate $100 to charity, feel warm and fuzzy because it’s tax-free or however you want to think about it, and pay exactly the same amount of tax as if you didn’t give the gift.

Right. You can also create a charity, which you run, and donate millions of dollars to it, and write that off against your taxes as a charitable donation.

Then, because you run that charity, you can still spend the money (mostly) as you please.

Exactly. But the point here is this is only available to people who wish to donate more than about $13k per year.

Yes, that's how the standard deduction works.

You can’t deduct charitable donations unless you don’t take the standard deduction. Instead, you must itemize your deductions. In practice this means you take the standard deduction because most people don’t total more than the standard deduction when they itemize (you have to be decently rich to afford to donate that much!).

Last year you could deduct up to $300 in donations on top of the standard deduction, but I didn’t see it this year.

> In practice this means you take the standard deduction because most people don’t total more than the standard deduction when they itemize (you have to be decently rich to afford to donate that much!).

Charitable donations aren’t the only itemizable deductions.

Ok, I’m sorry for not enumerating all possible itemized deductions when we’re talking about charity specifically.

However, charity is probably the most well-known deduction that you can control (in contrast to stuff like state taxes, which are more or less predetermined). And even among the deductions you control, those deductions require some spending. Can a non-rich person really spend enough to itemize beyond the standardized deduction? If you know how, please let me know because I’ve never gotten close to the standard by itemizing! Even when I’ve had large purchases to compute sales tax for I’m still far away.

Otherwise, it’s pretty clear that, generally speaking, charitable donations aren’t helpful for reducing one’s taxes. I’m sure people donate because they want to, but the tax benefits are not part of the calculus.

Why does this matter? A $100 deduction in income has a very, very, very small effect on your overall tax liability.

If we look at the amount of money people earn, pay taxes on, and how wealthy they are, many patterns show up. Including rich people donating to avoid taxes and poor people without much income not being able to deduct $1K. Or $2K. Pick any number. $100 is the unimportant part.

I changed the number to $2500 if that makes it easier. That does dilute the importance because a lot if not majority of the country can’t donate $2500 extra a year from their current budget and income.

Say you can afford to donate $x. If it's tax deductible, you can then afford to donate $x / (1-T) where T is your effective tax rate.