Over the weekend – after some serious wiggle action – my son lost his second tooth. The tooth fairy paid a visit and left him some money, causing me to wonder on Facebook about the tax consequences of the transaction (yes, this is how my mind works). You can see what readers and fans had to say by popping over to my Facebook page – and you can add your own thoughts (trust me, it’s fun and painless).
While speculating about ordinary income versus gift versus capital gains, one of my readers pointed out that selling body parts is technically illegal (it’s a federal crime, reported @JohnWilson on twitter). Donating body parts, however, is not illegal. In fact, it’s encouraged – and not just after death.
According to NPR, about a third of states offer tax incentives to people who donate a kidney, a portion of their liver or bone marrow for transplantation. Those states are Arkansas, Georgia, Idaho, Iowa, Louisiana, Maryland, Massachusetts, Minnesota, Mississippi, New Mexico, North Dakota, Ohio, Oklahoma, South Carolina, Utah, Virginia, and Wisconsin.
Despite the tax incentives, there has been no increase in organ donation rates.
Which makes you wonder.
Apparently, a tax incentive can make you do a lot of things: buy a new house, buy and sell stocks, get married, and maybe even have a kid (or two). But not give up a kidney.
Dollar-wise, the incentive isn’t all that great. On average, most states offer up $10,000 as a deduction but remember that deductions are a dollar for dollar reduction in taxable income and not tax payable. Considering that most states have tax rates that average around 6.5% – meaning that the tax savings top out at about $650. For a body part.
But your costs? Those are your own. You can’t be paid for your time or trouble because it’s illegal – the whole you can’t sell a body part thing, remember? So why have a tax break at all?
Don’t hurl your virtual tomatoes just yet: I totally support organ donation. And I get the reasoning behind the tax incentives but I think it’s misguided. A few hundred dollars in tax savings won’t cover the real cost of the donation. I’m inclined to think that if you’re of a mindset to donate an organ or bone marrow or a piece of your liver, you’re not in it for the cash. Adding or increasing tax breaks would, I’d venture to guess, not change those numbers at all. This is an example of where we’re kind of waving the carrot after the race is already over… is that smart tax policy? I don’t think so.
All of that said, tax break or no tax break, organ donations save lives. An average of 18 people die each day waiting for transplants. As you read this, the number of people waiting for an organ could fill a large football stadium twice over. You can help by becoming a donor (I am!). To donate, sign up online, and make sure that your decision is noted on your driver’s license. Tell your family, friends, physicians, and religious advisors – and be sure to indicate your wishes in your will and living will (your attorney can help with this). So please sign up. And then help me sort this out: would a tax break change your position on organ donation?
