Saturday, November 6, 2010
- AOL News, Nova Scotia Couple Gives Away $11.2M Lottery Win
- Forbes, Canadian Couple Donates Millions From Lottery Win
- NPR, Canadian Couple Wins $11 Million, Gives It Away
- Toronto Star, Couple Gives Away $11.2M in Lottery Winnings
(Hat Tip: Ann Murphy.)
Update: From Mary O'Keeffe (Union College):
Fortunately for this commendably generous Canadian couple, they do not live in the United States, which would apply a "No good deed goes unpunished" tax policy to a case like this one.
Canada does not include lottery winnings in taxable income. Canada also has a very different sort of tax preference for charitable donations. Donors apparently do not get to deduct the amounts donated, but they do get (nonrefundable) tax credits for the amounts they donate--and they can get credits for donating up to 75% of their income. The credit is computed at 15% for the first $200 of giving and 29% for subsequent amounts.
Since the top marginal rate is 29%, this means that taxpayers in the top tax bracket (over $127k in taxable income) get a benefit approximately equivalent to deducting it, but taxpayers in lower brackets get a tax benefit that is better than deducting it would have yielded. The bottom line--in general, Canada's policy towards generous donors with modest incomes is far more progressive than the United States tax policy.