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In fact, this column was inspired by a new York Times article that ran last week, arguing that generous tipping "is a technique that is guaranteed to keep no relation to your transfer pricing active service." (1) Then why does the person being tipped pay overtax?

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Contributing a deductible $1,000 will lower the taxable income in the $30,000 1 year person from $20,650 to $19,650 and save taxes of $150 (=15% of $1000). For the $100,000 every single year person, his taxable income decreases from $90,650 to $89,650 and saves him $280 (=28% of $1000) - almost double the!

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