Friday, March 27, 2009

Charitable Kickbacks

Joel Stein's latest column in the Los Angeles Times is marred by his rather lame attempts at snark (he is no Rosa Brooks), but his point still manages to come through. Why should people get a government kickback for making a charitable donation?

President Obama wants to take money away from charities. Which is awesome. Only he doesn't go far enough.

His proposal, which Republicans and Democrats both hate, would force rich people to deduct only 28% of their charitable donations, instead of 35%. This change would have two obvious disadvantages: It's boring and requires math. A simpler solution would be to eliminate everyone's tax break for donations. ...

The idea behind the tax break is that you give $1 to a good cause and the government kicks back 28 cents on your tax bill. This is also the government's scheme for getting you to buy toxic assets, only in that case you pay $1 and the government gives you $14.

The problem with even a 28-cent contribution from the government is that we all then have 28 cents less in tax revenue. Which essentially means I am being forced to give my money to the charity of your choice. ...

The charity of your choice, as important as it may be, is not what taxes are for. Taxes are for whatever we all agree is absolutely necessary. ...

By allowing charity deductions, I have to pay more in taxes so you can support causes I didn't get to approve of through my vote. In 2006, that was $40 billion more we had to pay, according to Congress' Joint Committee on Taxation. ...

Taxes aren't a punishment you can get out of by donating money. Taxes are our necessary contribution to the country. The money we'd save with Obama's tiny change would help pay for healthcare. ...


I stripped a lot of Mr. Stein's wise-ass comments out, mainly because they were distracting. His brand of humor works far better out loud in a comedy club than it does in print. That said, his analysis is right on the money. Why should the government be supporting All Saints Episcopal Church by knocking money off my tax bill? That's hardly consistent with the wall that's supposed to exist between government and religion. It's also unfair to those other taxpayers who, for various reasons, many of them reasonable, deplore the social activism of that church. And it's really unfair to those people who donate their time rather than money to causes they believe in. They don't get any kind of a tax break for their donation.

I suppose an argument could be made (and probably was made at the time the deduction was inserted into the tax code) that government wanted to give an incentive for charitable giving in the hopes that the charity would provide services the government couldn't or didn't want to provide. That somehow rings hollow, however. How is supporting a religious institution with a tithe something the government wants to get involved in?

That's not, as Mr. Stein points out, what tax money should be used for.

Those of us who are able to make donations should do so because we believe it is the right thing to do, not so that we can get a government funded kickback. It's really not such a hard concept, not nearly as hard as politicians seem to think.

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3 Comments:

Blogger FeralLiberal said...

I'd also like to see the local property tax exemptions on churches done away with. My property taxes are high enough without subsidizing local services for your church.

6:44 AM  
Anonymous larry, dfh said...

The government doesn't pay you anything to donate to 'charities'. As it is, it costs $1.00 to donate a dollar to a 'charity'. If the exemption were removed, it would cost a taxpayer $1.35, or $1.25, or whatever, to donate a dollar to a charity. Now I don't have alot of sympathy for many 'charities', whose executives are compensated extravagantly, and whcih have very high internal costs, but the structure of fundraising for many 'charities' depends on the donations' tax ememption. And along with alot of bullshit ".org's", we can expect college tuitions to increase, and the services of food pantries such as the Sunday Breakfast Mission to decrease, during times of economic strife. Look at it the other way: if the kompassionate konservative simian did this, we'd be all over him as cold and callous.
And I might add state universities to FeraLiberal's complaint. In my hometown, the university owns 1/3 of the town, and is constantly trying to get more property, all the time shrinking the tax base for the town.

7:10 AM  
Anonymous larry, dfh said...

A slight correction, depending on one's definition of FICA 'witholding'. If you are a wage earner, earning less than whatever the Social Security maximum is, then it costs you $1.15to donate a dollar to a charity. And speaking of FICA, are any of these brilliant government 'fiscal hawks' talking about charging FICA for investment income? Or is that still taboo?
We should not underestimate the lengths our government will go to in protecting the powerful. Obama's alsways talking about sacrifice, but that's only for you and me. You and I had absolutely nothing to do with the state of the investment economy, so why are we asked to sacrifice for it? We didn't run our credit card debt to infinity, we didn't jimmy the price of commodities beyond reason, then take out massive bets on the futures market. But the investment houses DID; so we have to sacrifice. Democrat or republican, the powerful resent the New Deal, and are trying to remove what is left of it. That's why so many democrats (all millionaires with investment portfolios) were with phil gramm and his sleaze-bag wife in removing Glass-Steagall.

8:25 AM  

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