The tax deduction for charitable contributions was an early feature of the US income tax code, introduced in 1917 because of a concern that the wealthy would stop donating to higher education when hit by higher taxes for World War I.
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In total, therefore, charitable tax exemptions cost the Treasury about $130 billion, or on the cuckoo 10-year accounting used in budget calculations, some $1.8 trillion over the period 2011-2020 – which would make a decent dent even in that decade’s horrendous budget deficits. In addition, state and local tax exemptions for charities cost $30-50 billion. The charitable contribution income tax deduction is very inefficient according to a 2009 Congressional Research Service (CRS) study of the sector; thus its $54 billion cost increases charitable donations by only about $27 billion.
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Apart from charities’ adverse effect on the economy itself, there are a number of reasons why this could be a bad thing:
- The innumerable scams in charitable donations of automobiles and other property;
- The ability of Wall Street hotshots to leverage their social life through “charitable dinners” and other charitable events, a substantial portion of the costs of which are borne by much poorer taxpayers;
- The raucous propaganda and lobbying activities, almost universally in favor of bad public policy, by the charities themselves;
- The uncounted “hedonic” cost to the public as a whole of being subjected to continuous obnoxious fundraising.
Given charities’ averse effect on the economy, their own economic inefficiency, the great inefficiency of the charitable tax deduction and the disinclination of the very rich to give charitable donations to the poor, it is clear that the charitable deduction should be ended, as should the tax exemption for charities’ income, the tax exemption on their real estate and their other benefits from the public purse. Since excessive charitable activity is economically damaging, such activity should no longer be subsidized by the remainder of the economy.
“Just send us your cash.”
– George W. Bush on donations for Haiti
#12
There is an obvious subsidy. Let me use another example, like when you could get several thousand dollars of tax credits for buying a hybrid car.
In both instances government gives part of its income stream to someone else without receiving services directly. That is a subsidy. Whether that money routes through the government or a taxpayer pays less due a credit/deduction is unimportant.
#16
If you don’t like the job the military is doing, should your personal defense expenditures be tax deductible?
I would love a system where you could allocate your tax payments to types of gov’t expenditure. It would be absolute democracy. You could model the allocation app after a retirement account, because people have experience with those.
When you say:”Let the government spend less on these things we will not agree on…” that really means things that YOU agree with.
I find the US’s semi-random militarism(internationally) and drift toward soft-authoritarianism(domestically) distressing. Should I be able to allocate the national security portion of my tax monies to something practical like public infrastructure development?
#19 & #20
Exactly right!
Ha! Who gives $10 so they can save $2 on their tax bill? The entire idea of tax deductions to promote charity is stupid. Our tax system, if it must be on income, would be much improved if it was a simple flat rate with no expemptions or deductions, period.
I have never understood why people think a flat tax is fair.
For example, if the tax is 10,000 a year. That would be 25% of one persons wage 0.5% of someone elses. How is that fair.
Or is it a fixed % for everyone. That would leave one person 30,000 after tax but some waste od air snirio civil servant would pay more tax but have the same % left perhaps 90,000. Why should a teacher share the same % as a crook from Goldman Sachs?
Since clearly this is simply a way to increase taxes, I really hope that they also take away the tax exempt status of Religious Organizations. How much would the coffers of the Treasury would grow instantly in the Billions of dollars if Religious Organizations had to pay property taxes, the preachers’ and staff’s income taxes? Billions I say, BILLIONS.
Religion gets its’ money tax free and SPENDS its’ money tax free. CAN anyone create a better way to ripoff the sheeple?
“The innumerable scams in charitable donations of automobiles and other property;”
Yeah, because the .gov is run so perfectly
How about “should political/campaign contributions be tax deductible” ?
No, find out who the REAL PHILANTHROPISTS ARE !!! They give, but not for tax breaks !!! Plus, most “Charitable Giving” is STOLEN BY “Fundraisers” and if not, by the Charities “Administration” !!! Only a few percent goes to charitable work !!! Much like America’s “Health Care Insurance” – most goes into “Overhead” – CEO Salaries, Pharma, HMOs and very little goes into actual HEALTHCARE !!! America PAYS THE MOST, BUT GETS THE LEAST for it’s healtcare spending of all the “Advanced Western Nations” and ObamaCare didn’t change that !!!
Having worked for a few “charitable” organizations in my time, I can tell you they are not all the same. I think the tax deduction is a great thing if it helps raise money for worthy causes. On the other hand, I suspect the average person would give just about as much with out the deduction.
I would like to leave you with these words. Examine your charity well. Some spend 30 or 40 cents of every dollar they receive on their own overhead. It strikes me as absurd that the CEO of a charity should pull down a high six figure income. I don;t like that they often hire professional fund raisers who work on commission. I despise charities that ask you to donate money for the tsunami in Libya and then spend the money raised to replant coconut palms in Iceland. I especially despise religious charities that expect recipients of aid to take a little sermon with their gruel. And just because it’s a big, well-known organization doesn’t mean they are not running afoul of one or more of these condemnations.
And, if anybody cares, I especially hate the Red Cross and Medicins Sans Frontieres. (The RC too often treats it’s staff as targets sending them into places they have no business being and, even though MSF uses “volunteer” doctors, they spend more on overhead then almost anybody. I wouldn’t be surprised to learn that 60 or 70 percent of their donations never make it to the needy. I once hired an MSF staffer and he was amazed that he was going to have to start buying his own cigarettes and booze.) End of rant.
Idiots..the only thing taxing charities will do is let the government (which is infinitely more corrupted than any charity could ever hope to be) borrow the country into even more debt against future “charity” revenues. this would it allow it to expand even faster..
this is a simple case of “don’t feed the trolls”
-the trolls in this case, being US GovCorps.
Clue: anything that further empowers the government, disempowers it’s people.
wake the f up, people.
-s
Yes. I would not have been able to have finished high school without the aid of the Lions Club. Which means that I would not then have won competitive scholarships to university and technical institutes. Anything that encourages patronage from the wealthy, needs to be encouraged.
Twice in the excerpt of the article given here is the phrase “…charities’ adverse effect on the economy…” which makes me question the bias of the author and the publisher. Why is the Asian Times being seriously listened to in matters of U.S. internal policies? Do you really think they have our best interests at heart? Hah.
Do you really think we would be better off if the Red Cross, the Salvation Army, Doctors Without Borders and the like didn’t exist? If people like Albert Schweitzer, Tom Dooley (http://en.wikipedia.org/wiki/Thomas_Anthony_Dooley_III) or Mother Teresa had gone into real estate speculation or injection-molded plastics instead?
And as for reducing the size of government to 1930s levels, well that worked so well for those prosperous, happy 1930s, didn’t it?
I’m all for tax breaks to encourage charitable spending. In Canada, donations to political parties are tax credits, not tax deductible. That burns my ass.
#15
The suggestion to eliminate the charitable deduction does not imply the elimination of the concept of a non-profit organization. A separate discussion could be had as to whether a charity should be tax-free.
#24
What you are suggesting is that everyone be taxed such that they are left with the same amount. I.e., no one can be wealthy.
#32
Why not simply make public the donations made by the upper 10%? Seems to me that shame is a better carrot to encourage charitable donations than setting up a system to be gamed by the rich.
>> dusanmal said, on January 2nd, 2011 at 8:44 pm
>> Yet another uncontrolled freedom that is in the eye of anal Progressives. Sorry control freaks, you can’t have a piece of it nor can you control to whom we voluntarily give.
You’ll need to ice down your brain after that stretch!
How about punishing the tax cheats rather than many great non-profits who are doing valuable work?
I have worked much of my adult life for non-profits and I can honestly say that I have never come across any cheating whatsoever.
Nevertheless, I support reform because, clearly, there is abuse.
Here is what I would propose:
* Public financial records
* Caps on salaries (let’s say $150,000 for the highest paid)
* Caps on administration costs (lets say 30%)
* Caps on fund raising expenses (lets say .30 per $1)
* Caps on financial investments (I’m not sure what’s reasonable.)
If the organization can’t meet these goals, they lose their tax exempt status.
Good non-profits are already beating these goals by a wide
# 37 Greg Allen said, “Caps on administration costs (lets say 30%)
* Caps on fund raising expenses (lets say .30 per $1)”
So you think it’s okay for sixty cents of every dollar donated should never visit the people in need? You must have been working for CARE, or The Red Cross.
60% overhead would be a stretch goal for so many “name” organizations.
Take “The March of Dimes” fer instance. There is a National MoD with its Exec D’or making $800K per year “because they have to be able to relate to their peers in industry” and local MoD where the Exec D’or makes 80K per year, his wife the VP D’or makes 50K per year and 2-3 other long term folks taking the balance of funds that are for individually determined needs of the local community–ie: zip.
And they follow/meet/comply with all the rules. Think of the Kiddies.
Its hard for flesh and blood to stand too close to green money and not grow a fungus. You need REAL enforcement so that people want to do it but refrain because they know they will be caught: not like right now where they all know there is nothing to be caught about.
So, I would vote against charitable deductions but am willing to go with the Majority vote on such issues==aka–as long as a social safety net is in place ((MAKING MOST CHARITIES UNNEEDED!)) I don’t care if others choose to expose their violins in public.
Silly Hoomans–getting cheated in so many ways and calling it a virtue.
Yea, veerily.
#13 ECA quoted expenses for what he considers the poverty line. His numbers are ridicules. I make a little less than what he said, but you know what? I have plenty of money. I don’t waste it on having both a home phone and a cell phone. I have one or the other. I don’t spend money on cable TV. I have a little TV and an antenna, not a wide screen.
He listed a lot of things that aren’t necessary. TV is not necessary. Rent is not 10,000 a year. I have 720 square feet for $250 a month. I live within my means so I don’t consider myself poor.