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Because for the increasing tax rate better brackets, a reduction of taxable income to the higher bracket saves you more tax than very same reduction inside of a lower segment. So let's compare the tax saving of contributing $1000 by an individual with a $30,000 income with a single person with a $100,000.
Let's change one more fact in example: I give a $100 tip to the waitress, and the waitress must be my boy. If I give her the $100 bill at home, it's clearly a nontaxable gift idea. Yet if I offer her the $100 at her place of employment, the internal revenue service transfer pricing says she owes taxes on it all. Why does the venue make a difference?
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