The proposal by Obama and Co. to limit tax deductions on the wealthy who give to charity is the fulfillment of a nasty secret of this crowd: in their hearts, they loathe private charitable giving and would like to see the entire third sector nationalized. And once the third sector is gone, the whole of society becomes politicized and dependent on the state. This is just the first step. This is a good reminder of what a nasty bunch this really is. The American covers the legislation with good detail and insight.
Source link: http://blog.mises.org/9684/the-statist-left-hates-private-charity/
The Statist Left Hates Private Charity
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With the third sector gone as a result of crippling taxation, the totalitarian left will then claim with their typical hubris that the market has again failed, and, thus, the state needs to be expanded even further. Does the pattern sound familiar?
Their intellectual dishonesty is sickening.
While I certainly agree with your premise and think that the additional taxation (via reduction in tax benefit) is a terrible thing, I have a few questions.
It seems that one of the presuppositions is that there are organizations which receive donations primarily because people wish to avoid paying taxes. If this is in fact true, do we really need these organizations? I would certainly rather see these orgs have the money than the government. It seems that if these orgs survive solely due to tax benefits, they are merely distortions caused by the tax law.
Alas, it has been some time since I have gotten sleep so I may not be thinking clearly. Anyone think I am off base here?
I agree with Obama that it is unfair that the wealthy receive higher deductions for charitable contributions than the less-wealthy. Everyone should be able to receive the higher deductions that the wealthy receive.
You know, I was somewhat puzzled by this when I first heard about it. I finally got it all to make sense yesterday.
Fact: Conservatives are far more likely to give to charities than liberals of similar income.
Fact: Of those that give, conservatives give more than liberals.
(Note: with the way these surveys were taken, I think many libertarians would get lumped in with “conservatives”, as questions were mostly about whether the government should provide a safety net and such.)
So, this (rather bizarre) change in tax deductions is really just a way to focus the tax increase on the conservative/small-government wealthy rather than the liberal/big-government wealthy.
Then, it all made sense. It’s not evil for its own sake. It’s evil for The Party’s sake.
What About the Poor?
There is a difference between charity and a government approved charity. Giving tax deductions for favored groups is a way of promoting those groups just as surely as giving tariffs to favored industries or bailouts to favored businesses.
It is not a matter of giving everyone the same deduction or treating all “charities” equally. We should not have to pay taxes at all and spend our tax dollars supporting whatever charity, investment, cause, or vice we choose. When the government allows a deduction, they are merely saying that they will take less of our money if we spend it the way they deem appropriate.
The system for approving tax exempt status and tax deductible donations is intended to control the goals and operations of charities, social movements, and civic organizations. My church jumps through many hoops to keep their tax exempt status, as do most other organizations.
The government should operate as a private foundation or charity dependent entirely on the good will and voluntary generosity of its adherents for its financial support. If the government had no means to compel financial support and compliance with its regulations, you can bet they would improve their behavior and offer a lot more value to attract donations. Wouldn’t it be a wonderful world if governments had to compete with businesses and charities in offering their services?
Isn’t it true that anyone who has to impose their will by force is probably doing the wrong thing? At a minimum, those who resort to coercion have certainly not made a persuasive case even if they might be right–and they don’t listen to reason if they are wrong.
The reason free markets are the foundation of all freedom is because everyone has to make their case to get paid. As soon as any entity can take money against the will of the people, freedom has fled. Any organization with the power to take money by force immediately attracts thieves and robbers to its ranks. Good men abhor exercising dominion over their neighbors, so if the government can exercise such power, it will be a government of corrupt men. Thus it is with the governments we must deal with.
Briggs Armstrong,
There is an argument going around that says that people don’t give money to charities for the tax benefits and so this will not affect the amount donated to charities. It seems you have been caught by this argument.
When giving to charities, one must take into account many things. While it may not be the primary purpose for giving, the reduced tax burden is one aspect that should be considered. If I decide that I can spare $100 for charity, I know that I can actually donate more than this due to the tax writeoff. Let’s say I’m more wealthy than I really am (since this change won’t affect me). With the top marginal rate at 35%, I would be able to donate $153.85 (100/.65) and the net effect would be that I’m out $100. With the proposed change, the most I could write off would be 28%, so I would only be able to donate $138.89, and still be out the same $100.
If you think the wealthy who are affected by this law don’t take into account the reduced tax burden when donating to charity, I’d ask you how you think they got wealthy in the first place. Considering all the economic ramifications of an action are very important in the quest for wealth. And I’d submit that a substantial majority of people affected by this plan will reduce their contributions in accordance with the new reduced tax savings.
If the gov’t takes more of your money (due to giving you a lower deduction for charity) then you’ve got less to give in total. That alone will reduce the amount given. Because gov’t takes more, you have less, charities will receive less.
@ Briggs
Charities existed before the federal income tax really came into existence in 1913 with the ratification of the 16th amendment. Consider for example, Andrew Carnegie. Although he died in 1919, he had previous to the 1913 tax code already given out large sums of money to various charitable causes.
Furthermore, there are many working class folks who rent and don’t have enough deductions to itemize them on their tax returns (they take the std deduction). These folks give to charity with no direct tax benefit. Although their income tax burden is fairly low, because they don’t make much, their other tax burden is high, i.e. payroll taxes, sales taxes, telephone taxes, cable taxes, property taxes imbedded in rental costs, etc.
So I would venture that the various tax codes are creating a distortion, just not the way you imagined. I would venture that more (in overall purchasing power) would be given to charities if the tax code were less burdensome, if the gov’t actually spent less in total.
The most disgusting thing is that this is being done in the name of “fairness”…why should a rich person be able to deduct more than a person of lower income? The entire question of why poor/sick/handicapped people are being deprived of money is being entirely ignored by the administration.
The charitable tax break will remain, as they will realize that most leftist activities are carried out under the umbrella of non-profits.
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