Charity and the efficiency of Government

I came across an article yesterday touting the grand efficiency of government over that of private charity(!) and thought that it was as eminently fisk-worthy as anything I’ve seen in many moons. Let’s get started, shall we?

A Tax Plan Charities Should Back

By Joel Berg
The Washington Post
Saturday, March 28, 2009; Page A13

Some of the nation’s largest charities — and the lobbyists they pay to represent them — have been hyperventilating over President Obama’s proposal to marginally roll back the amount of the tax deduction that the very wealthiest Americans can take for donating to charity.

So far so good; although already he’s taking some random pot-shots by pointing out the existence of lobbyists, as though hiring someone to represent you to government so that you can spend your time doing your job is somehow corrupt….

Of course, conservatives who oppose any tax hikes for the rich also oppose it.

And again with the suggestion that this is somehow sinister. Allow me to translate this sentence: “People who oppose tax hikes oppose tax hikes.” Well, Duh.

While these voices have created the impression that all nonprofit organizations oppose the plan, the reality is that many charitable organizations, especially ones that serve low-income populations, such as the one I run, strongly support it.

A straw man argument. There is no issue, anywhere, ever, that is universally supported or opposed. (Actually, that’s by definition, as if it were either of those, it would not be an “issue”.) So the grand revelation that some people support something is neither grand, nor a revelation.

According to the Urban Institute-Brookings Institution Tax Policy Center, the proposal would affect only 1.2 percent of U.S. households — those in the top two tax brackets. Nearly 99 percent of households would be unaffected.

Hey, man, we’re just sticking it to the Evil Rich™, so what’s the problem? Just remember, that’s how income taxes got started in the first place — as a 1% tax on the extremely rich. But once the principle was established that such taxes were okay at all, it was easy for the politicians to slowly bump the numbers up.

The plan would merely restore the deduction rate to Reagan-era levels.

This is a lie. Well, okay, it’s a statistic deliberately designed to mislead — same thing.

The top income tax rate at the end of the Reagan years was 28%, and people in that tax bracket could deduct that entire amount — 28% — from their taxes. Today the top tax bracket is 39%, and people can currently deduct the entire amount. Obama wants to change it so people paying 39% income tax can only deduct 28% of charitable giving. He is reducing the deduction for charitable giving from 100% to 72%. Simply put: Obama wants to start taxing that which was previously untaxed.

Both Obama, and Mr. Berg in writing this article, are claiming that Obama is trying to make it the same as it was under Reagan. This would be hysterical if it weren’t so outrageous.

Since the largest donors (such as Bill Gates and Warren Buffett) already give more than they can deduct, and numerous studies show that tax deductions are a relatively minor reason that the wealthiest Americans donate to charities, total charitable contributions are likely to decline by only about 1.3 percent if the proposal is enacted, the Center on Budget and Policy Priorities calculates.

Again, it isn’t the specific amount, it’s the principle. This tax is custom-designed to reduce the amount of charitable giving and put more such “charity” under the thumb of government. The basis of the socialist leftist agenda: Make as many people as possible dependent on government.

Combined with other progressive Obama tax proposals, that change would not only start to redress the inequality gap that has engulfed America in recent decades

Again, if you’re a leftist, the fact that someone might make more that someone else is anathema; and it is up to government to determine what income is “fair”, rather than simply allowing people to earn based on what others are willing to pay them.

but would also help to pay for many effective domestic programs, including efforts that fight hunger and improve nutrition; boost public education; improve health care and make it more affordable; and create jobs for low- and middle-income families. In other words, the funding would greatly reduce struggling families’ need for charitable aid.

…by making them more dependent on government. To Mr. Berg here, this is a priori a good thing. Charity is bad, forcible government redistribution is good… if you’re a socialist.

Well, that and the fact that study after study has shown that conservatives give far more to charity than leftists do. This has been a political black eye that they would love to remedy by reducing conservative giving any way they can.

When the wealthiest Americans donate to charities, they are most likely to give to universities, hospitals and cultural institutions from which they and their families may benefit. Such organizations often have budgets and executive salaries equal to or larger than those of mid-size corporations, stretching the definition of “nonprofit group.”

Translation: “Those mean-ol’ rich people aren’t giving to the charities that I want them to, so let’s have the government take money from them at gunpoint, and give that money to the “right” charities. ‘Cuz we all know that only rich people benefit from libraries and hospitals and museums. And… AND!… the guy running a big city museum that employs hundreds and serves millions makes more money than I do running my organization that you’ve never heard of, and that’s not fair.”

While anti-poverty organizations such as mine do receive some funding from the wealthiest Americans (for which we are extremely grateful), the bulk of our private donations comes from middle-income families.

Translation: “I’m the ‘right’ kind of charity, so this new tax won’t affect me much. I’m cool with that.”

Even if the largest tax deductions are kept in place only for anti-poverty organizations, a compromise that would directly benefit groups such as mine, there are at least two reasons I still don’t think that would be wise public policy:

First, such tax deductions are a highly inefficient way to fund social programs. It is far more cost-effective for the government to simply increase supplemental nutrition benefits (formerly food stamps) that are immediately redeemed at for-profit food stores than it is to give massive tax deductions that only marginally increase donations to feeding charities, which then have to split such donated money between administrative costs and food purchases.

Because of course the government is not bureaucratic at all, and spends money far more efficiently than private charities do. Right? Hello? I’m pretty sure whatever this guy is smoking is illegal in all 50 states.

Let’s look at government “efficiency” for a moment: Let’s say that I donate $1,000 to Charity A. Charity A will have some overhead, but X% of that money will go directly to the cause that Charity A supports.

Now let’s suppose that the government steps in and takes that $1,000 from me taxes. They, in their infinite wisdom, determine that Charity A is, in fact, a worthwhile program, and gives that money to Charity A — the exact same charity I was going to give to in the first place. It’s a wash, right? Because Charity A got the same money? Well, no it isn’t. See, somebody has to pay the government bureaucrats who collected the money from me, and the ones who decided to give it to whatever program, and the ones who actual did the transfer to that program. Let’s call those expenses Y. Instead of the cause receiving X% of my $1,000, they now receive X% minus Y — government always gets its cut. This is not “more efficient”.

Then again, it’s not really about efficiency — it’s about control.

Second, voluntary private charity is a less equitable way to solve community problems.

According to whose definition? Like much of leftist theory, this is one of those things that only works out “if the right people are in charge” It seems to me that the people in a community have a better idea of how to solve that community’s problems than some bureaucrat in Washington DC.

Oh wait, Mr. Berg did not say it was more effective, he said it was more equitable. Equality of outcome is more important than an effective society. It’s okay if we fail, so long as everyone fails equally.

While many people assume that the rich amass their wealth on their own, the truth is that their business interests are almost always aided by public efforts such as roads, bridges and ports through which they ship their goods or public schools that educate their workforces.

And they pay for it asshole! Gaaaahhh!!! Why are you acting like the rich don’t pay taxes? Charitable giving has absolutely nothing to do with roads and bridges, and you damned well know it. Property taxes pay for schools. In Illinois the tolls alone more than pay for the roads.

Given that even the wealthiest benefit greatly from this modern “public commons,” it is wrong to give them unilateral power to decide whether their taxpayer-subsidized donations should go to, say, well-heeled operas or lavish care of pets rather than to organizations that meet more pressing communal needs.

This doesn’t even need translation: Mr. Berg believes it is wrong to “give” people the power to decide where they want to spend their own money. To a leftist, it’s never, ever your money — anything you have is “given” to you, and government merely “allows” you to keep it. To a socialist, this is good and proper.

It is fashionable these days to say that “the community,” not government, should solve social problems. Yet no nonprofit leader, myself included, was elected by the community as a whole. Elected officials, whether we like them or not, are picked by voting citizens.

Unless your name is Saddam Hussein* no elected official is elected by the community as a whole. The difference is that government is all-or nothing; whereas with charity, you can give to the charity you like, and I can give to the charity I like. It’s called “the free market” — a concept with which you are apparently unacquainted.

In America, the government is the most legitimate voice of the entire community.

HAHAHAHAHAHAHAHAHAHAHAHAHAHA! *snort* The most legi…. aheh. Pull the other one, Comrade, it has bells!

The Obama administration should stick to its guns in fighting for tax equity, and Congress should support the effort.

Again, you seem to have a funny understanding of the word “equity”. Tax “equity” would mean that everyone pays the same rate. What you are looking for is “income equity”, where everyone is taxed to a point where they effectively all make the same — where the CEO makes the same “fair” rate as the street sweeper. It’s not even socialism at that point; that’s communism.

If charities want to prove that they value the public interest over their self-interest, they, too, should get on board.

Why? If charities value serve the public interest, the public will value them, and those will be the charities that get the voluntary donations. If your organization can only get good donations from the government, that is a sure sign that it is not valued by the public. Charities that are effective get donations, spend them effectively, and thrive. Charities that are *not* effective do not get as many donations, do not spend them as wisely, and fail. This is why organizations such as The March of Dimes have survived for decades — because individual people see the value in what they do, see the effectiveness of their organization, and donate to that cause.

[Hat Tip: Steve B.]

*: Saddam received 100% of the “vote” in the last election before the USA invaded. I suspect that the election might have been just a teensy bit slanted.

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One Response to “Charity and the efficiency of Government”

  1. Steve B Says:

    Equality of outcome is more important than an effective society. It?s okay if we fail, so long as everyone fails equally.

    Word.

    Excellent fisking, sir.

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