@brainbomb
only the charitable contributions aren't taxed come on man
I'm being taxed at a 40% rate, then I can give $500,000 to charity, write it off, and save $200,000 on my taxes. That's a net loss of $300,000. I may have paid less taxes, but it cost me 300 grand.
but there's another way to think about it. Suppose you are being taxed at a 40% rate. You wish to purchase $500,000 worth of diamonds. How much do you have to make in income to do so? You need to make $833,333 in income, pay 40% of that ($333,333) in taxes, and then spend the $500,000 on the diamonds.
But to spend that $500,000 on a charitable donation, you only need to make an income of $500,000, taxed at a rate of 0%, because donations to charity count against your taxable income.
Or, yet another way to think about it, is that if you make $833,333 in income, you can spend it on $500,000 worth of diamonds, or $833,333 worth of charitable contributions; effectively you get to purchase $333,333 worth of charitable contributions "for free" over the equivalent purchase that is not a charitable donation.
you're not making money here