Martin Feldstein: A Deduction From Charity

President Obama’s proposal to limit the tax deductibility of charitable contributions would effectively transfer more than $7 billion a year from the nation’s charitable institutions to the federal government. But the high-income taxpayers affected by the rule change are likely to cut their charitable giving by as much as the increase in their tax bills, which would, ironically, leave their remaining income and personal consumption unchanged.

In effect, the change would be a tax on the charities, reducing their receipts by a dollar for every dollar of extra revenue the government collects. It is hard to imagine a rationale for taxing schools, hospitals, medical research budgets and arts organizations in this way. I suspect that the administration officials who drafted this proposal did not understand that it would have this perverse effect.

Read it all.


Posted in * Culture-Watch, * Economics, Politics, Charities/Non-Profit Organizations, Economy, Office of the President, Politics in General, President Barack Obama, Taxes, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The Fiscal Stimulus Package of 2009, The U.S. Government

9 comments on “Martin Feldstein: A Deduction From Charity

  1. Br. Michael says:

    Well it’s one way for the feds to funnel money into the approved charities and accomplish the desired social goals. We simply can’t have people supporting the charities they choose. They might choose unwisely.

  2. Eastern Anglican says:

    #1 Absolutely. Remember when he and JB released their own tax records? Each made approximately three times my salary and gave less than 1/3 of my charitable giving (of the amounts I could claim). President Obama did have a sharp increase in giving after his major book deal, in the midst of considering a run for the Oval Office. I don’t write this to display my own righteousness, rather to point out the difference in worldviews. For me, charity begins in my direct involvement with charitable organizations and the lives of those they impact.
    If, like the President, you think that paying taxes is charitable spending, and that the government is the best force for charity, it explains the administration’s position.

  3. libraryjim says:

    This is just another way for the Government to take control of these organizations.

    “You take our money, you have to play by OUR rules. If you do not take the money, we will see that you are regulated out of business”.

    This is not ‘charity’.

    Jim E.

  4. Franz says:

    Amen to both of the above.

    One of the great strengths of American Society (from colonial times) was the development of voluntary associations, including not only churches, and church based charities, but also non-religious civic organizations. These provided a counter-balance to government power. The value of these associations was recognized early on, which is why the freedom of association is expressly protected in the Bill of Rights. IMHO, the provisions for tax deductions for charitable giving are an acknowledgment by the government that government is not always the solution to all problems, and encouraging (in a small way) the health of non-governmental civil society.

    There are some (mostly on the political left) who mistrust civil institutions that are not under the control of the government. When I was in law school, I actually heard someone argue that private charitable hospitals should not exist, because the government should be providing health care. We also see this attitude reflected in the litigation involving the Boy Scouts — there were some who could not stand to see a prominent civic organization articulate a set of values they did not agree with.

    Therefore, I would not assume that “the administration officials who drafted this proposal did not understand that it would have this perverse effect.” In fact, I would suspect the opposite.

  5. Brian of Maryland says:

    Since the two lead personalities (you know, the ticket that was elected last November) in this administration do not give that much to charities as a percentage of income, let’s just say it’s a non issue for them as individuals. Since they don’t do it, it’s clear to this simple, humble parish pastor they don’t understand why others do … so better the government take the money and give it away.

  6. Dilbertnomore says:

    George Will summed up the issue in this column – It is rich in documentation for the inevitable ‘drive by’ iconoclast who find themselves troubled by the truth. And the truth is conservatives give much greater percentages of their income to charitable causes than liberals do. Goes right back to core philosophies. Conservatives take individual responsibility for their neighbor and underwrite that responsibility with their very own personal time and treasure. Liberals figure charity begins and ends with payment of the tax bill and make sure as many as possible hear that their good intentions and exuberantly profligate scattering of tax dollars in the direction of ‘good’ causes are all the charity needed to fill the bill.

    But then there is the troubling history of tax evasion of numerous failed Obama nominees as well as the exceptionally gross example of our tax cheat Treasury Secretary, Tim Geithner. In these cases these worthies seem not to be inclined to give either personally or via the preferred liberal route, taxes.

  7. libraryjim says:

    Saw on the [url=]Bloomberg website[/url] that the Obamas gave less than 1% of their income to charity last year.

    [blockquote]Obamas Donated Less Than 1% of Their 2000-2004 Income
    By Ryan J. Donmoyer and Julianna Goldman

    March 25 (Bloomberg) — Democratic presidential candidate Barack Obama and his wife Michelle gave $10,772 of the $1.2 million they earned from 2000 through 2004 to charities, or less than 1 percent, according to tax returns for those years released today by his campaign.

    The Obamas increased the amount they gave to charity when their income rose in 2005 and 2006 after the Illinois senator published a bestselling book. The $137,622 they gave over those two years amounted to more than 5 percent of their $2.6 million income. [/blockquote]

  8. Dilbertnomore says:

    Peanuts. But what would you expect from Carter II.

  9. Dilbertnomore says:

    Sorry, question mark should be at the end of the end of the second sentence. Question mark sorta really fits, doesn’t it? Hopenchange to this. Who knew?