Notable and Quotable

Anyone else around here willing to support a tax on all foundation endowments, including those of colleges and universities, in excess of, say $1,000,000?

I’d go further, actually, and end the tax deduction for anything that is not directly helping poor people–helping them get health care, food, education, etc. I’m not quite sure where religious institutions would fit in.

Richard Adams

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Posted in * Culture-Watch, * Economics, Politics, Economy, Law & Legal Issues, Politics in General, Religion & Culture

19 comments on “Notable and Quotable

  1. Sick & Tired of Nuance says:

    I think that a strong case could be made that taxing religious institutions would constitute an infringement against the first amendment.

    “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof;”

    Of course, I am one who believed that McCain-Feingold violated the principle of free speech.

    “”Congress shall make no law…abridging the freedom of speech, or of the press;”

    But, try placing a political advertisement as an individual or a grassroots organization within 60 days of an election (you know, when it really counts to have free speech) and see how free your speech is or how much freedom of the press you will enjoy. The Constitution is virtually dead because of liberals making it a “living document”. Freedoms that our forefathers fought, bled, and died for have been ruled away by an activist judiciary.

  2. William P. Sulik says:

    I thought Ashbrook was a conservative institution? So he wants to turn churches into tax collectors for the state?

  3. Br. Michael says:

    I think we should repeal the income tax.

  4. Franz says:

    Absolutely a terrible, awful, dismal idea.

    The tax exemption for civic institutions (including artistic, educational, charitable and religious) is an acknowledgement of the value of a civil society in which there are institutions independent of the government, and in many instances operate contrary to the policies of a particular administration of that government. It enriches our civic life by recognizing that democracy is of value as a political system only, and that individuals (whether as wealthy individuals or as an aggregate of like minded members of an association) can make a mark in unexpected ways.

    I’m not articulating this well in general terms, so I’ll offer some specifics: We as a society benefit from the existence of independent colleges and universities, who do not depend on legislative funding. We, as a society, benefit from arts institutions which have arising from a particular vision (such as the Getty in Los Angeles, or the Frick in New York). We, as a society, benefit from the existence of a particularly Catholic vision of health care.

    We, as a society, have benefited from the notion that there are some things which the government ought to leave alone. This proposal rests on the presumption that the money belongs to the government in the first instance, and that it is the job of the government to tell these instituions what to do with it.

    The power to tax is the power to destroy.

  5. William P. Sulik says:

    Franz, #4, it’s interesting you conclude with a paraphrase of former C.J. John Marshall, “That the power to tax involves the power to destroy … [is] not to be denied” McCulloch v. Maryland 17 U.S. 316 at 431 (1819).

    Twenty-five years ago, the conservative justice William Hubbs Rehnquist stood this proposition on its head:

    [blockquote] Both tax exemptions and tax deductibility are a form of subsidy that is administered through the tax system. A tax exemption has much the same effect as a cash grant to the organization of the amount of tax it would have to pay on its income. Deductible contributions are similar to cash grants of the amount of a portion of the individual’s contributions. The system Congress has enacted provides this kind of subsidy to nonprofit civic welfare organizations generally, and an additional subsidy to those charitable organizations that do not engage in substantial lobbying. In short, Congress chose not to subsidize lobbying as extensively as it chose to subsidize other activities that nonprofit organizations undertake to promote the public welfare.[/blockquote]

    Regan v. Taxation With Representation, 461 U.S. 540 at 544 (1983).

  6. Clueless says:

    I would not tax religious institutions. I do think it is reasonable to repeal the tax exemption for non profits including churches. Why should Casear pay for the Church? And yes I know it will make people rethink their contributions. However if you tithe because it is the right thing to do, removing the tax exemption will not change your calculations.

  7. libraryjim says:

    When did the answer become “Increase taxes on anyone I don’t like” or “Increase taxes on anyone I think has too much money”?

    That’s not the American Way, and it hurts the American Dream.

    Let’s put a stop to this socialistic nonsense.

  8. William P. Sulik says:

    libraryjim – I confess I do like the idea of seeing Trinity Episcopal on Wall Street – indeed, all the establishment churches which are bankrolling the war on the faithful being taxed out of existence. Nevertheless, you are absolutely right.

  9. John Wilkins says:

    I don’t think it would be that wise, but this will become more commonplace for people to consider.

    Sometimes taxes are useful, sometimes they are burdensome. Takes tend to be more burdensome for poor people than on rich people, especially as the wealthy benefit more from having institutions paid for that help them keep order, stability and regulate the unprofitable exchanges that enable them to build wealth.

    I think there are good reasons to establish criteria for any organization that claims to be “exempt.” Does being tax-exempt cost my enighbors, or put stress upon the community? It might need to be quantified.

    There are several ways to structure taxes. One could be a “rent” tax: you pay for the part you share in the environment: what water you use, the amount you pollute, public sanitation, libraries. It’s a simple “rent.” But everything you earn above that you own. This is Henry George’s philosophy. It encourages labor, but doesn’t increase taxes exponentially. It becomes important to calculate shared costs precisely. It does acknowledge that we have things in common that should be paid for.

    One could also have ONLY an income tax. Corporations – not for profit and profit oriented organizations, pay no taxes. Taxes are progressive enough to discourage greed, but not so much they discourage industry. This make sense. Industries can form, but individuals are still accountable for supporting their country.

    There could be a confiscatory estate tax above a certain amount for heirs. By the time their parents die, they would have a good education, plenty of contacts in the elite, and opportunities to make their own wealth. It discourages a nation of Paris Hiltons.

    “Tax cuts” might be good religion, but it is not very precise, nor does it encourage the best part of human generosity. Tax increases should be simple, fair and useful for the country.

  10. Chris says:

    how does one define “poor?” opening Pandora’s box I fear.

    I do think the non profits (esp. universities) are hoarding cash for their endowments and at the same time are charging tuition that is far in excess of inflation. That’s a racket, I tell ya…..

  11. Br. Michael says:

    5, you are right. It assumes the ligitimancy of the income tax system. The income tax should be repealed.

  12. Br. Michael says:

    “There could be a confiscatory estate tax above a certain amount for heirs.” So speaks the socialist.

  13. Clueless says:

    The trouble is there are two items of value: Money and Time.

    If you tax income then you tax those who are productive, and give a free pass to those who prefer time to money

    Eventually most people would figure out that they would do better on the government dole and pay themselves in time rather than earning money that they know will be confiscated.

    Thus, to get people to work at all (work being less pleasant than lesure) one needs to either have the dole be very tiny (much less than currently) or to allow people to enjoy the fruits of their labor.

    Currently I have a number of patients whom I truly envy. The younger ones usually have some ridiculous diagnosis like “bipolar” which has qualified them for both medicaid and disability. Others are older, and have social security and medicaid/medicare. They live in modest but quite comfortable homes, and have plenty of time to spend at their children’s and grandchildren’s soccer games. They see me for stuff like migraines and back pain, and they complain about how the ER made them wait 4 hours when they went in to get their strep throat fixed.

    One good thing about Obamacare, is that when it comes in, I will be able to leave medicine, become a farmer or whatever else does not make much income, and therefore pay little in the way of taxes, and will have lots of free time also. And hey, I’ll have free medical care. Also free social security. And most of all, I will have free time. Which I do not have now, and which the folks who wish to increase my taxes and confiscate my assets have in spades. Who will be doing the work and paying the taxes in the system that will be present then I do not know. But I do know that I personally will be making less money, but working vastly less hard, and probably paying far less in the way of taxes. While getting “free care”.

  14. John Wilkins says:

    Clueless, actually, money and time are measurements of value. Some do value money and time in and of themselves. Others make money and exchange time because they have different values. I chose theology over economics in graduate school even though a theology degree at Chicago would have taken less time than Economics at Yale. And in the end, I chose a field that would make less money. Likewise, I don’t value yachts or BMWs – used cars are much better value.

    Capitalism does not say that money has any value inherently: it says that people should be allowed to do with it what they want, freely. With free exchanges, people are better able to create value. It helps us build all sorts of things. However, we tend to find that sometimes (say, drug use, sex) we are less willing to count value as a society. Your implicit argument seems to be that capitalism happens in a vacuum, outside the protection of government. That’s not quite true. Government – and taxes – ensure that a commercial society is viable. Name a commercial enterprise, and I will list for you how our government makes it a viable institution. Through taxes.

    People are on the government dole for a variety of reasons. It is not only because they are unwilling. Some are mentally ill. Others are felons. Others decide between raising three kids or finding a job (not an easy choice). I suppose some people might go on the government dole so that they can make music or help people. People might buy the music made: then such people pay taxes on it. Others might decide to live within the voluntary economy. We don’t know. What you should do is provide better numbers to back up your anecdotal assertions.

    But you are right that there is a difference between a leisure society and a commercial society. Or you could say that one is a sabbath society and the other is a labor-intensive society. For many people, people make money so they can have higher quality leisure. Thus they like yachts, must take first class or have their own airplane, and find that these things are valuable to them.

    Others just like to accumulate money.

    But a leisure society is not the same as a “planned” economy.

    In our economy there is another challenge; the superstar challenge. I was with a composer recently, one who had a nice residual. He was talking about a big name composer who made millions of dollars. The big name composer is a good composer, but now he really just has a reputation. This composer was asked if he ever encouraged or mentored any other composer. He said “No. They are competition.” In a “superstar” economy, people choose based on reputation rather than on talent. There are lots of good composers out there who are working very hard. The big name composer was rich enough he could buy out the competition – even hire them and say it was his own work.

    I would also add that universal health care would make it easier for me to hire employees. As it is, I am limited, because we can’t pay for health insurance. Not only that, as we’d pay less in a government plan, we’d be able to spend more money on other sorts of mission.

    Clueless, if you really don’t enjoy medicine that much, then why are you a doctor? What of those who decide to become doctors, and not for the money?

  15. Clueless says:

    #14. The difference, John, is that contrary to popular myth physicians really don’t earn that much. (They used to, I grant you, back in the 1970s when folks at GM also were wealthy). If I wanted wealth, I would have gone into banking, and if I wished to simply has an ordinary upper middle class life, I would have gone into plumbing. The majority of physician make less over their careers than the majority of plumbers. So by definition, unless you go into Dermatology or Cosmetic Surgery or Pain medicine, you’d be a fool if you went into medicine for the money.

    Folks who take 150,000 in loans to buy an education that, pays them less than minimum wage until the age of 30, and then pays them between 60,000 (Internist in New York) and 200,000 (surgeon in the Midwest) are not “rich” in the usual sense of the word. Their loans will not be paid off until they are forty, and unlike their plumber or auto mechanic neighbor, they will not have paid off their home until they are 60. If your debts are greater than your assets, then you aren’t rich. You just have a high income (all ready for the tax man).

    As to medicine I love medicine. I hate billing. I hate the regulation. I hate the fact that the folks on Medicaid think of me as a “government service” that they are “entitled to” and can sue if they think they can get some money out of the deal.

    I’m the only person in my area who sees Medicaid. I don’t have to. I’d be a lot richer if I didn’t. I’m the only person who sees kids. I don’t have to. I’d have much less risk of lawsuits if I didn’t. I stay in Medicine because when I leave kids will die. There is nobody else to send them.

    Three minutes ago, I got another call. Please see my patient she has seizures and is pregnant. Nobody else will take her, she has Medicaid. And Medicaid pays 12 cents on the dollar. And they are by far the most litigenous, and least compliant. If the pregnancy turns out badly, she will doubtless sue me, and consider this her right, as how else can she recover the costs of caring for a disabled child? If I refuse to see her, then again, since there is nobody else, this guarantees that the pregnancy will turn out badly, and a chld will be born impaired who could have been normal had the system worked better for him. She’s going to be squished into the lunch hower tomorrow. Yay. Another 12 cents.

    Sure universal health care will make it easier for business. It is ridiculous that business pay for medical care for the nation. However universal health care without cost controls, and without rationing will banrupt physicians while still bancrupting the nation. Everybody will be paying medicaid rates, while expecting Cadillac care. The only way to fix it that will work politically is for rationing to come in through the back door via “guidelines” that limit care for the disabled and elderly. Then it will be physicians who will either follow the “guidelines” and tell their patients “I’m sorry you don’t qualify for surgery/dialysis/cardiac stinting” . I imagine that just as “outliers’ who fail to bill their self pay patients the full rate are prosecuted as committing “Medicare fraud”, outliers who fail to follow the guidelines, and actually operate on the elderly patient with a hip fracture will be presecuted as committing “Medicare abuse” and performing “fraudulent and unnecessary care”.

    I used to enjoy medicine. I think about leaving every day. I dream about being a welder (there is a really good welding school near here) or an electrician (I could get a license really easily). I have lived far more frugally than any of my middle class, auto mechanic, hair dresser owner, state worker owner neighbors, and I have paid off all my debt including mortgage, and my kids college funds are paid up and in CDs. I could retrain.

    But if I do, who will see the kids with seizures? There is nobody closer than 300 miles. Who will see this pregnant girl with seizures? Who is going to take care of the folks around here? That is quite frankly the only reason I’m staying. I know the names of the folks who are likely to die when I leave.

    But I also know that I really can’t keep doing this much longer. Eventually something is going to have to give.

  16. Clueless says:

    “Clueless, actually, money and time are measurements of value. Some do value money and time in and of themselves. Others make money and exchange time because they have different values. I chose theology over economics in graduate school even though a theology degree at Chicago would have taken less time than Economics at Yale. And in the end, I chose a field that would make less money. Likewise, I don’t value yachts or BMWs – used cars are much better value”

    Again, you are speaking out of a world view that sees people as “rich doctors” and “poor priests”. I don’t consider most Episcopal priests poor. I consider them middle class in income, and extremely wealthy in time. They used also to be wealthy in security, but that is no longer the case. Most full time priests that I know make between 30,000 and 70,000 and their pace of work is leisured. Quite different from working 80 hour weeks, seeing 30 patients/12 hour shift with life threatening illnesses in a busy ER as my sister was doing until a few days ago. Student loans are far lower in theology than in medicine, and there is none of the soul grinding residency process that weeds those weak in stamina out of the field.

    I too drive used cars, take modest vacations, and my home is in a neighborhood with auto mechanics, electricians, school bus drivers, teachers, a hair salon stylist, etc. It is a nice neighborhood, but there is nothing fancy about it. I live frugally, other than sending my kids to private schools. My biggest monthly expense is my tithe.

    You wish to enjoy your “Sabath” society of leisure, while continuing to insist on a government payment scheme that requires that physicians work even longer hours than they do in order to pay their overhead. (Overhead for a neurologist currently runs about 160,000/year before the physician earns a dime).

    It used to be that folks who were rich had more time than those who were poor. Now that has reversed. The rich used to be the “leisured class”. However outside Wall Street and Washington DC, the new definition of rich is not somebody who has leisure. The new “rich” are folks who are “rich” only as long as they work 80 hours a week, and if they drop back to 40 they go out of business. The “working rich” work far harder than the middle class, and the middle class work far harder than do the poor. It is the poor (as well as government subsidized teachers, and yes priests) who are the new leisured class. This new leisured class (which you call a “Sabath Society” not surprisingly would prefer to tax higher income earners on their income rather than give up their leisure and work as hard as the folks who currently make higher incomes.

  17. John Wilkins says:

    Clueless, I understand the narrative: the poor are lazy, and the rich are busy. And government workers and priests are leisured. This isn’t very nuanced, and I can only agree with the latter part – although I think “security” is the better word, as you noted. And I think that security has value, in itself. I gave up a greater salary, for security. However, I also think that you should remember that the Sabbath is commanded by God. It is why we work (at least according to Rabbi Heschel).

    I do question the poor- leisured and rich busy narrative. You don’t count the working poor (how many are there? 40 million?) They have two jobs. They don’t have health care. About a quarter are on food stamps. I think you need numbers.

    I’m sure that plenty of people who have money are busy. Richard Fuld was busy. I’m sure plenty of Mortgage lenders were busy. Robert Willumstead was busy.

    However, I think you’re probably underestimating the sense of entitlement among the wealthy. My cousin, who grew up wealthy, goes to a prosperous college, and will probably get a job right away at an investment bank, well, thinks it is her right to be wealthy. And she’ll work for it, I’m sure. She’s bright. Is she intrinsically worth more than a middle class kid or a poor kid? Well, that is how she lives. Now – her father was the opposite, of course. On the other hand, he’s pretty thankful he’s done so well and doesn’t resent the government (or at least, he’s voting for Obama, even though it’s not in his personal self-interest given his bonuses were once in the seven figures).

    Taxes don’t really discourage investment if applied correctly. People who work hard often work hard because they love it – just like you – and not just because they make money. they are thankful they live in the USA and know that there are people who probably need a lift.

    Poverty, in itself, is a disincentive for working if there is no clear path to getting out of poverty. For most of the poor (and the working poor) there isn’t. And since getting sick is one way of staying poor, many stay right there. What can the government do? Well, it can do this by making sure that schools are well-funded; that getting ill isn’t going to make them poorer. And it can do this without costing lots of money. It means saying that schools are more important than prisons; and shifting insurance costs from the administrative costs of insurance companies to the simple transfers of a computerized system.

    Taxes on the wealthy would probably go some way to discouraging greed: those who make money solely for its own sake. And I think there is nothing wrong with that: for as we’ve seen, greed also corrupts the market that is supposed to save us.

    I also note that some argue that taxes are “sharing the wealth.” I would say that Capitalism is itself sharing the wealth. Its a great system of voluntary, cooperative trading when planning will not do. Government helps cover the externalities for which the market is clumsy, maintaining what is useful about a commercial society. Especially one where short term risks are valued more for their monetary value than for their real usefulness to the market.

  18. Clueless says:

    I agree that the government should pay for schools and hospitals. However I simply point out that the fairest way to do this is to pay for medical school the way we pay for police academy, and put physicians on the payroll at civil servant wages, hours and benefits, with civil servant protections against liability.

    The government does not do this, and will not do it because it is much cheaper to simply arrange matters by coercion, and blame the physicians for the outcome.

    A neurologist starting practice today (at age 29 assuming no breaks after high school and no fellowships) would begin with a 150,000 student debt (about 40,000/year).

    Assuming a shared practice with 3 other physicians, practice costs (billing, reception, rent, .nurse, malpractice insurance, etc) would come to about 160,000/year (before the physician earns anything).

    In order to practice the neurologist needs to be able to admit to a hospital and therefore in return for this must agree to accept all hospital patients. Most of these will not pay, so the neurologist agrees to approximately 20 hours free care at the hospital a week.

    The neurologist also needs to answer phone calls, letters, maintain records etc. none of which is paid for, and this will take another 10 hours a week.

    So. Before the neurologist sees a dime, he/she has ongoing expenses of 200,000 overhead that he needs to cover for that year, and further has commited to 30 hours of free care a week. (That is assuming he/she rents and does not have house/car/credit card debt).

    By definition, in order to meet that 200,000 overhead (and to generate a salary) the neurologist will need to practice at least 40 hours in clinic (which is the only place any money gets generated). If he/she sees medicaid, he will need to work more hours.

    Thus, for folks like John to have a “Sabath lifestyle” physicians are required to work a minimum of 80 hours. Any attempt to cut back to 40 hours means bancruptcy with the student loan debt remaining unforgiven. If one works 80 hours one can live in the same comfort as John Wilkins who works I am convinced less hard. If one works 90 hours, one can earn more, and can save up enough money to ensure that ones kids never, never NEVER have to take on debt.

    And now John Wilkins, sitting on his rear end, meditating on the greediness of rich doctors thinks that more taxes should be piled on them, so that folks with bogus “bipolar” disorders, and healthy, retired 65 year olds need not work and contribute to the common good.

    Maybe, as long as we are meditating on the sin of “greed” we should consider the sin of “sloth” as well.

  19. John Wilkins says:

    Clueless, I don’t recall bringing up the “rich doctor meme” but you’ve clearly brought up the “lazy priest meme.” It’s clearly personal for you. I don’t think you know exactly what a priest does with his time. No, its not like a doctor’s and yes, there are lazy priests, but I’m sure there are also idiot doctors as well. But gone are the days of the easy sinecure for a priest. Doesn’t happen.

    “Thus, for folks like John to have a “Sabath lifestyle” physicians are required to work a minimum of 80 hours. ”

    I’m not sure how this works economically. My parishioners essentially pay for my services. They don’t have to. It is a voluntary exchange. Nobody is requiring anything of them. They review my salary. Just as people have to work 80 hours to pay for insurance to pay for your salary, they make a choice to go to you.

    If you mean that there are government transfers for poor people (medicaid or SSI), it could be that the alternatives are worse. There is really one way to get poor people on their feet, and its fairly simple: middle class jobs in poor communities (William Julius Wilson advocated this a long time ago). Taxes would help pay for jobs; but then, they would pay taxes themselves. And then they would spend the money on things like food, clothes, cars, ad other things that are important to them. The money goes back into the economy. And that money can make other people, who create value, rich. The economic philosophy is called Keynesianism.

    All you’ve done is illustrate that the present system isn’t working. And you agree with me. But if you think I resent doctors, I gave you the wrong impression. Doctors are workers in my book. They clearly create value. Especially doctors like yourself. And I go to a doctor. I don’t resent he makes more than I do. He made a choice. I do resent the entitlement that some people have. When you hear “rich” clearly you hear” rich doctor.” That’s not what I am saying. I think “Paris Hilton.” Or Richard Fuld. I mean, you might think that people who make $140 million dollars and lead their company into bankruptcy, forcing you and me to pay for their sins, NOT to pay taxes. We get to pay their salary. I’d much rather see those who benefitted from the last 8 years of malfeasance pay the taxes to justify the bailout. Not you or me. If anything, why should we be paying for their luxurious vacations? And not themselves, through their taxes?

    Actually, if anything, a sabbath lifestyle is a “holy” lifestyle. but It is different than joy. It is about remembering the real important aspects of our lives include family and friends. This is what God created us for.

    Taxes aren’t the cause of a leisure society. You overstate your case, economically. You provide few numbers to justify your claim. It is, in my view, merely ideology. There are lazy people in any profession (and it is legendary: think of Dilbert or the show The Office). They make money, and often get raises, and even become managers. Poor people can often be industrious, and find that it doesn’t matter.

    Now I will say that the poor are often likely to suffer from Acedia. There is the argument that if we dealt with depression amongh the poor, and offered some medication, we’d find they would be more able to find work themselves. It’s a theory, and one worth testing. And perhaps an inexpensive way to get people working. Who knows?