"In a report from the General Accounting Office, about 16 percent of the tax returns filed in 2000 claimed deductions for donated vehicles. That amounted to $654 million the government didn't receive because of the deductions."This is one of those statistics that I read and then I think to myself: either (a) this number is wrong or (b) my basic understanding of the composition of the world around me is wrong. I mean, I really don't know if (a) or (b) is the more likely answer. If you had asked me the percentage of tax returns in a given year that included a deduction for a vehicle donated to charity, I would have guessed 1-2 percent, max. But, then again, there are all kinds of secret fiduciary practices of the middle classes that I have not yet been initiated to. I had always thought that there were basically four main ways that people divorced themselves from cars: (1) gave them to a family member [presumably this is not a tax-deductible "donation"]; (2) sold them to someone else; (3) traded them in; and (4) hauled it off to a salvage or junkyard. Maybe, however, these are all for suckers, as every saavy taxpayer knows, and that the smart thing to do is to give your car to your church or to the Make-a-Wish Foundation, where some unfortunate terminally-ill little tyke will get the chance to spend some of his waning hours joyriding in your old Taurus.
Could this be right? Could donated cars be represented on one out of every six tax returns? How many tax returns are filed in the US? I would guess maybe 100 million. Are there even 16.6 million tax-deductible charities in the US? Does the average tax-deductible charity in the US pull in more than one car a year? How do you get only $654 million dollars in lost tax revenue from 16.6 million donated cars? That's less than $40 a car. This would mean that one out of six tax returns includes a donated car whose value for tax purposes is under $200. Where are all these sub-$200 cars? Why do I simultaneously feel like my Saturn is more of a piece of junk than the vast majority of cars on the road and like it is still worth more than $200? Now I'm worried that not only do I drive a crappy car but that I'm screwed myself over on my taxes for the privilege.
Really, truly, I am befuddled about this. If anyone understands how this works or where my reasoning has gone astray, please please e-mail me.
(BTW, in response to a recent inquiry from a reader, I've now included my e-mail addresses at the bottom of this page. If you are wondering why I spelled out the ats and dots, it's to fool the spam-servant-web-bots that search through webpages looking for e-mail addresses.)