At first blush, it seems to make policy sense, too. The rich fabric of America’s civic life, from Boy Scouts to community orchestras to soup kitchens, is the envy of the world. Its diversity reflects in part how much it depends on private givers with diverse interests and motives, and not just on the government. Their giving is encouraged by the charitable deduction, enacted in 1917, just four years after the income tax itself. The deduction lets people feel they are beating the system even as they practice virtue.
But there’s a question of fairness that complicates the issue. Overwhelmingly, the deduction benefits the wealthy ”” and the rest of the country has to make up the gap.
On the other hand, overwhelmingly, the giving benefits the poor.
The justice argument in this article sounds in the notion that a person’s income is first the property of the government.
There is no gap, as Montanan indicates; the charitable giving, from churches and soup kitchens to Boy Scouts and PBS, benefits society as a whole.
I’d love to see a breakdown of how money claimed as charitable deduction is actually spent. In a whole lot of churches nowdays, 90+% of donated money goes to salary/benefits/buildings to maintain a sectarian gathering place. Obviously, this isn’t true for money given to UNICEF. And money given to Harvard is different yet again. When they talk about eliminating or capping the deduction, I find it hard to imagine what the ripple effect might be.
Where is it written that everything must be ‘fair’? Life has never been fair from the perspective if the liberal left or the conservative right. Fairness is a different thing for everyone. I do not know what the answers are for all of the problems facing the country but I can not see how taxing everyone heavier and spending for more stimulus can work. We can not spend our way out of debt, no matter how much the socialist in the White House thinks we can. Our spending has to be CUT.
Giving should be done because the donor wishes to do it. If he gets a tax break, fine; if not, as in the UK, where there is a ton of non-deductible giving, fine.
Fairness has nothing to do with it.
“But there’s a question of fairness that complicates the issue.”
I’ll say. Just bring up the idea of a flat tax and listen to all the whining that goes on about everybody having to pay taxes. All you’ll hear is about how “unfair and unequal and mean” that perfectly equitable distribution of taxes is.
Our network is the “envy of the world?” I think not. I recently spent a month visiting friends in England and I was amazed by their charitable network and services! Their town “leisure centre” was utterly amazing and offered all sorts of helpful classes and programs for folks. They’ve got “open university,” health and wellness opportunities, and social functions open to all.
The C of E churches do a wonderful job of outreach in this regard. They have lunch and games for senior citizens, programs for young mums and tots, and open tea time when folks can just pop in for tea and conversations. This is all in addition to their religious programs, of course.
Honestly, I wish I could grow old in England. There’s just so much more available to keep one active and engaged.
#7 — It depends entirely on how the “flat tax” is set up. There is a minimum income required for people to be able to pay for basic necessities such as shelter, food, utilities, and required insurances. A flat tax is NOT fair if someone earning $12,000 annually has to pay the same rate as someone earning $120,000 annually. A 15 percent flat tax, for instance, means that the $12K earner has to live on $10,200 while the well-off person “makes do” with $102K. Also, basic cost of living expenses vary greatly in this country — how is that factored in?
I know that previous proposals included a sort of rebate to the poor for basic necessities. Why and how would you set up a new bureaucracy like that, and who is going to be in charge of policing prices to ensure that the rebate comes close to reflecting actual expenses in every part of the country? Even the urban areas differ greatly. You can live fairly well on a low salary in Dallas but the same salary in Chicago may not get you a tenement.
Charities and social services help struggling families make ends meet, especially in urban areas. Personally, I think that one should give from their means and their heart without expecting a tax deduction but if the deduction figures greatly in some large donations then, by all means, give it. Charitable assistance likely keeps some folks off government assistance so it still saves taxpayers some money.
The logic in the article makes my head spin. OK, by how many percent of the population did the president win the election? And, how many of those who voted for him actually contributed significantly to the revenues of the federal government? So now we say this political majority gets to decide how all the federal revenues are spent. Charitable giving allows a more democratic voice for individual citizens to support those causes which they feel are most important to them. I remember when I was a child and my school teachers were drawing a distinction between our system and those of the communist dictatorships. We were told that our government existed for the citizens, where as the people under dictatorships existed for the government. With this logic behind class warfare, we are creeping toward the latter example for the productive.
#9: How much does the $12,000 earner receive from the Earned Income Credit, and how many of the working poor are truly marginalized by no fault of their own vs those who increasingly find less incentive to get trained for a demanded skill, become better educated, delay their retirement or work harder? Socialism expands this class and shrinks the other. Who pays the bill?
8. Teatime 2 – I yield to no one the pleasure I’ve had visiting the UK since first there 62 years ago, but you did forget to mention the 20% VAT they have to pay on nearly everything, on top of their income tax rates. Yet, they still run the country deep in the red.
I’ve found over the past 15 years of nearly annual visits there, mingling with lower socio-economic groups to some very well off folks, that, nearly to a man, they have given themselves up to “Let the Gov’t take care of me.” Very depressing for me to see that.
You may have seen some few successful churches, though there, as with ECUSA here, the leadership has abandoned the Gospel, but there are hundreds and hundreds of small parish churches there that have shut down, or nearly so.
#10 — We’re talking about a flat tax. If there was a flat tax, there would be no earned income credit or other such deductions, from what I know about the proposals. It would be exactly what it says — a flat tax rate that everyone pays.
Furthermore, how can anyone earning $12K have money left over to pay for school and training? It boggles how people can still believe that people who earn minimum wage are lazy and unmotivated when there are people with college degrees who would be grateful for any job. I don’t understand how people can condemn the long-term unemployed who receive benefits and also condemn those who work for minimum wage. Middle-income jobs aren’t plentiful. It’s getting better, thankfully, but it will take a while to recover.
And, see, this is what I really don’t get. As Jesus said, “The poor you will always have with you.” Granted. However, persons of a particular philosophical persuasion grouse about people who work for low wages, those who receive government assistance, and about particulars regarding charitable contributions, as well. Is it that they see those who aren’t flush with healthy bank accounts, material stability and abundant education and retirement savings as an affront to the very idea of America and American values/exceptionalism? Sometimes it appears as if that’s the case. And it’s weird because some of our most vital jobs — educators, first responders, researchers, etc. — don’t pay especially well.
#11 Luke, Oddly enough, I found myself leaving behind my stuff so I had room to bring back a lot of UK bargains in clothing, food, cosmetics, and odd things like a memory foam pillow, lol. Even with that 20 percent VAT, I found must-haves that were far, far cheaper than what I pay here. It was just a pity that the baggage restrictions were so stringent, grrrr. I had to get creative.
Furthermore, the food there was very fresh and locally produced. I was impressed. This was the first time I had an extended stay and got to “live the life,” so to speak. I found the recycling scheme annoying and the short shop hours startling but loved so much of English life. The people, of course, are tops.
No one I know there, however, expresses the “let the government take care of me” sentiment. I don’t think my friends there are exceptional and, of course, we’re all at the age now when our children are navigating society as adults and having children, in some cases. They’re enjoying new types of employment opportunities by working from home, as consultants, and through private contractors. They have some exciting and versatile situations.
They are worried, however, about their NHS being turned into some sort of weird socialized-American model hybrid and they SHOULD be worried about that, I think. It’s going to be a hodge-podge with lots of cracks to slip through developing. Also, their employment innovations are largely possible because employers aren’t burdened with providing benefits and health care access doesn’t mainly rest on full-time employment with one firm. The benefit question hampers employment versatility in our country because health care is so crazy-expensive.
#10
It is also weird that educators who are unionized are paid much higher salaries than educators working for private schools like the ones that educated my children. First responders? It depends on whether they are in a public employees union, not, or are volunteers. Researchers? If you are tenured in a university, you are paid adequately. If you are a graduate student or Post-Doc, you are paying your dues for a future success. My late wife was an urban public school teacher and I work at a university supporting scientific and engineering research. I still get mail from my wife’s union telling me how to vote, and to oppose charter schools. It is funny how people divide the labor force for the sake of a class warfare argument.
In my state, all wage taxes, other than federal, are flat. Of course the federal tax is progressive. I was talking about the federal government and the charitable deduction. In my last post, I’m not trying to talk on all issues, and I will give it to you that the working poor have traditionally less medical benefits, etc than the truly poor or middle income. If they would have had the right advocate, they might have gotten better treatment. That aside, your comments don’t negate the fact that socialism lowers productivity and total national wealth. We are supposed to have public schools that equally educate all social classes of students. That doesn’t seem to work. Why? Because there is no competition, alternatives or teacher accountability within the inner cities. Also, the declining ideals of family stability and responsibility are not helping the situation. But, why shouldn’t successful people have a say in where their money goes for the betterment of society as a whole? That is my point. They don’t need a lobbyist to make an outcome.
Both of my children had to face a poor job market when they graduated from college. It didn’t help that one lost his job when the green energy stimulus money ran out. He eventually got another. I tried to raise my children with the right work ethic values and if they are refined in the fire for a while, it will only make them stronger to face life’s challenges.
In post #14, I was answering post #12
Cole, public school teachers in many parts of the country, especially the South, aren’t unionized in the traditional sense of the word. Yes, teachers belong to unions here solely for legal protection in case they’re accused of impropriety. However, there is no collective bargaining or striking permitted and wages are quite low. I’m not a huge fan of unions but why can’t wages commensurate with education simply be paid without unionization? That doesn’t happen very often, though.
Why not simply advocate for living and fair wages rather than the whole “hardship will buck you up” argument? That’s always given to folks in the humanities, education, media, public service, and the like but financial analysts and such make good money right off the bat. Even those who lose other people’s money in a big way are given vast sums of money to go away!
Again, I don’t get the propensity toward rewarding those with big bucks for everything they do and for demonizing the poor just for being poor. Again, if the wealthy require tax deductions to help the less fortunate, well, OK, but it really does rankle.
#16: I don’t know where you live. I live in an urban big city. You imply that I’m demonizing the poor and protecting the fat cats. If that’s your primary argument, it is a smoke screen hiding the real problems in society and the economy. If one looks at an electoral map from the election, it is clear that many of the less unionized states were red (conservative). It is also clear that the blue states represented more of a concern to gain or preserve entitlements, unionization and unfunded public employee pensions. The entitlement growth of our economy is not sustainable. That is a fact. The proportionally smaller gain in revenue from taxing higher incomes is disproportionate to the spending increases that need to be checked. We are heading for the fiscal cliff. If we suppress business incentive and growth (and this includes the small investor like myself) revenues will actually decrease. Then where are we? Should we take a page out of the book from Greece and have rioting in the streets when the money runs out.
If you want to point out that investment firms and CEOs might make too much when their businesses are not producing, I’ll agree with you, but the increase of income fresh hold on tax rates will hurt small businesses and farms and suppress the economy even more. A suppressed economy lowers tax income for the government. The poor will always be with us because government needs to keep them poor to gain their votes. Of course I’m not cynically talking about the disabled which any society needs to protect. I am cynically talking about people faking disability or waiting only for the unemployment checks to run out before they consider looking for a job.
My children had to work for tips in the food service industry before they got their professional jobs. Their present jobs are not ideal because both have to work swing shifts. This runs havoc on their social and church life, but they will save their money until they can make the move to a better job.
#8 Teatime
Thank you for the positive comment about the UK. I am glad you enjoyed your time here and it is nice to hear you saying so. There are indeed many good things here, and we did beat the All Blacks at Rugby last weekend which augurs well for the Rugby World Cup here in 2015 that we will be able to not embarrass ourselves. You may have noticed our response to challenging times and circumstances [and we have plenty of them]…is to have a party!