If only we were rich enough for our charitable giving to make any difference in our taxes - we give anyway. We have chosen to give to well run organizations, often local, that help folks. Funding a couple of scholarships, usable at any accredited school, helping a local community forest that works to provide jobs in our rural area, and a few other carefully chosen non-profits. None of these has given us a tax deduction but that is not our goal. Our hope is to make a difference where we can.
52
"Taxpayers," and by that I mean the majority of us who aren't billionaires, let alone millionaires, are losing out, but not in the way you claim, Dr. Carroll and Dr. Bach. As a senior citizen who used to be able to itemize her deductions on Schedule A even on my modest retirement income, I was able to deduct the $800 or so every year I gave to various charities and tax-exempt charitable or educational groups. However, in order for it to pay off for me to itemize my deductions on Schedule A, I now would have to reach at least $13,300 (includes the over-age 65 bump up plus the standard deduction) Last year, my itemitzed deductions were under $12,000 but I still saved money. This year - nope. My tax bill has actually increased - yeah, I'm one of those people the Republicans NEVER talk about, a senior citizen with about $30,000 a year income (including Social Security). Living high on the hog, whoop whoop! So - now I don't donate. The money I used to give now goes to paying my increased tax bill. Multiply my story by millions and a lot of charities that people like me USED to donate to are suffering. That's the real tragedy here, doctors.
125
Taxpayers underwriting charitable contributions contribute to the unwillingness of the public to support the government social services at adequate levels. From senior care to early childhood, from basic healthcare to educational services, we lag other developed countries of the world because we don’t accept that it is fully the function of government to manage social services completely. Thus we have liberal organizations, fighting for the charitable deduction to help fund their nonprofits, when in fact their work should be run by the government through public oversight. Instead we have numerous private parochial entities that function without public input or vetting as to their utility. The donor class promotes the notion that government is inadequate to the task so that they can maintain their deductions while exacting out-sized influence on social policy. Religious entities and private educational institutions do the same. The extreme abuses include foundations setup and run by family members and their accolades, art collections donated and gathering dust in storage, and vanity charter and private school educational institutions draining tax dollars without public oversight. If their work is so important, they will support it without taxpayers making up the difference from their missing tax contributions.
77
When I read this I had a new appreciation for the missing federal tax revenue occasioned by wealthy individuals' deductible donations.
In the past, as a former administrator of a taxing district, I have looked at this kind of issue through the local lens, when I had to compete with other government taxing bodies that solicited charitable donations. It seems that local taxing bodies ( of which, Illinois seems to have the highest number) need to have charitable foundations that will welcome donations to augment declining budgets. It is a fine line to ask taxpayers to fund local budgets and also contribute to government agencies as they would to any 501C organization. And it is an additional burden for local government leaders to always be on the lookout for "extra" charitable funds to accomplish their goals or even expand their level of service. Not only are local governments competing for tax revenue, but now they have to spend their time and energy soliciting those wealthy individuals. How much "charity" is enough? If we have too much in our "foundation" why would citizens wish to vote for additional tax levies when we run out of "regular" operating money?
19
both authors are professors at non-profit healthcare institutions supported by wealthy donors' philanthropy.
Are they paying additional taxes to cover the cost of the lost taxes their institutions do not pay on their salary.
3
Sorry, but the artcle reads like a gripe of Aaron E. Carroll and Peter B. Bach who are not sharing in the charitable donors' largesse.
2
Wow .... we really need to start teaching civics. There is a separation of church and state in this country -- hence ..no taxes.
Also -- the US treasury already got the taxes (once) ..when the person earned the money. This so called deduction ...the second time ... is a pass through. Secondly, there are many gifts ... under 5m that would never fall under any tax
No other country has a donation level even close to what we have in the USA ... and no it's not matched by socialist governments,
2
I would love to know whether the authors, or anyone else with similar beliefs in the power of government to do good, put their money where their mouths are. Do they remit more than they owe in federal income taxes to serve the greater good?
3
The authors confuse a deduction with a subsidy. They are not the same. The underlying assumption is that it’s all the governments money, and lowering one’s taxes is the same as a handout. It’s a statist mindset. More troubling are these comments that seem to overwhelmingly view churches as insidious. These mean spirited jabs at churchgoers are very harmful in our pluralistic and very religious society. It also ignores that most of the private sector care for the poor in America is church sponsored. We should celebrate wealthy folks who decide to give generously. They would have more money if they didn’t give any of it away.
6
@James -- Not so: if they didn't give away any of their money, they would end up paying more in taxes and we, taxpayers, might end up with better schools, better roads, more libraries, etc. Taxpayers are actually subsidizing those who are allowed to deduct the amounts they give to charities from their "Adjustable Gross Income", thus lowering their tax bills.
(Note that "charitable donations" also include donations of used clothing and other used household items; the value of these donations is set by the donors themselves -- remember Bill Clinton's donation of used briefs, valued at $3.00 each... about 18 years ago.)
And those who live in apartments or other rented housing because they can't afford the down payment on a house (or do not want to be tied down by a house and a mortgage) are subsidizing those who are allowed to deduct their mortgage interests from their AGI -- in practice, it means that the poor and lower middle-class are subsidizing the middle-class and upper-middle-class mortgages and life style.
16
@James Churches are mean spirited - anti gay, women, abortion, children. Against any common form of decency. Lowering taxes is indeed a handout. What else is it?
4
Dr Carroll is right that small donors get no tax break. That is another gift to the wealthy that the Republicans bestowed on their friends. The tax exemption was created to encourage giving - to our local churches, social welfare agencies, and yes, fancy hostipitals. It is a key to our democracy and belief in a healthy civil society. As Dr. Carroll points out, our goverment cannot do it all and is often wastefully ineffective. Let's not take away another fundamental part of our free society. Let's make sure even the small donor gets a tax break. OK?
@S John Not OK with me. Let's us abolish the "itemization" system. Same exemption for everybody. You want to be charitable? That is commendable, but why should you get a tax reduction for it?
10
Maybe the charitable donation to the arts should be in a different category since the US spends much less money on the arts than many other countries in the developed world. And btw, why give everyone at NYU med school a free ride regardless of need?
4
These authors need to focus on what they know, not on a screed that exhibits A COMPLETE LACK OF UNDERSTANDING with regard to economics.
The people who are able to donate huge amounts of money (whether or not these gifts are tax deductible) have been successful. This means that the goods they produce or the services that provide are considered valuable to lay citizens. The lay citizen (specifically) and society (generally) will accordingly then handsomely reward such people.
When the comments on financially poorer citizens are examined, most of these men and women are living paycheck to paycheck. These people do not have the disposable income necessary to engage in the behavior that our wealthier fellow citizens are able to execute.
This screed smacks of envy for those who invested the necessary time (often in years) to create THE WIDGET that EVERYONE MUST HAVE. These successful people likely failed multiple times prior TO THEIR SHIP COMING IN.
These authors would benefit from reading this Post and remembering that our most successful fellow citizens have failed, dusted themselves off, and ultimately succeeded.
4
@dmanuta
"The people who are able to donate huge amounts of money have been successful". Some of them perhaps, but many (if not most) of them have just inherited it. And we know that you can be rich, or appear to be rich, and still be a bankrupt businessman and/or a conman.
10
So you REALLY want the government to take over and manage all causes which may benefit our species, or our country, or communities, or even just our interests? I don’t think they’ve done a particularly good job of demonstrating good decision making.
I’m willing to forgo some govt revenue for the sake of continued freedom and the diversity of thought and ideals it all represents. Messy, sure, unfairly generous to the rich, probably, but govt dictating our causes sounds like a step down a more totalitarian path. And I’m darn sure I don’t want any more of that.
And BTW, I’m not conservative.
8
How much did the Regenstrief Institute pay in Federal Tax?
1
Liberals support high tax rates, but then give their favored donors (Bloomberg, Buffett, Wall Street) loopholes to reduce or eliminate their tax liabilities.
The ability to tax a full tax deduction for appreciated assets has probably let Bill Gates avoid paying any taxes for decades.
And the big tax deductions go to universities, the arts, and other liberal causes. With the current standard deduction, most people donating to evangelical churches won't be getting a deduction for their contributions.
3
If the non-profit sector collapses due to a lack of charitable donations, there will be millions of people out of work, out of careers. The non-profit sector is a fairly large chunk of the economy especially here in New York City.
1
@Navigator -- Yes, charity, like religion, has become big business.
I thought the problem was going to be that much charitable giving in the US attempts to fill in the gaping holes in the social safety net and public services that should really be funded by tax receipts. My family has more financial resources than we need for ourselves and I regularly write checks to food banks, homeless shelters, parks and conservation groups, our local school foundation, nonprofit social service providers and so forth. I live in an area with a lot of European transplants. They write no checks for these things--they are used to such needs being met by the government.
5
@LMG: Yeah, in Germany there is the Church Tax and if the religious organization decides to collect it themselves the government is obligated to provide income information of church members.
That'll work here.
2
@LMG dig deeper and you will see that most don't match the levels of donations by any metric as in the USA
The advantage to society of individual philanthropy is that it encourages the philanthropist to have a sense of ownership and accountability in how the charitable funds are deployed. As a result, the resources are deployed much more effectively than they would be by a government agency. For example, Habitat for Humanity is 4 to 5 times more efficient in providing housing per dollar spent than HUD. We also get the benefit of having some of the most talented people in the world directing those resources. Who would you rather have developing a strategy to eradicate polio, Bill Gates or some mid-level bureaucrat at a Federal agency.
5
First, polio is largely eradicated, thanks to massive coordination by the federal government. Ending it worldwide is a challenge in countries with 10th century religion in control. Pick another disease, let's say parkinsons. Bill gates or trained scientists working on treatments? No discussion. Getting treatments out to the masses? Bill gates or a federal agency? No discussion there either. And I like Bill; I just know who is good at what.
8
Let's get real here.
Would you rather see fabulously wealthy donors give their money to reputable colleges and hospitals …..
Or churches?
I live in an area with gigantic Sunday entertainment centers everywhere. They pride themselves on their evangelical missions to underprivileged countries. Go a couple of miles and you'll find destitute old people living in shacks and kids who have bad teeth and go to school in rags. It's safer to get involved with poor people an ocean away, so you can go home and they won't bother you.
Many self-serving, greedy things are passed off as charities these days. Exhibit 1: The Trump Foundation. Let's hear some complaints about these.
11
Ah yes, all this money (people's income) belongs to the government first - and anyone receiving a reduction in their taxes as a result of donating to a (government) recognized charity, is TAKING it from the rest of us? And therefore the rest of us is "subsidizing" such largesse? Isn't this standing even income tax law and logic on their head?
What law and logic say - and those commenting here apparently cannot see - is that people's income belongs to them and the government takes what it does, but it first belongs to its rightful owners, i.e., the people whose income it is. There is no "subsidy" here because the people's income does not belong first to everyone else. They - through the government - take what they do, but that's where it ends.
I, for one, am very grateful to those who generously donate to all these charitable causes - whether or not I agree with what those causes promulgate or not. And by the way, even with all these deductions for charitable giving, the top income producers - as a group - still pay proportionately more - and absolutely more - in taxes than the rest of the population all put together.
7
The idea of charitable giving has been skewed. While we are very willing to help others to get back on their feet, through donations, the action has been taken away from the federal and state governments (the very place where our taxes are paid). Instead, personal individuals have set up charitable organizations to funnel funds to particular causes ... all and good ... but, let's put the focus back on taxes being allocated for what will help our nation (and by example, help the world) to thrive. The multiplication of goodness is very possible. Like a vaccination or preventive shot for the flu, when the majority of people are kind ... the minority of cruel and uncaring people are given no ground. Thrive! Peace.
I just want these charities to stop calling me on the phone. That would matter more to me right now than a tax break.
2
Any one of us can make a gift to the US Government.
https://www.fiscal.treasury.gov/fsfaq/faq_gifts_to_govt.htm
"Citizens who wish to make a general donation to the U.S. government may send contributions to a specific account called "Gifts to the United States."
This account was established in 1843 to accept gifts, such as bequests, from individuals wishing to express their patriotism to the United States. Money deposited into this account is for general use by the federal government and can be available for budget needs.
These contributions are considered an unconditional gift to the government. Financial gifts can be made by check or money order payable to the United States Treasury and mailed to the address below.
Gifts to the United States
U.S. Department of the Treasury
Funds Management Branch
P.O. Box 1328
Parkersburg, WV 26106-1328
Any tax-related questions regarding these contributions should be directed to the Internal Revenue Service at (800) 829-1040."
Quote is from the website.
6
Then there are the hedge fund, private equity, and real estate plutocrats who provide vanity charitable funding for the rehabilitation of some well-known government monument, park, historical building, etc. which of course results in great, free p.r. for them and a hefty tax deduction, while they are also the beneficiaries of various special tax loopholes, including carried interest and depreciation. “Only the little people pay taxes!” So true, so true.
5
There may be articulate rebuttals to this argument in the comments, but they're probably hard to find. Instead, I'd like
The Times to find the most prominent person with suitable credentials to attempt to rebut it in an Op-Ed duel.
3
You lost me at encouraging donors not to "reduce the ability of our government to fund its priorities." What priorities? While the priority of a charitable gift is to be charitable, the current priority of the Congress is to reduce taxes for the rich. Ironically reducing the deduction would be a naked gift of the rich to the rich at the expense of the charities: craven politicians would be encouraged to funnel increased revenue back into the rich. Moreover, the fraction of the federal budget spent on research is pennies on the dollar, a poor charity indeed.
3
what about the money that they already contribute in taxes... it seems no one thanks them for that!
1
Eliminating the tax deduction for charitable giving would be a good start.
Eliminating the tax deduction for property taxes is also needed. High taxes are used by the rich cities as a virtual wall against the poors, and to limit the wealth redistribution at State level.
Eliminating the tax deduction for State taxes is also needed, high taxes are used by the rich states to limit the wealth redistribution at Federal level.
4
Not only do the wealthy lose less net worth when donating, they also demand more in return. Sometimes it preferential admission for progeny in the case of educational philanthropy. Business relationships, employee selection , free advertising and all manner of influence are rewards for donations. A lot of this activity makes political lobbying look highly ethical.
6
This article is missing a key element about why nonprofits need charitable contributions. Nonprofits are unique in the United States. Who funds higher education and museums in Europe? The government. If the US government provided money for organizations that cannot operate like profit-making businesses then nonprofits would not have to look for charitable donations.
Nonprofits provide services that the US government chooses not to provide, particularly in terms of making things like art and culture, health care and education accessible to those who are not wealthy.
2
Many commenters: "People don't give because of taxes"
Many others: "If there's no tax break, people will stop giving and many non-profits will suffer and/or disappear"
Both can't be true.
1
As a person who lives on his salary as professor, and who has made substantial donations in the last few years, I thank Go (!) that New York Tiimes readers are not making our tax laws.
For the two universities and the New York Public library who received these donations would be poorer if NYT readers had been making the tax law and I had simply kept my money.
1
I want to ask the authors what they think about New York State & NYC's governmental "CHARITY," namely: that gift to AMAZON to move here, valued at about $1.7 billion. That "charity" is coming out of our tax dollars - but not one citizen I know got to have a say in it, and it wasn't on the ballot when I voted a few weeks ago.
So how about also looking at these lavish "subsidies" that government pays to corporations, then? Because the give-aways are on an astonishing scale, and *I* have a problem with THAT kind of "charity."
10
Seems like a better answer is to tax rich people fairly, and not to discourage charitable donations.
5
I understand the gnashing of the teeth regarding rich people giving to the same institutions, which may not be the ones I think I would give to if I had rooms full of money. Very few wealthy people give large gifts to places like Habitat for Humanity or food banks. However, as others have commented I'm not sure that those additional taxes would go to social services either though.
Also, I would like to point out that the government supports the big institutions too. If you look at the academic medical centers that the government agencies (NIH, NCI, CDC, Defense Department) grants awards it is more often the behemoths...Mayo Clinic, Memorial Sloan Kettering, Johns Hopkins, etc. These institutions have the seed money for new ideas to apply for grants, infrastructure, ability to attract the best researchers/doctors...and much of this is due to private philanthropic endowments. Should more go to other smaller less-funded centers for more equality...or should it be put to the one most likely to meet the goal, i.e. cure cancer, alzheimers, genetic diseases?
This should not be one opinion article about the tax deduction but a multi-part series. Look how much is sitting in Donor Advised Funds. Fidelity makes their money off of fees. They aren't pushing people to give that money away.
4
We should also consider charitable tax deductions for the wealthy a form of foreign aid, because many charities (including the Gates Foundation) focus their efforts in other countries. Fighting malaria in the developing world is all well and good, but Gates, Koch, Jobs et. al. made many of their billions from American consumers. They should help people in need in their own backyard, or else pay taxes to the country that made them rich. Really, the best way to help people in their own backyards would be to hire more American workers and pay them well, but that's too radical an idea. The stockholders would never stand for it.
5
The problem I see with charitable giving, regardless of tax issues, is that rich people look at prestigious projects to give to, projects that tend to enhance their own prestige and self-esteem. The gifts buy nameplates on buildings and letterheads, and I don't entirely dislike that. My own alma mater has a sports complex with a governor's name attached---I had a class with the guy. BUT the real needs of a community are much more humble---a roof over a family's heads, food on their table, transportation to a job, a job that doesn't damn a person forever for running afoul of the law at some point. The legal system and social service system in my state are capricious and often despicable. And rich people almost never see these problems or care about them. I had a rich girlfriend for a couple of months---her grandfather was a billionaire. It would make me feel good to know that she shared this concern and was addressing it with serious money. But if I had access to her giving, what would I see? Gifts to universities, high-dollar arts, medical school scholarships, or homeless shelters that provided the help for people to get back on their feet financially and otherwise? What would I see?
4
How about a reverse progressive deduction where $18 donations are fully deductible and Bloomberg's $1.8b are nondeductable?
2
This article makes no sense. A few weeks ago my wife and I celebrated our 60th wedding anniversary and our sons gave us a party with 50 guests at a local restaurant. Our invitations asked that in lieu of gifts we requested that a donation be made to a food bank for the poor in any amount that the guest chose. We had no idea that we were making the government a gift and that it was up to the government to feed the poor and hungry.
We have been receiving acknowledgments from various food pantries that a gift was made in our name and at much higher amounts that we had expected. We are not rich but we have favorite charities other than public television, WNYC and
the ACLU and Planned Parenthood, which we consider our civic duty.
My wife and I went to Queens College together and we owe that institution a debt we can never repay and NYU Hospital Emergency room which saved my wife’s life in 1998 when she was clinically dead and revived after 5 minutes of being shocked with the paddles and installed with an emergency pacemaker.
We know that our contributions are small in the big picture but gratitude js a good reason to make charitable gifts and we don’t itemize on our taxes.
We also contribute to Democrats running for office and those are not deductible and that has never crossed our minds. I don’t care about tax deductions and there should not be any because not every thing that is deductible is deserving and who is to say which is which.
5
I'd like to know what issue-related group these to are tied to. Two well-meaning physicians don't just "happen" to write a piece like this and get it published in the NYT. The piece reads like it is part of a larger public relations plan for some conservative leaning think tank, movement or nonprofit (oh the irony if that's true). The authors likely did write the piece -- and it's hard to believe they are solo operators.
4
The author is speaking about wealthy people giving stock or money to a foundation, charity, university, college, or other tax sheltered organization and getting a tax break.
But another tremendous (and bigger) problem that I see is that once this money is given to the foundation, charity, university, etc. it is often tax sheltered forever. For example, Harvard University has an endowment of 25-30 billion dollars -- that is not buildings and grounds -- that is securities and investments which Harvard pays people to manage. Harvard is the biggest but most other universities and colleges have large endowments.
Watch Public Television and see who sponsors programs -- the Koch Foundation, Arthur Vining Davis foundation, and a whole long list of foundations. It is great that they sponsor programs on public television but it points out that there are hundreds or thousands of foundations which are mostly tax sheltered. Warren Buffett is giving Berkshire stock to the Gates foundation but he is also giving to the Buffett foundation and several other family foundations.
There are billions upon billions of wealth tied up in foundations, educational, religious, and charity organizations which pay no income tax. As I understand it they are required to give away a certain percent ( 5?) every year, but the bulk of the foundation assets remain intact. Is it good that a large part of the economy is tax sheltered?
63
This article starts with the absurd belief that it's the government's money, rather than the individual's money. Lowering one person's tax bill does not put a greater burden on others. It's the outrageous spending that creates the burden.
The tax code is a very complex system. One that has the top 1% of income earners paying nearly 40% of all income taxes. To pick on one small portion of the system and say "if only" ignores the complexity and negotiations that are required to get a tax code passed through Congress.
The real crazy thing is that if a guy gives money to his family, he has to pay a special tax on the giving, but if he blows his money on gambling, booze, and hookers, he doesn't have to pay that special tax.
3
@Steven Re "The real crazy thing is that if a guy gives money to his family, he has to pay a special tax on the giving, but if he blows his money on gambling, booze, and hookers, he doesn't have to pay that special tax." Well... I assume you mean the estate/gift tax, and that only kicks in after several million dollars. You can't take it with you, and we decided long ago to discourage dynasties. Yes, one could spend it, but that's an awful lot of hookers.
4
No doubt that many charitable donations fund projects of dubious distinction and value to society. On the other hand, many do -- the Gates Foundation, our universities (which are the envy of the world -- admissions at the best have been need blind for some time and are able to meet all needy student costs without loans), etc. AND PLEASE, remind me again, what is an example of a government program worthy of additional tax dollars in terms of efficiently and creatively solving society's big and small problems.
1
I once resigned from the Board of Directors of a small charity because tax-deductible donations were being spent on luxurious accommodation, wining and dining. It did not surprise me to read in The Wall Street Journal that only about 1% of 501 (c) (3) organizations are ever audited by the IRS. Quite apart from the important issues raised in this article, if the IRS actually enforced the laws controlling the finances of charities, at least donors would know their contributions were being used as intended. Avoiding taxes is bad enough; getting a tax break for throwing yourself a party in unconscionable.
11
51% of my taxes go to defense spending. This year through our family's charitable fund I was able to donate $1000 to the NRDC to help fight climate change and resist Trump's anti-environment agenda. I am absolutely comfortable with my choice for directing these funds, and glad the tax deduction provides an incentive toward action.
7
This article is spot on. But it only addresses part of the problem -- the real issue is that we are *not* funding these essential social services with tax dollars.
Because we have decided as a society that the arts, scientific research, and social services should be provided by nonprofits rather than the government, we have built an entire system of fundraising activities and tax write-offs to support that system.
We have Galas, bakesales, walkathons, corporate ghallenges, media campaigns, "Giving Tuesday," and people photographing themselves dumping water over their heads.
I know why we engage in this system — it makes us all feel good and feel as though we get to choose how "our" money is spent. I'm a donor, and I work at a nonprofit. But personally I wish I paid higher taxes so that health care, education, scientific research, the arts, and social services could be properly funded by the government.
5
@Launa Schweizer
You are correct, and I'd like to agree. However, once these services are to be "properly funded" by "the government," realize that they will be subject to political fights. The party in power will decide what gets funded or not--indeed, this is just what has happened, as you point out.
"The government" is us, the people. Arts get funded some years, or arts funding gets cut another year, if the powers that be decide the art is too offensive, not pretty enough, too ideological, etc. Housing issues fall into squabbles over where to build (NIMBY), how large, which contracts, whose brother-in-law will be the electrician, etc. And nothing gets built or the work is shoddy or not what is really needed to solve the problem. The new, architecturally grand concert hall or art museum won't (I predict) be built in a cornfield or a run-down part of the "inner city," and even if it is, ticket prices will keep "the poor" out, except maybe on one free day a month.
What should be eliminated are charitable foundations, which often fund cultural events or institutions, not true services for the poor or underserved. These foundations receive little or no public legal oversight from understaffed state attorneys' general offices. It is not uncommon for donors to dip into the foundation's (tax-sheltered) funds for personal uses. Penalties for doing so are just a slap on the wrist. The Trump Foundation is one such entity that has received some scrutiny for just this reason.
3
"Deciding how our collective resources should be used to improve health is the job of our government, even if it sometimes makes us sigh in exasperation."
No, if you mean "federal government". There is nothing in
the Constitution about health care. It falls under the 10th
amendment "to the states, or the people".
1
In their closing sentence, the two authors write: ". . . if everyone has to pay, everyone should have a say." It sounds good; it rhymes. But it's not the way it works. If we take the choice away from the philanthropists and give it instead to the government---it is true that charitable givers will lose the ability to pick who gets funded, but that does not mean that the public at large will now have more choice than before. How to spend this additional money now goes to the politicians. The undrained swamp will take over. All you will now have are more smoke alarms that cost $6.99 each being billed at $82.00 apiece. (See today's article in the Times about FEMA in Puerto Rico, page one.). You will have generators that cost contractors about $600 and sinks that cost about $150 being sold to FEMA for $3,700 and $666.
If we take discretion out of the hands of philanthropists and place it in the hands of Congress---wow!--all that money being thrown into the swamp, quickly consumed by swamp denizens with the right connections. We will have no-bid contracts, expensive lobbyists, selection of approved contractors only to bid where applicable---and projects that should cost $1,000,000 costing $3,000,000 (and taking longer). No, if everyone pays, not everyone says. Not by a long shot.
5
What speaks volumes about our twisted priorities on where our national money and resources are spent, a good example is The Las Vegas Victims Fund, which started as a GoFundMe project for healthcare (which should have been provided by the U.S. government) for the victims of the mass Las Vegas shooting. Eventually The Las Vegas Victims Fund became a non-profit to draw more donors. Why was this non-profit created? Because of lack of U.S. government universal healthcare and the refusal to protect its citizens by reducing accessibility go guns. The U.S. national insanity is truly breathtaking.
7
@EarthCitizen And GoFundMe is a for-profit corporation which takes a cut of the funds raised for the charitable purposes.
4
I am amused and appalled by the number of comments that essentially tell people with enough money to give away how to spend it.
As Margaret Thatcher so aptly put it, "Socialism is great until you run out of other people's money."
I am no great fan of the Internal Revenue Service because it takes so much of my money and provides so little in the way of service, but I do recognize and applaud the fact that it is the agency for certifying and monitoring not-for-profit organizations to which donations are tax-deductible to the extent allowed by law.
Without such screening and oversight the US would be overrun with fraudulent groups seeking funds for bogus purposes. Yes, there are occasional bad apples in the not-for-profit sector, but without the IRS there would be so many more.
1
Really naive commemnts here. Sure there are abuses, like the political churches. So eliminate deductions for religious institutions. But for medical research, if the work needs to be done, somebody has to pay for it, and it is going to be either private or public sourced. If public sourced it is coming out of taxpayer pockets. If private sourced, some smaller percentage will come from the donor getting a deduction and taxpayers footing that bill. But bills are bills. Are you all so sure cancer research would be as well funded if the charitable deduction was eliminated? Or are you sure smaller charities like local meals on wheels would be able to offer the same level of service?
1
Based on the article and comments section I can see socialism working at its finest. This article makes the assumption that all money belongs to the government rather than to the individual, when in fact the original writers of the tax code didn't believe that at all. Does it bother me that liberal Universities promoting everything I abhor are gaining billions of dollars from donors who then subtract that donation from their income? Its not where I would send my money but its THEIR MONEY, not mine and not the government.
Society makes a decision to promote certain types of work and then says to the government" keep your mits off" not the other way around. The government isn't underwriting the charities
2
My daughter is being treated for a traumatic brain injury at Stanford. Even if she were being treated elsewhere, I would support increased funding for brain research there and at every other university in the world. The inanity of your choice of philanthropic gifts to use as examples is devastating to your credibility. If the electorate won't fund vital research, somebody has to.
1
The real problem is that the definition of charity is far too wide. What the taxpayer is putting in is really theoretical because the taxpayer is foregoing taxes as the cause is deemed worthwhile. Religion should certainly not qualify and many other charities where the main expense is executive salaries and fund raising should also not qualify.
2
And furthermore, there should be no tax-exempt non-profit organizations such as religious organizations.
6
This article raises many issues. First there is an u derlying assimption that it will be better to handover the money to the federalor state givernment. As a liberal, I disagree with the addumption that government knows the best. Government spending is prevaricatec on many political considerstions and many projects may be left out to my dismay. So why I cant donate to support that cause?Perhaps tax deductions should be linked with objective of the charity, such as education, healthcare etc.
NYU is a fine institution. Subsdizing their tution costs takes all the incentives yo contain the costs. Moreover, folks going to NYU med school are by and large coming from well to do families. But there should be scholarships for needy students.
Having worked in lesser known universities, I have found how difficult it was to raise contribution for us as most donors were eager to donate to the likes of Harvard and Yale. A $10 million gift to our school, could have gone much farther than it can at the elite schools. Moreover, we really transformed lives of many inner city kids, a claim the rich and famous schools can’t make.
@Mr C
"Perhaps tax deductions should be linked with objective of the charity, such as education, healthcare etc."
No, they shouldn't be.
The government decides where tax revenues will be spent, or not. We should vote for those lawmakers who will make the decisions we agree with.
"why I cant donate to support that cause?"
Nobody is stopping you, you just shouldn't be able to deduct it from your taxes.
5
I cannot exert any influence at all over our government’s disgraceful military spending. I can, however, significantly support my very deserving, even essential, alma mater- a great public university whose budget has been gutted by shortsighted legislators. My money- not close to mega-philanthropy levels- does measurable good for students and embattled intellectual centers. Do we want an educated populace? Economic innovation? A more equitable society? Top level science? Mitigation of climate change? Improvements in healthcare? The Mars InSight mission? Without the generosity and commitment of philanthropists....forget it. Our government is not capable of meeting these challenges on its own. Pushed by community-minded philanthropists, vital institutions have a chance. Do not let the parasitical military-industrial complex level our greatness.
1
Our Tax schedule has been changed and is a constant ongoing system that special interests pay millions to elect politicians to help them avoid taxes. We need a straight forward system of 35% taxes for the wealthy, corporations, no deductions. 25% middle class . and decreasing for lower incomes to zero for poverty levels. No deductions.
Then there is the spending, we need more on health, retirement , education, infrastructure and less on military and Defense contracts. Home land security is now a huge expense and must be stopped. If people received things from the government for their taxes they would not regret paying.
4
Among the other things mentioned in the article and comments, I believe there would be much less art (both fine art and performing art) without the charitable tax write off. And without that, we would be a poorer country.
1
If the "tax deduction" funds were somehow sent to the US Gov't, it's likely they'd spend it all on wars, weapons and military benefits. Seems like we spend enough on those areas already. At least donors can pick a non-profit organization without the overhead of gov't and the money goes straight to the non-profit which would probably never get a gov't grant, or if they did, it would take years. Moreover, it's not that easy to exercise the due diligence to make wise and effective donations. There are far too many questionable non-profits with large overhead and fund raising expenses.
I am totally in sympathy with the feelings that animate this article. However, I question whether the hypothesized increase in tax revenues that would result from curbing charitable donations would actually be directed to the good ends the authors advocate. Right-wing Congresses and Administrations – e. g., the ones in power, today –could (are likely to) redirect the funds toward other ends, including giving money back to the super-rich (who tend to think it's *their* money, anyway).
It probably would be better simply to influence appropriations processes.
1
The fallacious logic of this piece parallels arguments that can sound like "the cost of Kim Kardashian's engagement ring could feed all of South Sudan for a year."
Philanthropy generally provides benefits for many Americans in a diversity of ways. Suggesting that the government would better use resources "recovered" by those wealthy scoundrels who are major donors is preposterous. And the notion that their use of philanthropic tax deductions places an undue burden on the not-rich is just wrong.
Individual Americans gave $410 billion in the last reporting year, which amounts to about one tenth of one percent of the $38 trillion U.S. Budget. How this can be viewed as a "problem" driven by an inequitable tax system is beyond comprehension.
4
I remember reading an argument that charity is the ultimate form of economic tyranny. One person gets to decide who to give to, how much to give, when to give, and whether or not to give at all. And the more wealthy the donor, the worse the level of tyranny. Oh, and they get tax benefits to boot, thereby slowly starving our government of resources badly needed in places the donor may deem unworthy for strictly personal reasons.
5
@Mikeweb "I remember reading an argument that charity is the ultimate form of economic tyranny."
Don't believe everything you read!
1
It's all such a scam, really.
Someone is called a 'philanthropist' for donating a meager 1% of their net worth millions/billions.... meanwhile, the restaurant dishwasher who gives away 10% of his paltry salary to charity each year, gets nary a 'thank you'.
We taxpayers do walk-a-thons, bake sales, make monetary donations, for things that our government/taxpayer dollars should already be funding.
Our govt. has plenty of money for war.... to give financial aid to this foreign country or that...to provide weapons to other countries.... but healthcare for Americans?... better access to education?.... updating our infrastructure? Nope. We 'don't have the money' for that.
7
Charity's problem is that individuals choose who to help. Often those individuals are similar to the donor be it by race, region, or background.
Charitable donation or a push for locally solving problems is a way for people to help others like themselves and avoid helping others who are different. Government, as hated as it may be, is one good way to help a much wider variety of people.
7
@Miles "Government, as hated as it may be, is one good way to help a much wider variety of people."
Like Central American refugees?
As a tax lawyer who has dealt extensively with charitable giving issues, the problem with the income tax (and the gift and estate tax) charitable deduction is *not* the deduction, per se, but rather the causes that people choose to support. For example, the charitable project might be nothing more than, say, a local museum established and funded by the town's founder or his descendants, purposed with the renovation and maintenance of his manorial home and the display of art and jewelry collected by the local "first family."
To me it is offensive to be called upon to subsidize what is in effect a vanity project for a wealthy family. The charitable deduction should be limited primarily to providing help to the poor, a cause which most of us agree to be a worthy one. Any additional categories of deductible charitable-giving should be approved only very reluctantly.
168
@Mark Smith
So agree with you and with your qualifications, it is apparent that you speak with knowledge. Thanks for your input for
a system that boggles the mind of most of us.
12
@Mark Smith
Mr. Smith and many other commenters seem put out by where people choose to spend their money. Not to put too fine point on this issue - its not your money, it is therefore not your concern.
The other question is "should charitable contributions be deductible?" Our national and state leaders have decided they wish to encourage charitable donations through tax policy. You are of course free to lobby to change their mind on this. Don Quixote and windmills comes to mind.
3
I live in a community that has two examples of the institutions that you find offensive. I happen to support both of them. They foster economic development through tourism, provide educational experiences for local school children and are examples of cultural institutions that the government does not support. I also support basic needs but to suggest that they are the only organizations worthy of charitable giving is something I find offensive.
6
How about churches, temples etc. they pay nothing including property tax. Want religion great! but you pay for it otherwise your real god is money.
9
I hate charities. I hate that charities provide cover for rich people to feel okay about themselves the other 364 days of the year that they soak up resources and vote Republican. I hate "benefits" that cost as much money to put on as they generate in funds. I hate how they feed the beast of religion. I hate how we're not supposed to question them or the people who work at them no matter how subscale or poorly managed the charity is.
I remember when Warren Buffet decided to give his money to the Gates Foundation because in his analysis it would have a slightly greater edge of impact/efficiency over giving it to the federal government. That may be true as the Gates Foundation is at scale and highly professionalized. I wish though that he thought bigger picture and let his money go to the government instead to send a message that nearly all *other* charity is wasteful value signaling nonsense. The government is our best hope of making impact at scale for society as a whole. It would be great if we could spend our efforts on making that better, not reinventing the wheel thousands of times while patting ourselves on the back.
80
@Sarah
We can wait a long time for the government to fund the needs of the poor.
7
@Sarah Well said, Sarah, well said. Most U.S. "charities" would not be necessary if we had a humane, democratic socialist government like other civilized nations. I donate to several charities, political candidates, and volunteer considerably, especially for good Democratic candidates locally and nationally. The winter holiday season is an especially offensive time of the year to me, a miserable blend of religion with phony, guilt-inducing pleas for money for causes that SHOULD BE FINANCED BY OUR GOVERNMENT VIA RICH AND CORPORATE TAXPAYERS to the average citizen to give (and buy) even more than they do year-round, sacrificing resources they need for survival due to the inferior U.S. safety net and the egregious cost of aging in this country. For this reason, I find December a particularly disgusting reminder of the hypocrisy of U.S. capitalism and phony Christianity.
25
@Robert Koch Yes, because of REPUBLICANS and those they effectively brainwash. "Show me a capitalist and I will show you a bloodsucker."
-Malcolm X
9
I find it very hard to believe that anyone with children would donate to charity. Why not give that money to your own kids to help them out and make their lives a little easier? You can even put it in trust and not let them know about it until after you are gone, if that's your concern. To me that's the best and only charity around.
@DRS Part of what drives my husband and I to make charitable giving part of our financial plan is to demonstrate to our son that we think this kind of giving is valuable and important. We give what we feel is reasonable to causes we believe in, but we don’t give more than we can afford. To me, modeling kindness and generosity are great gifts to give your children.
5
Charitable giving is not really charitable if you're gaining something from it.
If you need to be incentivized to give, that's not really charitable giving either.
To sum- "But when you give to the needy, do not let your left hand know what your right hand is doing ...".
4
Income inequality is the issue. Why focus on such a small piece of the pie?
1
To the minds of some, nothing the rich do is good enough. Let alone that these guys don't understand how money works, their argument that government should decide what projects get funded is pure communism. The Soviets outlawed charity because it eroded their power.
Letting people whose name will be attached to a project fund it seems a pretty good way to improve the accountability of philanthropic decisions. We can assume there will be monuments to ego - the worst people seem to favor children's hospitals for their high expiation quotient - but, by and large, letting givers pick is probably more efficient than letting politicians pick.
4
Looking forward to next week's piece on cancer treatment options written by a tax lawyer and an accountant.
4
@Mike75
Really cute - may you never need help.
This is an inane argument that cuts to the heart of the idealogical split between left and right in economic matters. The authors argue that the people of the United States would be better served with the state and federal government directing the massive resources, which donors choose instead to give to charitable causes. It's a socialist argument against the capitalist reality.
In the case of charitable giving, just as in economics, individuals and enterprises are better served to meet the needs of the market than a central authority. There is room for both, and the government has in fact collected record taxes over the past two years, but the open market of competing charitable organizations can better direct the hard earned resources of those who provide them funding than can the government.
2
@Jim" . . . enterprises are better served to meet the needs of the market than a central authority."
So how's that private health system working out for you? You know, the US system that is the most expensive in the world, and that delivers inferior outcomes to systems of social medical insurance and social medicine.
5
@Jim
The assumption that any one mega-donor or charitable organization (i.e. the actual 'central authority') somehow knows better than our representative government - where decisions are made mostly by consensus - where resources are most needed, is ludicrous.
In Europe, where taxes are higher and charitable giving is much more rare, democratically elected governments decide where needed resources go and how much of it. The result: longer life spans than us, lower infant mortality rates than us, making it easier for parents to raise happy healthy children, investing in public infrastructure of all types, and truly excellent educational systems at all levels.
If you want to see examples of 'capitalist reality', perhaps take a drive through Appalachia or the upper Midwest some time.
2
@Jim. You mistake and misstate the authors’ argument. It is not in the least bit socialist; their argument addresses a distortion in market forces caused by a tax code that currently favors the wealthiest. The authors are making the limited argument that taxpayers should not subsidize the choices of wealthy donors, or, more specifically, that there should be a limit on the taxpayers’ subsidy of such choices by a cap on charitable deductions. That is not argument for limitations on the ability of wealthy donors to do what they want with their money, but only that those choices should not be subsidized by taxpayers.
4
Pity a society that cannot function without charity.
Imagine if we lived in a world where NO charity would be needed.
The charitable gesture a human being makes another individual by giving a much-needed bread loaf or a container of homemade soup--that is the purest form of charity, and yes, the one that Jesus is known for.
The multimillion dollar check that a Koch creature "gives" to a hospital or other institution building is just another "business transaction" to preen one's vanity with naming that building.
All charity--except for the person-to-person giving illustrated above--is a form of KONTROL, not unlike aspects of religion.
It is an instrument of the elite (or ruling class) as a "carrot" to control the less privileged (not the guy living under a bridge in a cardboard box). The message is basically: behave, you may need us one day, so you must respect us, our status, our wealth at all times. The other option for them is the "stick" which they would not hesitate to use (through police, etc).
Just another form of feudalism, complete with "alms for the poor."
Charity is a bandaid to cover or hide the ills of society---which should not exist in the first place, if it's an equitable one.
The quicker this form of "transactional" charity is abolished, the quicker will the citizen/slaves realize the true state they are in, take charge, and make the proper changes necessary to improve their quality of life.
2
I would be all for tax-deductible donations if the wealthy were taxed more.
6
The problem is not that rich people choose to donate large sums to favored charities, it is that so many Americans have nothing to donate at all.
This sentence says it all:"In 2016, half of all the tax dollars deducted as a result of charitable gifts in New York State were deducted by the top 0.5 percent of tax filers, who earned $1 million or more. The bottom 60 percent of tax filers were responsible for 5 percent."
Those of us in the lower quintiles would like to give to worthy causes, too. We must find ways to create disincentives for corporations to continue funneling money to the top of the pyramid and incentivize them to raise wages instead. Then we all really would have a say in what charitable endeavors get funded.
3
@Nikki
Donate time and physical labor. Both are tax deductible.
Next teardrop paragraph should say thanks to those who goveand have taken at a substantially higher rate than youand cannot even use the services their taxes pay for.
1
@Kadius Huh? Neither time nor physical labor is tax deductible.
1
@Kadius
Time and labor are not deductible in any way I know of. And I did not say that I was a recipient of charitable services. I'm not poor, just the struggling middle class. And if you want to talk about paying taxes for services one doesn't get to use, well, I pay over $8500 a year in property taxes, the lion's share of which go to school taxes, and I don't have children. Taxes are paid to support the common good, whether or not one is a beneficiary of that specific good. More money in the pockets of the little guy would diversify the charitable giving, and include causes (like a local animal shelter, for example), that the big guns like Bloomberg and the Kochs would never think of, not to mention reducing the number of people poor enough to need services.
1
In the 60s I attended City College, tuition free. City College had the most Nobel Laureates of any public school. How did they do that, tuition free?
3
Let's say I make 10 million dollars, and my tax rate is 35%. If I don't give a dollar to charity, my taxes will be 3.5 million dollars and I will be left with 6.5 million dollars.
Let's say I make10 million dollars, and my tax rate is 35%. And that I give 50% of my earnings to charity, leaving me with 5.0 million dollars on which to pay taxes. On that latter amount I will pay 1,750,000, and I will be left with $3,250,000, exactly half of what I would have been left with had I given nothing.
The tax deduction for charitable giving in no way favors me in such an instance. I have still given 5 million of my income to charity and $1,750,000 to the government, the net result being that I am out $6,750,000 at the end of the year, whereas I would be out only $3,500,000 if I gave nothing at all.
I do not benefit from charitable giving under the above circumstances (which probably apply to most of the super rich), as a much larger amount of my money still flows out rather than being kept by me. And if I give nothing, what I don't give is still going to have to be made up from somewhere, quite possibly by the federal government. So, in this scenario, the government may lose, but I do not gain.
The rich might be well advised to yell at writers like these two, "Find another whipping boy!"
Full disclosure: I do not fall into any such category myself and never did, but I am grateful to many that do and make such contributions.
29
@Joe Pearce
Well outlined and stated. People do not get incredibly rich by giving money away. The right question: Why/ how do these people get incredibly rich? tRUMP tax cuts, tax laws around carried interest... 2 glaring examples.
7
Let's see. Spending money on charity, you are 1) buying the influence, 2) spend money on your hobby while not paying taxes that otherwise, would be spend on common goods. If the charity is not for making money, then let's taxa them. in this case, everybody will be happy - the Government with bigger budget to spend in common goods, and the rich who are funding their projects because of kindness of their heart.
1
@Joe Pearce
Bravo, we both tripped onto a leftist Google forced sensationalist article.
I barely got through and felt indigestion rising up.
Yes, yes and yes! Good article. I'm so sick of all the tax hides rich people have around the world while the working class is disappearing and stressed to the maximum.
3
Not one but two Scrooges! Better check your stockings for lumps of coal.
By all means, let's bash the big donors (and other donors, too), and take away their tax deductions, that will surely act as positive reinforcement and motivate them to give even more. (As the old naval saying goes, "Floggings will continue until morale improves.")
Perhaps what the authors are not so subtly proposing is confiscation of wealth above a certain level. If so, why not just come right out and admit it?
And how is it, exactly, that two professors of pediatrics are so qualified to pontificate about tax-related matters and philanthropy? Or should we be expecting to see the NYT publish an article on pediatrics by Larry Sommers?
29
@Ro Ma
3 pointer from half court. I try to reason through such as thier sensationalism, but my lunch was coming up.
I failed at turning a blind eye.
Don't the authors manage their money? I think it qualifies them to discuss what kind of financial arrangement of community will be better for society, considering that common money are at stake. Or you want to deny me the right to spend my own money, just because I don't have degree in economics?
1
Why not? Some believe that the rich are better in running health-care facilities even although they have no experience in health care at all. Of anything, your post reminds us that charity are ran by amateurs who very often have no experience in the projects they selected. Why anybody should support the system that promote amateurism?
1
The recent changes in the tax code should provide an interesting experimental condition for testing how, for whom and whether the proposition that charitable giving and tax deductibility are linked. I expect multiple such studies based on tax-return data and cynically expect results to vary by how the researchers are supported financially. I am hopeful, however, that those of us who no longer deduct still give, but the survey data to test this hope will be more subjective.
1
In the last year or so I have been re-thinking my ideas about charitable giving. I have definitely taken advantage of the tax deductions available when giving, and in the past it has nudged me into giving more at this time of year. That has been helpful to the charities I give to, I’m sure.
But upon further reflection, when I look at the stories coming out about Donald Trump’s Foundation, and the apparent use of his non profit charity to avoid taxes and enrich himself, I am appalled. Combine that with the tax exempt status of so many mega churches that are currently in the position of over influencing politics and not truly helping the poor, I no longer believe charitable giving should be tax deductible.
This article just gives me more food for thought on the subject and further convinces me that charitable donations should not be tax deductible. If someone has millions or billions of dollars to contribute to the causes they believe in, the belief in that cause should be more than enough reason to give money away.
10
@Jane K
It's lousy article so full of holes it makes swiss cheese appear as dense as cobalt.
1
Seems to me that giving a large donation is still, in a sense, paying taxes, except instead of giving it to the gov. to have a lot of it wasted on projects that the donor might not like to underwrite, they are giving it all to a source really needed. Personally I think large donations from worthy and wealthy donors is just great.
22
Charity are wasting money as well only on their pet projects, not for the common goods. And if we can hold the Government responsible through the election, we can not hold charity responsible for the waste of money originally designed for common goods.
2
I think you need to look at the overall social effects of personal philanthropy, rather that the rights and wrongs of any one person's donations. If you could show me that making all donations non-deductible would not reduce the cash flow to worthy causes that are neglected by the government, I would be for it. I agree that that there is much that could be done to limit the losses to the government, the most important of which would be to control more closely the types of organizations to whom donations would qualify for a deduction. But it seems that some tax deductibility is an effective incentive to allow people, many of whom are not extremely wealthy, to direct their philanthropy where they will, rather than, for example, buy another aircraft carrier. And millions of disadvantaged and threatened people depend upon this largesse, so I think it should not be attenuated.
7
I guess the 'worthy' is subjective term. What is worthy to you, it is not worthy for me. That's why we should tax all charity, and people could support their worthy cause by their after-tax money.
1
This is the type of argument that Republicans love.
There isn't even a Democrat in the White House and liberals are calling out the idea that more money for the government is a good thing. The government knows priorities better than the citizenry.
Writing this article wrote trumps next speech. Even if he does not quote it. In fact anti-government populism is what got him elected.
I'm actually a conservative. But reading this article is just baffling.
8
The only solution is a complete overhaul of the tax system.
Until "We the People" elect representatives at all levels of government who will stand up to the rich, it will not happen.
1
As someone who was a fundraiser for a national charity, I can tell you that our nation's tax policy plays a large part in the donations of the wealthy. The wealthy also fuel much of the nonprofit world. Their donations can be game changers. Yes they can also be quirky, but that is their right.
The average donation to most charities is modest. That will keep the organization running, but it will not pay for a new program or facilities needed to serve their clients, this is where High Net Worth donations can make a huge difference. That is part of the reason for the tax exemptions, the government wants to encourage people to give to charity, because the government has neither the financial means, nor the skill to address the issues that need solving. The charities are there on the ground locally, they see the need, and can respond without two feet of paperwork.
Overall, this is a system that is working. Getting the government involved or having a committee to approve someone's choice on how to spend their money is a very bad idea. This is discretionary spending, do not make it hard to do, or it will go away.
21
I, personally, think that charity is a wrong way to finance a cause. it has less oversight, and is too ripe for all kind of frauds. Many charities activities overlapped, that leads to waste of money, and sometimes it slows the systematic solution of many problems by offering a bandaid rather than cure. If you want to support some cause, you should be able to do that, but don't expect tax breaks for that. if you are really think the cause is worthy, taxes should not be obstacle for you.
5
I would rather have some control over where my charitable giving is directed than none over where my taxes are spent. Is it not better to encourage the support of life-saving and life-improving medical and educational institutions rather than the constant expansion of the American military and its parasitic industries?
8
not if it is done by lowering expenses on education, or on health insurance for all
2
@robert You make it sound like you have no power but we, the people, do. When was the last time you visited your Congressional representatives, worked on a political campaign, or attended a city council meeting? The gov't is not some far-away entity. Citizens make up the gov't and we can affect how money is spent. Most people complain about gov't spending but how many actually try to do anything about it?
I too was uninvolved in politics until a personal health issue. Now I visit offices in my spare time and advocate for increased research funding. Over a period of 5 years, along with others, I have been able to get several million allocated to the areas we have interests in. Note we are citizen lobbyists: no one is paid and no one does this as their day job.
1
While I completely agree that deducting charitable contributions is a tax advantage primarily accessed by the already-wealthy, as a professional fundraiser I must disagree with a key point in your article. You are weighing apples-to-apples in your calculation of the "value" of these donors' contributions, but not taking into account the long-term, multi-generational benefits of sending hundreds of doctors to school for free, or discovering treatments and cures for neurological diseases that currently cost Americans billions (and account for untold emotional suffering).
Were it not for the scholarship of one of the "rich" universities mentioned in your article, I wouldn't be working where I'm working (a nonprofit working in a "non-sexy" sector), and virtually all of my friends would not be contributing in multiple ways to society -- both through their volunteer work and in their taxes.
Gifts to education, healthcare, pollution prevention may "cost" us in taxes on a yearly basis but contribute immeasurably to the well-being of the country. And while it's true that rich people give more than middle-income people, all of them are doing so voluntarily to support the greater good.
Please don't forget that.
10
I love these articles that reveal the fake-liberal nature of so many Times readers, or at least the commentators. The minute you suggest something that might affect their lives or stuff they like to do they suddenly sound just like Republicans.
Republicans appeal to our selfish base instincts. Republicans never ask that their voters sacrifice anything in service of others or the greater good. It's either the free market takes care of it all, or people's suffering is their own fault. It's why they're successful at getting elected. It's also why they should be stopped.
2
Too often the uber rich have done "dicey" things to make their huge fortunes. Then they do something very good for the "people". I call this...legacy laundering...
The Frick Museum is a great example of...legacy laundering...
Frick was truly one of the meanest industrialists of the Guilded Age. Unfortunately, many people think he was an OK guy because of the beautiful museum he left us.
3
@Richard Fried OK or not, the Frick Museum is a great cultural treasure. Thank you Mr. Frick!
4
Giving a deduction for funding worthy causes that are entirely at the discretion of the donor seems to make a lot of sense if you want the rich to give their wealth away. It may not be the only reason but is likely a contributor to making the US the most charitable country in the world. Additionally it seems illogical to deny deductions for discretionary contributions but advocate for a return of full SALT deductions, a platform championed by many costal democrats and certain to benefit the same constituency.
6
Yeah, but isn't that in the USA people have to rely on charity rather than in the Government, as in many developed countries. I don't see why charity are better than the Government programs, as matter of fact I think the charity is much worst , because they have less oversight and waste too much moneys. And deduction for SALT is different than deduction for charity. Charity is for pet projects of individuals, local taxes are to help local community.
2
@Mark, those of us who live in states with high state and local taxes appreciated those SALT deductions because while we don’t like taxes any more than the rest of the country, we really don’t appreciate paying taxes on the same earned money twice.
If I pay $20,000 in state and local income taxes, and the federal government further taxes me on that $20,000 that I can no longer deduct from my total earned income when calculating my federal taxes, I am being taxed two separate times on the same money. In addition, that $20,000 that is paid to SALT, is not available for me to spend at my discretion.
Keep in mind, that is earned money. Money I work for. I can calculate in hours how much time it takes for me to earn it. It is not a dividend that I just sit back and watch roll in. Not money that my parents earned, saved and chose to give me with no effort on my part. That SALT deduction went to my local taxes that pays for the county roads I drive on and the schools in my community. I don’t mind paying taxes, just not more than once on the same money.
Removal of SALT deductions paid for the tax breaks given to Billionaires. It enabled them to pass on wealth to their children and not pay estate taxes. Money those heirs never worked for and likely will pay little taxes on ever.
If rich people are truly concerned about the greater good, getting a tax deduction should not be the prime motivation for giving money to charity.
2
@yulia This is not a socialist country. I have lived in 3 major English speaking countries and all used charities to put a cherry on the cake. None of them relied on the government for everything. You have clearly also lived elsewhere though not in the anglophone world. I wonder what you experienced previously.
There is a provision of the tax code that provides a special tax benefit to the “ill, infant or needy.” Perhaps, this standard should be adopted to all charitable giving, so that taxpayers are only subsidizing functions that might be otherwise performed by government. What is permitted as charitable today seems absurdly broad. Taxpayers even got a tax deduction for giving to the trump foundation.
2
I agree that the charitable donation deduction disproportionately benefits rich individuals/families, but what this op-ed doesn't say is how the deduction disproportionately benefits rich _institutions_.
Harvard got $1.2 billion in donations in 2016. That's a loss to the Treasury of $300-$400 million.
Rutgers got $220 million that year. That's probably a loss of $40-$50 million. Other non-elite universities get about the same amount.
The charitable donation, by making rich institutions even richer, exacerbates personal wealth inequality by allowing graduates of elite colleges to graduate debt-free and exacerbates spatial inequality because our elite institutions are concentrated along the coasts, especially the Northeast.
3
The majority of charitable contributions are not in the millions.
In fact the majority of them are very small.
But they do add up.
All of those small donations that find their way into the multitudes of nonprofits that help the homeless, help find cures for various diseases, take care of the elderly, educate the needy, feed our neighbors, keep our libraries open, provide affordable housing and a myriad of other needs do add up.
And they add up well beyond what the millionaires and billionaires hand out to engrave their names on a major arts institution, a hospital, a college hall or another monument to themselves.
The truth is that the small donations add to all our lives. They provide services that benefit the majority of us yet cost us nothing in taxes.
The tax benefits to the wealthy are really a small price to pay for the majority of causes they tend to overlook. And those that give the most in aggregate typically don’t take the deduction.
4
If charitable contributions were no longer deductible I would be forced to decrease my giving by the amount I was no longer getting as a reduction on my taxes since my disposable income is limited. Say, for example, that giving 100 dollars reduced my taxes by 20 dollars. I would then give 80 dollars. Those who do not itemize would have no need to reduce their giving, and those who have disposable income would have to decide whether they are giving from their hearts or their wallets.
2
There is a larger issue at play.
The celebration of charity, along with lionizing philanthropists, has eroded the social contract. In ways both subtle and explicit, beginning with Reagan and the Bush "thousand points of light," citizens and legislators have been led (misled) to believe that charity is the best way to create a just society. It wasn't, isn't and never will be true. Charity is not justice.
Charity is, in large part, a mechanism that allows the accumulation of wealth with less guilt. While some charity is motivated by noble intent, the ultimate result is a society that is less just and less equitable. The evidence is everywhere around us.
14
The authors miss two crucial facets of this discussion. First, they do not address the changes made to charitable giving tax treatment by the 2017 tax law, the grotesquely misnamed Tax Cuts and Jobs Act. Prior to its passage, the Pease limitation prevented high earners from itemizing their deductions and the AMT made sure that they at least paid part of their share. The repeal of the Pease limitation combined with the now-weakened AMT have created the problem discussed in the article. A better discussion would be to demand that these provisions are reinstated into the tax code. As before, the charitable donation deduction is always limited to no more than 50% of AGI.
The second facet they miss is that this deduction allows people who are the most generous givers (and they are not the ultra wealthy) to leverage their giving in partnership with the government. Yes, the government is subsidizing giving in a sense, but it is getting a huge bang for its roughly 30 cents--the individual donor is still doing most of the heavy lifting. By focusing on giving to lavish medical and educational facilities, the authors miss so much selfless work by organizations like Doctors without Borders, the Southern Poverty Law Center, the Salvation Army, Lutheran World Relief, and on and on.
16
@Valerie I myself support three favorite charities via annual stock donations though nowhere close to Bloomberg amounts. I do save a bit on taxes but I give up not just the amounts donated but future appreciation and dividends so overall I do not benefit financially.
l support public broadcasting, a national food bank and a successful charoty that supports and mentors high schoolers with little parental and financial support, enabling them to finish school, go to college and succeed.
None of this is going to happen out of government funding despite what some contend.
There will always be a place for donor money to improve on what government can offer.
1
@MMcCarthy, I would guess that you would still give to charity regardless of the tax breaks.
Whether you rely on a government agency or charitable organization to distribute funds for any number of purposes or causes, it’s always a matter of judgement for someone or some committee. It is susceptible to fraud, self-aggrandizement, or hidden purposes. Funds from Trump’s charity bought vanity pieces, many military veteran charities channel funds to their management’s pockets, the United Way suffered due to past scandals, and other “charities” confirmed that charity starts at home. I check Charity Navigator before donating in an attempt to find legitimate causes.
Wealthy charitable givers should donate from their offshore untaxed earning or tax-free investments if they really care. Everyone should be only allowed to deduct some low threshold before losing tax deductibility. Political donations should also be limited by creating an additional matching tax obligation to test the donor’s love of a candidate or party.
Behavioral scientists should be in charge of tax policy instead of past and future lobbyists.
Well, the article does argue for more equality in taxation, but removal of the deduction would substantially reduce the overall amount of funds going to charity.
2
I assume Professor Carroll will put his money where his mouth is, and immediately renounce his faculty position at Indiana University, as well as his position at the Regenstrief Institute, which undoubtedly both accept tax-deductible charitable contributions from which Prof. Carroll either directly or indirectly derives financial or professional benefits.
1
It is important to recognize (but never explicitly stated in this editorial) that charitable contributions do not reduce tax liability, dollar for dollar. A charitable contribution merely reduces taxable income. Insofar as the maximum federal tax rate is 39.6%, at best, a dollar of charitable contribution reduces tax liability by about 40 cents. While this no doubt helps to incentivize philanthropy, it does not in any way line the pockets of the giver. It simply provides him in essence with a bit more say in how his taxable dollars are utilized. For a person whose tax liabilities already run into the hundreds of thousands or even millions, I don’t think that is necessarily a bad thing.
12
Suppose there was no tax deduction for these kind of donations? The alternative question is, would these facilities be built at all without the deduction?
2
@PJT Perhaps we would see a reduction in grand entrances to hospitals which do nothing to cure the ailing.
1
The authors seem to be engaging in the proverbial biting the feeding hands, and Memorial Sloan Kettering Cancer Center's now outed pay to play doesn't help.
Transparency may be more important. People should not have qualm if rich people wanted a couple of buildings named after them. Why, religious tax exemptions are more of a problem if and when the organizations use the donation for political activities. The real safeguard is that the donors must not derive other benefits like Memorial's pay to play kind of activities
1
We don't know what the long-term effects would be if the government stopped incentivizing the wealthy through the tax code to continue to donate. How many museums and universities and hospitals and schools would have to fundamentally change how they do business? How many would close? There are so many not-for-profits that do good work yet exists some where on the margins and are barely self-sustaining that it is truly impossible to calculate the potential negative consequence of disrupting a fraction of those donations. How would the subsequent closing (and there would be) negatively impact communities small and large alike. The government, in order to fill the role that many charities currently occupy, would have to get substantially bigger... and almost certainly less accountable. In other words, a dollar spent on a charity passion project is not necessarily equivalent to a dollar spent on a federal bureaucracy. However, it is quite clear that the U.S. taxpayer shouldn't be on the hook for every ill-conceived pet project the wealthy dream up.
There is a potential solution. The government could limit deductions for the wealthy based on the type or location of a given project. In which case, donations that favor underserved locations (poor urban communities, or rural communities) would be entitled to the full deduction (maybe even additional support) while a playground for dogs might be subject to a much smaller deduction.
3
Rather than go after the tax deduction for charitable gifts, Congress should turn its attention to unwinding perverse give-ways in the tax code that are aiding and abetting concentration of wealth such as provisions that indefinitely defer capital gains taxes through like-kind exchanges and the step up the costs basis of assets transferred to at the time of death. My suggestions are political poison, but they merit further investigation by the NYT to start an important dialogue about leveling the playing field and restoring fiscal discipline.
1
If you want to give money to your church that believes women are inferior, gays are damned and only Christians will go to heaven, be my guest. But don't make me subsidize you by letting you deduct it from your tax bill.
Charitable giving is wonderful, but it shouldn't be tax deductible.
183
@Sparky
A " church that believes women are inferior, gays are damned and only Christians will go to heaven" is reprehensible, but whatever the church believes, or doesn't believe, contributions to it should not be tax deductible.
Even if the cause is one you ardently believe in, and champion, the rules should be the same. NO exceptions.
19
The very reason that I no longer believe taxes should be tax exempt.
6
@Sparky
What is this mythic church? I've been going to church for over half a century and I've never heard of the one you are talking about, and never heard preached from any Christian denomination that women are inferior, gays are damned and only Christians are going to heaven.
2
I’ve ofTen thought about this conundrum. The wealthy get to choose who gets helped and who doesn’t while we pay higher taxes to help everybody. I’m especially incensed by David Koch and the opera house with his name plastered on it. A facility mostly for the well heeled. Let the opera charge ticket prices that cover all its costs. Let him donate the money without getting a tax deduction - then we’ll know how important it really is to him. Why should we subsidize it?
10
Your respective institutions thrive thanks in part to philanthropy from wealthy donors. I am not one, but I am perfectly fine with those individuals giving to the causes represented by the thousands of organizations that comprise the nonprofit sector--the vast majority of whom are doing good work with minimal resources. If you could designate their tax dollars to be used for medical research/education/arts/environmental causes/etc. purposes, you might have an argument.
2
The real question is how is more societal value gained with this money. Are we better off letting government bureaucrats decide the best use of the funds or letting private philanthropy steer the money to end recipients. I would go with the private direction every time.
1
Writing as someone who has never wished for my government to spend my money to harm people, as it does often, I feel the need to walk carefully here.
Philanthropy, though often well-intentioned, gives governments an excuse (if they needed one) to evade their responsibilities. Like everything else, this problem is far worse now.
If we can tick off a box on our 1040s to insure that we are entertained every four years by a spectacle that is loosely associated with choosing our leaders, then perhaps we can be trusted to instruct the government how to spend some small fraction (say, 0.1%) of the money we entrust to it annually.
3
This is muddled thinking. The authors seem to be assuming that the funds donated to charitable causes would somehow have been taxed if they weren’t donated. Not necessarily. We tax income, realized capital gains and large inheritances. We don’t tax wealth (though we should).
They also forgot that some of the economic activity generated by the donations will be taxable.
If you want a useful assessment of the economic benefits of charitable donations and tax deductions, you need to net everything involved.
1
Tax policy is used to incentivize various types of behavior. There are plenty of unfortunate tax giveaways to large corporations. Encouraging charitable giving seems a legitimate and worthwhile benefit of the tax code.
1
Where on the spectrum does Michael Bloomberg's $1.8 billion gift to Johns Hopkins lie? Also, wouldn't it make more sense to tax the very wealthy enough to fund the kinds of research and departments that work to help people in the first place? We need to ask how the wealthy got that way in the first place (we know the answer, of course) and remedy those issues.
1
How is it that wealthy people can itemize when most of us can't? Are they paying more in property taxes or mortgage interest? The charitable deduction is only a part of the tax laws that benefit the wealthy.
1
@Dan If you don't itemize you ought to take the standard deduction. Or, are you asking a better question. For example, why shouldn't everyone get a standard deduction which is the Federal poverty level, and then tax what is left after that?
You get the standard deduction and do not have to give a penny to charity. It is such a sweet deal after the last tax law that only 10% of taxpayers will get more benefit from itemizing. Enjoy!
"Deciding how our collective resources should be used to improve health is the job of our government, even if it sometimes makes us sigh in exasperation."
I agree with this statement, which means I think we should leave the current tax break for charitable donations in place. It has been decided by voters and our elected officials that supporting the nonprofit sector is important and worthy of tax subsidies. The nonprofit sector, while imperfect, moves much more nimbly than the government, especially when it comes to advancing new and innovative research and/or social service programs. This ability to move as quickly as possible is particularly important in a time when the federal government is stuck in perpetual gridlock.
3
Corporations pay tax when they buy things. They pay another tax on their profits. Stockholders pay a third tax on their dividends or profits from selling stock. That's three levels of taxing.They reduce by ther tax rate - only - the third tax by charitable giving. You want to take that away? Good way kill charitable giving.
@henry
When corporations purchase durable goods, they write that expense off of their taxes.
I expect that write off far exceeds any tax burden suffered when purchasing the good.
As money enters every supply chain ONLY when a finished good is purchased, you could make an argument against a business profits tax ... but you actually need to make that argument rather than complain about the profits tax.
3
This is a misguided article. Government spending needs to be more efficient. Take example the military. We spend more money than any other nation but yet the military desperately needs help from Silicon valley.
Tax codes are complicated because it is a factor into our democracy. Many rural voters side with the republicans who give out tax breaks to their voting block. USA was never about being completely democratic. An uneducated public can do a lot of damage "Trump".
3
It seems that the biggest concern here is the spending priority of tax dollars versus charitable giving and the priority spending by the donors. Who is to say that the charity spending is not more valuable to society versus the spending that government would make with the same dollars on projects supposedly as valuable or even more so for society? Have we not experienced poor spending habits by our government including incredible cost over runs, etc?
1
Many charities are already in trouble because of the new tax law, because they are small players overlooked by the billionaires (and of course, not supported by the government), so they must rely on thousands of small donations (on the order of $25-$100) from people like me. I like to donate to relatively obscure causes, like the American Indian College Fund, where a little bit goes a long way. Without the deduction, my ability to provide such donations is significantly impaired. Meanwhile, with the current mania by the Republicans to cut taxes on the billionaires, at least with the charitable donation deduction they have an incentive to support some reasonably worthy cause, such as scientific research as mentioned (and for some reason, scorned) in this article. Limit the deduction, and they will find some other, probably less beneficial way to reduce their taxes. So please find another deduction or loophole to target - the rich have so many options!
4
Of course, if Trump, Bush, Jr. and Reagan hadn't granted huge tax breaks to the wealthy, we would have a whole lot more funds to use for government funded programs. Picking on charitable giving as being ‘expensive’ for us taxpayers seems rather absurd in comparison to the giant tax breaks routinely granted to the wealthy at the expense of the rest of us. These authors and the NY Times should be ashamed of themselves for publishing such nonsense. At least when the wealthy are giving to charity, they aren’t otherwise engaged in paying lobbyists to run all over the rest of us.
8
More nonsense. Democrats in New York and New Jersey ran on a platform promising to restore the SALT deduction. The SALT deduction benefits the same people as the charitable deduction. When Democrats run on a platform promising to restore tax deductions for the rich, you know we are in an Alice in Wonderland world.
2
One idea would be to stop writing columns like this complaining about everything, and instead thank the donors for helping their fellow citizens. Even if you don't like the donors' priorities. It's called freedom. There are 328 million people in this country and very few of them want to act in accordance with your views. They have their own ideas.
3
@Gordon Wiggerhaus
Personally, I take a dim view of those whose "freedom" consists chiefly of legalized tax evasion. The nepotism, insider-dealing, and ineffectiveness here is obvious.
Why should paying your nephew to engage in poverty tourism warrant a tax break?
1
There are two things that fascinate me about about this topic. Years ago Meg Whitman gave $30 million to build new dorms at Princeton. Estimates say it cost $200,000 per bed - then she gets a tax deduction?
The other unbelievable fact is the amount of tax breaks that rich non-profit colleges get. Princeton gets over $94,000 per student each year in tax breaks.
Definitely a system rigged for he rich to perpetuate elitism.
https://www.theatlantic.com/business/archive/2014/10/princeton-gets-10-times-as-much-tax-money-per-student-as-public-colleges/381679/
7
And instead of running the government on debt and raising taxes that hurt the little people , we should bring back the luxury tax of 10% on art, jewelry, super luxury boats and cars, etc. It takes a lot of little guys paying up to make 9million in taxes -- what would and should automatically be paid by someone buying a 90 million $ work of art at auction!
If you don't pay your taxes first, it ain't charity; it's self promotion.
1
The way of philanthropy may have a savior already applying the incredible idea of pulling the people on the planet that live in abject poverty up and into the sunlight. I refer you to Jacqueline Novogratz and if you want to read about her and understand how her ideas will do it, check out her book which was a New York Times bestseller The Blue Sweater. You don't need to believe me, but check with the Rockefeller Foundation, the Bill and Melinda Gates Foundation and assorted world renowned individuals. Her programs and passions are so fundamentally understandable and worthy of consideration by even businesses, especially small businesses and all individuals interested in the poverty syndrome that has plagued mankind since he/she first stood up.
Of course, if Trump, Bush, Jr. and Reagan hadn't granted huge tax breaks to the wealthy, we would have a whole lot more funds to use for government funded programs. Picking on charitable giving seems rather absurd in comparison to the giant tax breaks routinely granted to the wealthy at the expense of the rest of us. These authors and the NY Times should be ashamed of themselves for publishing such nonsense.
1
@Richard Aberdeen I think of it more as two sides of the same coin...the tax breaks for the wealthy help fund their charitable giving which helps shape the world. I agree with you tax breaks are the first problem, maybe the authors do too! This article is simply questioning one of the results of that problem.
Oh that’s right - we should give money to the government to decide what causes are worthy because they are better at getting important things done in a timely and efficient manner .... What planet do you live on?
The better idea is to encourage more charitable giving by, let’s say, increasing taxes unless people give a certain percentage of their income to charity - that should make both the left and right happy in a rational world (not this one).
2
@Scott L
Charities are myopic.
Governments are not.
Your suggestion fixes only that which the person who donates sees. May necessary fixes go unaddressed.
That's bad.
I am sick to death of the criticism of wealthy people who choose to make charitable donations that benefit the greater good, since our government can't seem to do so given the political divide ever since the days of Newt Gingrich. How really twisted do you have to be to simply reduce generous charitable giving to a tax break for the rich? When is the last time our federal government was able to meaningfully contribute to higher education or other very worthy causes mentioned here, given chronic the general dysfunction of Congress? Never mind the vile, disgusting GOP currently controlling our government or the horrid creature at the top who cares about nothing and no one but himself. Our federal government continues to WASTE precious taxpayer money, because of their gross dysfunction, which is why so many (particularly the wealthy) are opposed to paying more in taxes. Yes, the tax code should be fixed. But don't hold your breath waiting for government to function. It's a political hot mess and some people are actually trying to make a difference in spite of it.
2
I have spent some time studying the board members at Cornell, and others who give these schools money. Seriously some of the worst people in the world...the old oil ceo libertarian types especially tend to "give back" for tech in cancer research/heart disease. Maybe try not to kill all humans in the first place.
1
"Many megawealthy individuals have followed Bill Gates’s and Warren Buffett’s lead and pledged to give away half of their accumulated wealth."
Point of clarification: Warren Buffett has pledged to give away 99% of his wealth.
https://givingpledge.org/Pledger.aspx?id=177
4
It should be intellectually easy to combine a minimum tax with charity deductions. But the snotty attitude of comments about the alleged sanctity of their nonprofit work is not an encouraging sign.
1
Is overhauling philanthropy really the easiest way to force the super wealthy to pay their taxes? I would think eliminating carried interest would generate far more tax revenue than re-legislating philanthropy. Carried interest is on one example as well. We could also talk about tax havens, shell companies, equity swaps, capital gains, estate taxes, trust funds, incorporating, payments in kind, life insurance, and real estate.
Start wherever you like. I don't think philanthropy has the best return on investment.
10
What a narrow view. The tax code is rampant with many "benefits" via deductions. Let's limit, or eliminate, the deduction on your home ( which I suspect is very nice) mortgage interest. Let's eliminate the ability for you to defer taxes via retirement savings. This article reflects a selfish greedy attitude toward society as a whole.
Charitable giving, even IF partly motivated by tax savings, still has to be initiated by someone who has a connection to something they care about. Stop greedily picking on the non profit sector and focus your energy on providing quality medical care, in some cases to those that cannot pay you for your services.....that's philanthropy.
5
If public services and investment are underfunded, then targeting the deduction for charitable giving is *absolutely* the wrong target ... at least that giving is going to serve the public welfare ...
Instead of focusing on one relatively insignificant revenue source, aim at the real issue ... the overall tax rates in this country, especially for the very wealthiest and for the rentier & speculative classes, are just too dang low ...
1
Why should charitable giving have any tax preference at all? If you want to give money away, do it, don't ask for a government handout at the same time... why should I support churches, rich universities, and wealthy hospitals if I don't want to?
If you're only in it for the tax deduction, you end up looking for buildings to put your name on.
113
Interesting and informative analysis. Maybe it’s time to create tiers for charitable giving; a higher deduction for giving to rural hospitals, less for well-funded research centers. Donate to improve a rural road, build a crumbling bridge over a creek- bigger deduction AND your name on the structure....ala sports stadiums. States might submit their list of qualifying projects for federal tax recognition. We as a society have allowed this massive accumulation of wealth- we can certainly.....help.....them spend it, constructively.
4
This feels like a dangerous path. There are many tax evasion strategies we should be clamping down on to ensure that all contribute to the common good. However, charitable giving often benefits the common good directly, and, should the new cancer center raise local employment, might present our best chance at the mythical "trickle down" reaching those who need it.
Yes, there are dubious "charitable" entities. But there is also scholarships and malaria prevention and education and clean water.
4
Donors might donate to the arts, medical institutions and other charitable causes that the authors like, but someone has to pay for our museums, hospitals, etc. So, if one individual or a group of wealthy donors contributes a billion dollars for medical centers, the government is out $320 million in tax receipts, but it has saved a billion dollars that it would have had to pay for those needed facilities if the wealthy weren't donating. Plus, sad to say, but if the government were in charge of selecting and building the needed infrastructure, it would be delayed and, as usual, over budget. This is not to say that the charities shouldn't have more stringent controls, such as eliminating pseudo-charities and those that have extremely high administrative costs.
3
@BocaDoc Correction: "Donor might not donate ..."
I believe that the wealthier you are, the more your deductions are pared back, which means that you don’t get a full deduction for these contributions.
I write as someone who studied the nonprofit and philanthropic sector and who has great respect for the work that much of the sector does.
I firmly believe that while the sector is broad and the larger organizations may well not be all that different from for profit organizations in the way they operate, there still are key differences. The sector can more nimbly respond to local need, can enlist energies of volunteers and can experiment with different models of service delivery.
The issue is the problematic nature of the funding for the sector. Resources that might otherwise go into charitable efforts have to be devoted to development - individual donations, foundation dollars (which support less of the sector than most people assume), government grants and earned income. And, given the vagaries of funding, there is always the problem of mission creep and having to repackage their work as something new to secure funding.
This is inefficient. If c(3) nonprofits (those where you can deduct your donation from you taxes) get this status because they are doing what the IRS recognizes as charitable work, well then we should publicly support them.
The problem - which is one of the strengths of the sector - is how to we then isolate them from political shifts in the wind.
1
This article is misguided and dangerous. I was involved with a major local charity for a decade, and we relied on private donations for funding in large part because the relevant governments felt our population was adequately cared for, when that evidently was not the case. It was only after we "built it" that the government got involved. The main source of political intrigue in the charity sector is at the government level, ask anyone who has been involved in charitable activities over the long run. While you're at it, ask them about this proposal to eliminate the tax deduction - and you'll see they will vehemently disagree.
4
How about the fact that a growing number of wealthy individuals give to foundations like Fidelity at which time they take the tax deduction but don't make the gift to a non-profit entity?
This trend is holding up enormous amounts of money and sitting in the hands of corporate foundations. Who makes the decision as to what to fund then? The foundation? The individual?
What happens to that money as it is held?
In the old days, local community foundations with boards of directors, aggregated funds to allocate to local causes they chose.
There are lots of ways to give to any cause and I'm not against corporate foundations. But I'd love to see an article outlining this trend and educating the public on the financial structure of philanthropy.
P.S. Go give a buck to your local cause!
Read a NY Times article on it from several months ago. Yes, some celebrities have done as you said. Mostly it resulted from poor planning by the celebrity, probably thinking the fund could be a tax free piggy bank. Per that article, it is not widespread. One important thing is the donors cannot get the money back without big tax consequences. If they leave the money there, they essentially pay the investment firm to manage the money without benefit to them. That situation gets old very quickly. The person eventually spends the fund. You may not like their choices, but they do spend. Eventually death resolves the issue one way or the other.
2
We, my wife and I, are far, far from rich. We donate a significant amount of our annual income, more than 10%, to causes we choose, and yes, we deduct those donations.
I prefer my selection process to the political process used to direct spending of those tax revenues, and I do not begrudge the rich doing the same. It's vastly better than Candidate Trump's bragging about his tax avoidance, or sycophant Manafort's illegal tax evasions.
None of us appear to be making donations to the heavy weapons industry, or the training of our young people in the arts of war and torture, or even offering to offset costs of oil exploration, or soybean production--all of which seem to be high in collective political priorities, judging by the number of dollars appropriated for those purposes. We have yet to offer to pay for a wall on our southern border, or tear gas for the Border Patrol, or cages for brown skinned children to live in.
I celebrate Mr. Bloomberg's, and others', largess. It would be good if the reduction of student debt was a priority for our political process, but sadly, it's fallen off the edge of the desk. Thanks for picking a bit of it up, Mr. Bloomberg.
27
I'm a middle class guy who makes enough money to itemize. When I donate to charities, it almost feels as if I'm making money. And helping charities. If the deduction were eliminated, I likely would donate less.
14
You’re going to have a surprise when you do your taxes this year.
2
Are you saying your giving has nothing to do with wanting to do some good in the world? If so, that is precisely the problem, Jim.
1
He would simply find that he may not have to donate to get a doubled standard deduction with equal or greater benefit. His cash flow does not drop. He sounds like a good person and would likely continue giving despite not having to do so to get tax benefit.
1
Someone who makes charitable contributions but is not in a tax bracket to take advantage of any tax deductions for doing so also has the disadvantage of their net contributions being "worth" less.
If I have $1000 in my budget to donate, and do so without being able to take a tax deduction, I could have donated more if I had the advantage of it being tax-deductible. In this way, my donation money is worth less than that of someone who can deduct it.
This is another way that the contribution choices of wealthy people are advantaged over those of the non-wealthy.
Charity is a worthy behavior, but if it is a genuine"charitable" impulse, people should be willing to donate without receiving anything in return.
To provide tax breaks for charitable contributions is to functionally interfere with the principle of 'taxation with representation' because in reducing the taxes of some, others will have to pay more but will have no say in what those "charitable" funds will be put toward.
12
This is very easy to solve. Place a yearly limit on Tax deductible
“ Giving “. Say, One Million Dollars. People can give as much as they wish, but only the first Million Dollars is Tax deductible. Small Charities would not suffer, but the Foundations and downright Scams would be curtailed.
Seriously.
10
Small charities are often highly dependent on individual large donors, much more so than mega charities. In many cases, the donor is dead and the trustee has fiduciary duties. If it allocates x cash and y of the x now goes to taxes, the donation to charity drops. Right or wrong is a political decision. Just do not have the unfounded belief that many charities will not suffer.
3
Summary: we should reduce the incentive for the wealthy to voluntarily redistribute large swaths of their wealth so that we can forceably redistribute a far smaller fraction.
37
First, if we want to encourage giving we should replace the charitable tax deduction with a tax credit, which would apply to everyone. The credit might be, for example, 10% of the amount donated, up to a cap of $1,000.
Second, we should consider a cap on any donation to a single institution, so that if someone wants to give they must spread it around.
5
What a strange argument the authors are making. It seems highly unlikely that the additional tax revenue generated by reducing or eliminating the charitable deduction would disproportionately go to the NCI, Pepfar, or the CDC (combined budgets of $23.4B in the article) simply be put into the general fund and in effect be allocated proportionally. The greater likelihood is that it would be allocated entirely to military and debt financing, since it requires congress to increase the budgets of the aforementioned institutions - something that is not very probable.
38
probably these two people do not donate 20 or 25% of their income to charity. And wouldn't dream of it because of the tax deduction issue. those people who donate 50 75% of their net income to charity don't brag about it, it's not always this year's income tax in people's brains. The people the less deductible side of this sort of an issue generally take the idea that somehow or other they and their class are being discriminated against. what an awful way to understand incentive number one and desire to do good number two. I hope somewhere in their heart people that think someone who deducts a large percentage charitable deduction on their tax return is not somehow or other messing with someone else's income and net eating ability. thanks to Trump my taxes went up this year on the same income. What a miserable bunch.
The authors' point seems to be undeveloped, as brought out by many of the comments here. Their parting recommendation - that donations should not be tax deductible and instead be entirely without government reward - seems to be out of kilter with their diagnosis.
Their key point is that, with tax deductions for donations, what happens is that the same $ (paid in taxes or deducted from them) are allocated by wealthy individual's decisions rather than through more democratic processes. Unelected and unaccountable wealthy individuals then usurp important government roles in determining where tax $ go.
To illustrate, daughter Susie's glioblastoma may spark a wealthy family to give large donations to brain cancer foundations. That may be a worthy cause but, as the authors seem to argue, (a) the money may be far more effectively spent on, say, poverty relief or healthcare for all, and (b) that if the expenditure is to replace tax $, where that $ goes should be determined in a more democratic and publicly accountable fashion.
Those points seem to get lost when they recommend that donations should not be tax deductible. The authors also overlook a fix: tax deductions for giving to foundations without a specific focus, whose spending decisions are instead determined in democratic fashion.
5
You start out by mentioning NYU and its move to make tuition free. This is mostly the result of attendance becoming too expensive, resulting in graduates leaving with a huge loan which then forces these graduates to choose specialties that pay higher so loans can be repaid.
A big reason for these huge tuition bills is to support administrative staff such as Vice Chair for health policy and Director of center for health policy. Do we really need so many deans, directors and chairs at these big institutions?
4
Cannot disagree more with the authors of this piece. Philanthropy is the underpinning of so much good in our society. Charitable gifts funding institutions and causes that our government will not fund - unlike other countries, where arts, education and health care are well-funded by the state. You can be pretty sure the authors have benefited from "rich people's donations" and small gifts from many, as all of us have.
36
First, it is our government representatives who wrote the tax laws that provide deductions for charitable donations. Second, I find the focus on healthcare institutions here somewhat disturbing. Yes, these are elite institutions, but in the case of hospitals and research centers, donations provide returns to the broader community.
8
"Deciding how our collective resources should be used to improve health is the job of our government..."
Therein lies the crux of the disagreement between the authors and their critics -- and generally, between 'liberals' and 'conservatives'. Not everyone agrees with that statement. In fact, some passionately dispute it.
If people on both sides would make the effort to understand why others might disagree with them, rather than merely accusing them of being "bad people" and dismissing them, we might be able to have an intelligent conversation about such things....
-apl
9
@Augustus P. Lowell
"....lay and collect Taxes, Duties, Imposts, and Excises, to pay the Debts and provide for the common defense and general Welfare of the United States."
This is the clause to which you refer.
How do you define "general Welfare'?
2
Ah, right on schedule Doctors Carroll and Bach drop by with our annual, tax-time, indignant hubris.
I'm all in on their thesis, but I see they mention nothing about the myriad social engineering features of our modern tax code. So long as they wish to get rid of all of the features promoting "desirable" taxpayer behavior, I'm happy to agree with them. A flat-rate tax code, perhaps? They remind me of the healthy 20-something at work who complained about all of the old coworkers spending "his" health care money.
That a physician, enshrined in an industry that incubates in a bath of thousands of intricate tax preferences, could complain about a little tax deduction for my donation to the local food bank is beyond oblivious.
31
I would not be surprised if the philanthropists making the sizable donations faulted here pay more in taxes in one year than Drs. Carroll and Bach will pay over their lifetimes. Yet it's not enough for them is it? They want even more.
7
One thing that the article doesn't mention is that these tax breaks are not just a way of diverting money, they also make a statement about what the United States values. They tell the American people it's good to look for ways to help others or get invested in causes they believe in.
We as tax payers indirectly subsidize companies by funding movies, sports stadiums, and second or third locations for mammoth commercial retailers through tax breaks for the companies to purportedly create jobs (few of these subsidies create jobs that wouldn't have been created anyways). Why is it suddenly undesirable to do the same for people supporting the arts, education centers, or humanitarian organizations?
Also, as other commenters have mentioned, these tax breaks really only are major incentives to the small amount donations from middle class families, not to the high dollar donations that the article scandalizes us with in the beginning.
33
This needs to be read in tandem with David Bornstein's piece today about the need for a "decolonization of wealth." Mr. Bornstein points out a troubling paradox of philanthropy -- that the wealth donated to "good causes" has often been amassed by exploiting, underpaying or otherwise harming the very people that charitable giving is supposed to serve. As he puts it, "Where did this money come from? We’re operating in the charity space and it feels pure. But we need to know the history and the role that people of color played in helping to amass the wealth. Then we’ll feel more compelled to give some back to those communities."
Limiting the deductibility of contributions will do little if anything to bring about the "decolonization of wealth," at least not without making other policy changes that we should be making anyway, but aren't. To the extent donors give less, the wealthy will just stay wealthier. To the extent government raises more tax revenue, there is likely to be little social benefit UNLESS somehow we can ensure that the money is used to fund universal health care, student loan forgiveness and tuition grants for low and moderate income borrowers, stabilizing and improving Social Security, and other things that would actually reduce wage and wealth inequity in America. That's not going to happen under the current administration.
10
If the majority of taxpayers in a state wanted to fund their State University they would. Instead, the current boomer majority wants that money spent elsewhere, on themselves usually, and they want to receive far more than they contributed.
Without people who are willing to donate to a University, there will be high tuition. Folks that want a University are paying for it. The others want the benefits of the research without having to pay for it.
6
Wah Wah. Are you kidding me? Many donations come through private foundations that donors have set up with large a large sum of money taken from their income/earnings. The foundation is yes tax exempt to some extent but not totally. The donors still have to pay yearly income taxes, etc... Charitable giving is not a tax haven. So this is bogus to cry foul about this. Be thankful that many wealthy in this country want to support the arts and those in need.
28
@M
Yes, we should be grateful to our wealthy overlords when they deign to toss us a few coins.
3
This article is misguided on so many levels
People don’t give away money for the tax deduction. If they simply wanted to lower their taxes they could find other tax shelters like real estate
It’s not like the deduction exceeds the donation.
I think there are bigger fish to fry to correct the tax code than going after charitable donations
Maybe private “museums” or churches and colleges that are really real estate ventures (NYU for example)
52
@Blue
"People don’t give away money for the tax deduction. If they simply wanted to lower their taxes they could find other tax shelters like real estate"---or hide it in the Cayman islands. The donation is purely a way of making them "look" good. These fancy charity balls are merely an occasion for all the wealthy elites to preen their feathers in an exorbitantly expensive high-fashion show.
As someone with a career in philanthropy, this article strikes me as one of the most ill-informed, short-sighted things I've ever read. We live in a country where our government's spending priority is military power; because of this, social services MUST receive philanthropic dollars. Philanthropy is picking up the government's slack in human services in health care, education, housing - and we all eventually benefit from these things. Only a very selfish, very poorly-informed person doesn't see this.
98
@PW We understand your message; however, the article is attempting to point out the need for a fairer taxation system that would provide a far more abundant government social net which would eliminate the need for so many non-profits to fill the gap for bleak social services in the first place!
11
@PW Ditto @EarthCitizen. What needs to be emphasized, however, is not the fairness of the federal tax system--or unfairness--but the distorted priorities in our budgeting process that operate to the disadvantage of those who have the greatest need.
8
@PW We should get at the root why we need some many private charities to support essential services whereas other countries don't need them to the same degree.
(Don't worry, if services transfer to the federal or other level government, they will need to hire people with experience from nonprofits.)
4
Gee, you complain about people sharing their wealth to further health care and research because they get a tax deduction. Would you rather people of abundant wealth not get a tax deduction and just keep their money, or would you complain then that the rich are stingy? The decision not to make charitable deductions is an easy one, and the “new” tax changes this year will probably put many nonprofits out of business even if they get some donations from the wealthy. Your suggestion would just drive another nail in the coffin of charities.
22
If you are REALLY concerned about nonprofit tax issues, tackle the issue of churches not paying taxes and quit worrying about us in the nonprofit sector working to improve society.
322
@Jane White
This is also a complex issue but with issues related to separation of church and state in our constitution. However, the authors suggest charitable donors voluntarily forgo the deductions as proof of their genuine magnanimity. Then no laws would have to be argued over. Are there any churches who voluntarily pay taxes to pay for the services they receive (police, fire, infrastructure, etc.)? I'd think if churches are run by good people, they'd voluntarily pay their fair share.
21
@Jane White
Churches aren't exactly attracting 1.8B contributions these days. Universities turn out to be the biggest "charities".
Many people who give to churches give very small gifts and don't even bother to deduct them.
And please remember that most houses of worship provide social services to the community that many people take for granted.
39
@Jane White
But what if what you consider "working to improve society" is what I consider to be "against the best interests of society?" I don't think I should have to pay extra taxes to support your preference, nor should you to support mine.
26
The subtext of this article is that the government knows more than individuals how best to spend people’s hard earned money. The opposite is true.
30
The authors left out a “further”: “But we could (FURTHER) limit it, either through lowering the cap on how much of a gift can be deducted...” There are already limits, which they conveniently fail to detail in the article. Most of the people who aren’t “the rich” have no idea how these work, and it would have been informative, though complicated, to include that information.
6
Instead of giving away money to Ivy League schools that already have more money than good sense, wealthy individuals with noble intentions should establish full scholarships (that include living expense, not just tuition) for low income high school students or those going back to school. They should advertise these scholarships at every low income high schools. This is better than getting another building named after your name. Another way is to donate to community colleges. Same thing with donations to healthcare. Choose a clinic that serves the low income women and children. Better yet, fund a clinic next to a low income school to make it easier for parents to take their kids for check-up and vaccinations.
14
Eliminate tax deductions for charitable giving. Problem solved.
4
If our tax laws were reformed and far simpler, we would be "cured" of this inequity. But, discussing tax reform is like whistling into the wind of discord.
Do you really want to help the charities? Get off your wallet and, if you are able, head to your nearest food shelf or soup kitchen and lend your hands and your time. There are many good folks out there ladling and delivering what we might call triage to those in need.
Charitable giving isn't all bad, and much of it is very helpful. But Charitable Doing is far more helpful, and immediately so, than Charitable Dollars. Lend a hand first.....
4
Charity is nice, and I wouldn't ever want to discourage anyone at any level from giving to causes they feel they should.
But, we do have to address the tendency of large charitable gifts starving the tax revenue system. There is a limit to the amount of charity that may be deducted on tax returns, but there are many ways to game that limit, particularly with carry forwards. We really need to simplify the tax laws (of course), and adjust the limits of deductibility not based on percentages of income, but with specific cap amounts (which certainly can be progressively tied to income levels).
Fundamentally, no society should have to rely on private philanthropy for services that should be provided for by a humane government.
24
I think that the authors are seriously mistaken. If you want to tax the wealthy, just do it. Charitable giving is hardly a big tax haven. And as some authors point out-- better to fund non profits than to help further expand the military budget. This is where the dollars would flow. I think we are rather late to truly looking at the economics of our policies. They raise good issues, but fail to truly consider the economics. Oh, and most wealthy donors fund their alma maters because they feel they are beholden to then for their success in life. This is a humble gesture, recognizing they didn't do it all on their own.
24
I cannot begin to count the number of small arts organizations that would disappear if donors could not deduct their contributions.
I am not talking about the mega-donors. I am talking about the people who give $500 here, $1,000 there.
In case you haven't heard, government funding in this country for the arts in practically non-existent.
63
@Joan P. Many of those people will likely no longer itemize on their tax returns because of tax changes that favor the wealthy. They may still give, but will no longer be able to deduct the contribution.
2
@Joan P
In making your point, you are actually advocating for the opposite: individuals don't have the economic means to support the arts, that's exactly why it should only come out of taxes ! The real problem: those tax funds are going mostly to building instruments of death instead of being allocated to the true needs of a society (arts, real education, town squares & parks, clinics, etc).
2
Just another mechanism for the upward transfer of wealth.
7
@Ed Watters - Right you are, Ed.
What we need is the transfer of doing unto others their needs. Then the giving. Put your money in the red kettles.
1
This isn’t a one to one trade off. Rather, the assumption here is that it is better for the donor to give the government $0.35 (and keep $0.65) than to give a charity $1.00.
Do we really believe the government is 3x as efficient in allocation and distribution? Even with the added bureaucracy to identify organizations, evaluate their “worthiness” , and distribute the resources?
To me, that belief seems extremely optimistic.
49
@Aaron Klein The private sector does everything better than the government.
1
@Aaron Klein This seems to me to be a complete misunderstanding of the authors' point. It's not a question of the bureaucracy's competence to spend tax revenues wisely or efficiently. Rather, it's the fact that we forgo the revenue not received in tax payments from philanthropists, to the extent that they donate to tax-deductible activities. Either we also forgo the social expenditures to which that tax revenue would have been directed, or we raise tax rates generally to offset the lost revenue. The bureaucracy isn't making any judgments about "nonprofit" organizations' worthiness. (This argument is completely independent of the question of what "social expenditures" we *should* be making--i.e., guns vs. butter.)
@Aaron Klein
I'd rather have the government bumbling around with it than some church getting a cut of my tax dollars, thank you very much. I'm not sure the private sector is better than the public anyhow. For example, social security income isn't much, but it comes on time, and you don't have to know anything about investing to get it, and payments weren't affected by the recession. The gov't does a better job of investing than most Americans would do of either saving or investing. (and the NYT readership is not representative of "most Americans")
1
Charitable giving deductions are in many ways a privatization of services government would have to provide if the charitable organizations did not exist. That was one of the rationales for creating charitable giving deductions in the first place. In socialist and communist countries, like Hungary, the government funds the organizations directly--and those operations are no where near as proficient as the services provided by many charitable organizations in our nation. In the United States, it happens indirectly through tax deductions. Though given the change in the tax laws, it will happen far less. Doing away with charitable giving deductions will ultimately harm our society because the organizations that rely on them will cease to exist. That's what's really at stake here, not simply the tax deductions of the wealthy. If the government had more money through the elimination of tax deductions for charitable giving, do you think they would provide more funding for education, health care and social services? Then the problem is not charitable giving, it's naiveté.
39
@Joe Clifford Thank you for enlarging the scope. Another angle on this that troubles me is this: when the federal government choked off funding for Planned Parenthood, ouraged and justly concerned citizens leapt in and donations surged. A woman in Michigan was denied a heart transplant by the Spectrum heart & lung clinic (named after its donors, the (ahem) De Vos family) and told she should set up a fundraiser for her medications. Someone did just that and raised half again as much money in days. While admirable and well-intentioned, such donations let the primary source of funding off the hook. See? Who needs government funding, let volunteers take care of it! But sick people and social services or arts organizations cannot survive on random, impulsive giving. Let's quit spending tax money on coffee cups and stealth bombers and office furniture for cabinet members and gold curtains AND giant giveaways to corporations and the richest rich. There are so much greater needs.
19
@Joe Clifford
I am drifting off subject, but if only, if only government would re-order its spending priorities.
2
The tax deduction for contributions to charitable organizations became US law in 1917. Today, many argue that tax benefits for contributors are necessary to sustain these organizations.
Many organizations that I view as valuable, like the Salvation Army and the Metropolitan Opera, were established and thrived long before the existence of US income taxes.
And many organizations that I view as disgraceful and immoral, like organizations that fight vaccination or espouse religious views against abortion, are effectively supported by me---as the authors point out, I pay higher tax dollars to the US to cover loss to the fisc from tax deductions for contributions to these organizations.
Removing tax deductions for contributions to all 501(c)(3) organizations is the only reasonable and fair solution. The rich could continue to give as they did before contributions were tax deductible and all organizations could continue to freely exercise their First Amendment rights, but not on my nickel.
22
@ANNE IN MAINE
Thanks, I look at the 503(c)3 as being tailor made to siphon off taxes to support partisan causes. I haveno objection t people using their money as they see fit, only with giving them the government's blessing - and tax revenue - for doing so.
3
What an imbroglio. Perhaps those really magnanimous ought to forgo reducing their tax when assigning their 'giving' to a specific aim...as opposed to making the donation in cash so the city may distribute according to people's needs, even better when the egos are put aside and no plaque installed nor medal given for the good deed (anonimity for a change). Or at least allow only a small percentage of the donation be counted for tax purposes. Who would have thought, that no good deed may go unpunished...when the final result is a net loss for the majority, left holding the bag for bare necessities, unmet precisely for lack of the standard taxation that might have accrued without the donation. Can't we get together and solve these conflicts of interest, for the good of social justice?
4
It's probably still better for society to let the wealthy choose the recipients of their largess than to have them spend it buying their government.
Oh, wait! That already happened.
23
I have never believed that people should be able to tax deduct charity giving because what that does is allow a rich person to decide what is important to them personally and be rewarded for it in the form of tax reduction. That single person can then decide what is better for society (Mercers, Adhesions, Gates, Bloomberg, etc etc). That is wrong. We have a government which is supposed to be elected by the People, All the people who invests in what We The People think is important as a collective not as a single rich individual.
31
@terri smith
Too bad that our rigged electoral system does not produce a government that is responsive to the will and desires of the majority of the people and that the present proprieties are the military, self enrichment for corrupt politicians and only doing things to support the right wing political agenda. If it came to a choice between building Trumps border wall and finding a cure for Alzheimer's disease we would build the wall although the people would want the opposite.
@terri smith I've never heard of the Adhesions. Are you sure that's not a trendy band? Or perhaps you mean the Adelsons.
Charitable giving also lets the rich decide what will be funded and what won’t - which is a decision that we are supposed to make together as a society through taxing and spending. So it is fundamentally undemocratic.
156
@Mary
Exactly right. This is right-wing philosophy 101: let the rich determine what is worthy of funding, and then give them a further financial incentive to do so.
It's not really philanthropy if you give with one hand and take with the other.
57
@Mary Last time I checked, we were not under socialism. Individuals still get to decide where their money goes.
11
@Janet If what they are giving is all their money. But anyone who read this opinion piece knows that what it refers to is the fact that the tax deduction forces all taxpayers to bear the cost of their charitable contribution.
9
The authors focus on PEPFAR and other positive government programs without mentioning that the vast majority of that lost tax revenue would fund the world’s largest military budget (by far), including the development of new cluster bomb weapons systems that are banned by international law. When donors contribute to large and small foundations and nonprofits, they are able to direct their funding to work they believe in and can base future giving on the effectiveness of actual results. We have no such voice when we pay taxes. Our tax dollars fund both essential and good government programs as well as wasteful programs that are often the result of lobbying that is against our personal beliefs and the greater national interest. I hope the story’s alarming headline doesn’t further negate giving to causes large and small that matter.
86
@Turk Pipkin
Exactly. That's why the problem should be FIXED--not deferred to the stop-gap measures of charity.
This means the systems of government should be improved: the budget should be decided on through direct-democracy referendums. For example, on your tax returns, you should be able to decide how your taxes are being spent, from war machines right down to your congressman's salary.
When we hold elections (well, scratch that, since we are in 24/7 perpetual campaign mode for the benefit of the campaign-industrial-complex), we unfortunately tend to pay more attention to party ideology than real dollars-&-sense everyday issues. And politicians often distort the necessary dialectic: i.e the reason your wages are low is because of unwanted immigrants, not because there is an underlying system of inequitable distribution of income (which is the true reason).
And then there is the mother of all issues: do you really think you have FREEDOM? You can be oppressed politically or economically without realizing it---& there are plenty of bread & circuses to distract you from knowing that. You are told you have freedom to choose your medical options, but you also have that "freedom"
to lose your home to pay for it. Ah, here comes "charity" that may be able to "save" you from that dire outcome.
3
the assumption here is that the government will do more good with the 32 cents than the receiving charity would do with a dollar. is that true?
81
@dave Sort of yes. I think that point is lost on the authors. The Philanthropist is also giving the $.68 to charity. The Tax Deduction acts as an incentive, or a voluntary tax. Many other countries have higher overall taxes and Higher level of support for NGO's. Some countries have no charity culture but a much larger Government funded NGO culture.
12
@dave
That's because the "government' is no longer us--the people. It has become an elite structure infested with lobbyists, etc. Remember how Monsanto penned its own legislation?
4
@dave - first, the genuine donors would continue giving even if they had to give taxed money, so the charity might receive its dollar after all. The current assumption is that I, John Doe taxpayer, implicitly agree to subsidize 32% of rich person's choice of charitable gift. I pay it in terms of poor infrastructure, underfunded schools, budget deficits, etc. I am all for philanthropy, but perhaps my contribution to rich person's discount could be way lower.
8
Our tax system could be simplified so that a return could fit on a postcard, but that's never going to happen. All the complexities and impenetrable concepts are there intentionally because they benefit someone, and you can guess who.
Eliminate all deductions for religious organizations, charitable contributions, etc. and tax all income at the same rate no matter the source. It's not really philanthropy if you're giving with one hand and taking with the other.
46
@Pat While it could be simplified, that's not the point, as the tax code is used to incentivize certain activities of others.
2
@Adam Schepp
It's exactly the point. The complexities of the tax code are there to obfuscate and create myriad ways for wealthy people and organizations to pay as little as possible.
A vastly simplified tax code would leave little or no room for situations like Warren Buffet's famous example of his secretary paying a higher income tax rate than him. But of course, nobody who currently benefits from this will give it up easily.
26
If you give a dollar and take back 25¢ in taxes you can avoid paying, you are still giving 75¢. And in almost all cases, x*75¢ to a charity means much more than x*25¢ to the government.
3
Ever since I heard an interview with Anand Giridharadas on the show "On Being", I've been thinking that the tax-deductible charitable contribution should be eliminated. And I benefit from that deduction. Giriharadas challenges our win-win thinking about doing good (for example, I get to feel good about giving money while at the same time getting a benefit, or I get buildings named after me because of my donation).
We need a spiritual shift in the way we think about money. We also need a major tax overhaul to simplify it for everyone, and make it more difficult for crooks like trump to game the system.
41
We should fund our government thru adequate taxes. Then the donation gimmick wouldn’t potentially “bite” us.
25
Yes...but.
There is a cap to the amount that you can deduct from your tax bill. A rich person can't endlessly deduct charitable donations, and the cap is variable but rather low. Many of the truly wealthy people that I work with don't even consider taxes when they make their gifts. The ones who think about tax deductibility the most are the ones who give 1K-10K.
(Yes, those people are fortunate, but are not peers of Bill Gates.)
And tax benefits are factoring less and less into the way the wealthy give away money. One needs to look only at the staggering non-deductible sums that are given to political campaigns as evidence.
Of bigger concern is that our wealthiest citizens are focusing their philanthropy on a few institutions, often ones that are personal to them. Bloomberg's 1.8B gift to Johns Hopkins had nothing to do with tax benefits and everything to do with his sentimental attachment to an institution with about 5,000 undergraduates, of which only 600 or so are Pell-eligible. That's a huge amount of money for a very few students.
118
@Cousy
Not nec. true that one can only deduct a certain amount: one can spread out a donation -- say of a work of art that has accrued in value gigantically possibly over several years... and take full "value" = a hefty deduction. Ditto stocks...
5
@Cousy Well, if taxes aren't an issue as you say then it shouldn't matter then if donations aren't tax-deductible. But try changing the system and I am sure both moderate and super donors will protest.
3
Remove the cap (AMA created) on the number of qualified students applying to medical school and make if free as in many EU countries. Then the wealthy could contribute to solutions that are inadequately funded by other sources to speed outcomes. Private funding's best use is adding speed to the funding process where government is slow and corporations only want wins.
7
Why not donate tuition free medical and dental training to institutions with student recipients, who, upon graduation, are willing to donate subsidized treatment for 4 years to serving communities unable to afford medical, dental and other health services? Former New York Mayor Michael Bloomberg donated a half a billion to his alma mater John Hopkins University, ignoring community organization pleas for rent subsidies for affordable housing in Manhattan for young workers and families. There are many urgent needs for philanthropy but donating to wealthy institutions ought not to be a priority.
19
@Bayou Houma Are you seriously suggesting that you or anyone else should tell--or be able to tell--someone where to donate his or her money?
Yes, the charitable deduction means that some low-income factory worker may be indirectly subsidizing the new swimming pool at my child's private school. But that worker also benefits from any number of other philanthropic donations, and we surely cannot count on the government to use the tax money it would save from eliminating the deductions for worthy causes. I haven't seen much evidence of that lately.
17
@tobela but might that "low-income factory worker"'s child benefit from free tuition at your child's private school.
1
@Adam - a good 35% of children at all of the private schools in New York City receive financial aid. My family among them. Not everyone in those schools is white and rich.