Tuesday, March 31, 2009

Dear President Obama:
Taxing Charity? Is nothing sacred?

President Barack Obama signaled last week that he wouldn't back down in seeking to raise the taxes of the wealthiest Americans in order to pay for his colossal domestic policy agenda. He believes a proposal included in his budget request to reduce the tax deductions for charitable donations of the wealthiest Americans, thus raising their taxes, was the right thing to do.

"This provision would affect about one percent of the American people," Obama said. They would still be allowed to claim deductions, he noted, they would just not be able to claim as much as they currently do.

Some in Congress have expressed doubts about the tax increase, worrying that it could lead to lower charitable donations by the wealthy. Mr. Obama rejected this claim, saying there was "very little evidence" to suggest there would be a significant drop in donations as a result of the tax increase, and he then chastised the wealthy just in case they might use the deductibility factor in deciding how much to give to charity. After all, he stated, tax deductions aren’t supposed to be the reason that someone contributes to charity in the first place.

Just how much does the targeted group contribute each year? The Indiana University Center on Philanthropy released the following data in the summer of 2007 for charitable giving in seven categories. The data for two of those are:

Basic Needs giving: Of households with an annual income between $200,000 and $1,000,000, 74.5 percent give an average household gift of $3,076, cumulatively making up 27.9 percent ($5.30 billion) of the funds raised to help meet basic human needs.

Of households with an annual income equal to or above $1,000,000, 76.4 percent give an average household gift of $12,673, cumulatively making up 10.2 percent ($1.93 billion) of the funds raised to help meet basic human needs causes.

Health Related giving: Households with an annual income between $200,000 and $1,000,000, 74.1 percent give an average household gift of $2,805, cumulatively making up 21.9 percent ($4.81 billion) of the funds raised by health organizations.

Of households with an annual income equal to or above $1,000,000, 70.4 percent give an average household gift of $92,289, cumulatively making up 59.1 percent ($12.97 billion) of the funds raised by health organizations.

In summary, those in the two highest earning quartiles give 38 percent of all charitable giving for Basic Needs, a total of $7.23 billion, and 81 percent of all charitable giving to Health Related needs, totaling $16.78 billion. And, when it comes to charitable giving in all seven categories the wealthiest 2.3 percent of Americans are responsible for 56 percent of the total.

Why would the President of the United States want taxes raised on the charitable contributions of the wealthy, or of anybody? Wealthy people are the ones whose charitable giving comprises a majority of charitable donations year after year; they are the ones with the most to give.

Mr. Obama says that putting a limit on the amount of these donations that can be deducted won’t make that much difference. But why wouldn’t the President want to encourage everyone to give as much as possible to charity, so that those in need will have as much private sector money to assist them as possible, particularly at a time when the economy is under stress and more Americans are out of work than at any time in the last 30 years? And, more to the point, why shouldn’t every dollar of charitable giving be deductable?

So, what is behind Mr. Obama’s desire to make giving to charities less attractive for the people who are the greatest supporters of charities?

Does he dislike wealthy people, and seek to punish them at the expense of America’s neediest citizens?

Is he so hungry for money to fund his plans to increase the size and scope of government to gargantuan proportions that he would jeopardize private funding for the nation’s charities?

Barack Obama is a statist who believes in a centralized government in control of economic planning and policy, who believes that government is the answer to all questions, the solution to all problems. History teaches, however, that central planning always fails.

Statism is the opposite of capitalism, which in contrast to statism supports the principle of individual rights, the very foundation of the American ideal. Capitalism, not statism, observes the rights of the individual to live his own life as he chooses, without needing government permission to do so. This includes giving to charity, which supports a long-standing tradition of our great country for people to take care of each other. Our Founders believed government's sole responsibility is to protect those unalienable rights, and never violate them.

However, Mr. Obama is determined to achieve his statist goals, and if in doing so he must cripple private charities, take control of private businesses, and impose government’s judgment over that of the people, well, that’s just the way it has to be.

And so he is working to engineer the most ambitious and dangerous seizing of power by government in our history, and using an economic crisis to cover his tracks.

Cross-posted from Observations

5 comments:

  1. Excellent article, you've outdone yourself on the statistics. This will really hurt agencies who depend on charitable giving. Sadly this may hurt churches also.

    True story: Many years ago I worked as church secretary. You would be shocked to know that some people would come in AFTER the fist of the year to see how much money they had contributed in the previous year, so they could deduct it from the taxes. If they were going to have to pay, they would want to GIVE MORE TO THE CHURCH, HAVE BE BACKDATE THE CONTRIBUTION, SO THEY COULD GET MORE DEDUCTIONS.

    Amazing I know. I refused to back date the contribution and they were not happy.

    Debbie Hamilton
    Right Truth

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  2. Thank you, Debbie. This idea of his is just one more in a series of unbelievably dumb ideas.

    I work for a community foundation, and I feel certain this will affect our donations if it passes.

    I find myself in the strange position of depending upon Congressional Democrats to stop a bad idea from becoming reality.

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