Editore"s Note
Tilting at Windmills

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March 4, 2009

OBAMA ISN'T UNDERMINING CHARITIES.... Former Bush speechwriter Michael Gerson complains in his latest column, among other things, about President Obama undercutting charitable giving. As Gerson sees it, the White House will discourage donations to non-profits as part of some kind of ideological, big-government experiment: "This is a direct claim that the good done by government spending will be more important than the good done by the wealthy."

David Brooks made a similar argument yesterday: "The U.S. has always had vibrant neighborhood associations. But in its very first budget, the Obama administration raises the cost of charitable giving. It punishes civic activism and expands state intervention."

Given all the fuss, among these two and elsewhere, it's probably worth noting that these concerns are unfounded.

President Obama's proposal to limit the tax deduction for charitable contributions would affect only the top 1.2 percent of affluent U.S. households and, despite claims to the contrary, would reduce total charitable contributions by only 1.3 percent.

The President's 2010 budget proposes to limit the tax subsidy for deductible expenses of the most affluent Americans and to use the additional revenue to help finance national health reform, including universal coverage. This proposal has been attacked on the grounds that it would lead to substantial reductions in charitable contributions and hit charities at a time when they face increased need and decreased contributions due to the recession. Careful examination indicates that these criticisms are greatly exaggerated or wrong.

If I only had a nickel for every time I've seen that phrase when applied to conservative talking points.

We're talking about a small drop off affecting a small percentage of donors, which wouldn't even take effect until 2011 (so it's not as if charities would see fewer contributions during the recession). At the same time, the tax change would help finance a health care system that would necessarily "greatly reduce the burden on non-profit organizations."

It's a good move, handwringing notwithstanding.

Steve Benen 10:10 AM Permalink | Trackbacks | Comments (30)

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Comments

And just think, the wealthy could actually choose to make charitable contributions even without the special incentive of a tax break bonus.

Posted by: Vicki Linton on March 4, 2009 at 10:06 AM | PERMALINK

Actually, the fact that this would affect the top 1.2 percent of households actually IS relevant.

It's long been known in fundraising circles that 95% of your funds comes from 5% of your donors. Even though this affects a tiny portion of US households, it's the portion of households that give the most funds to charities. That's an empirical fact.

On the other hand, tax implications are almost always at the bottom of the list when it comes to whether or not a person gives. If a person really likes a cause, they're going to give, no matter what the tax laws are. So the changes are fairly irrelevant.

Posted by: gwangung on March 4, 2009 at 10:14 AM | PERMALINK

Once the rich have been soaked and have departed for financially friendlier shores, what will you Porkulus-grasping lefties do to fund your chronically lazy lifestyles?

It's only food for thought for those with brains, and robbing the rich takes no great intellect.

-A

Posted by: Atanarjuat on March 4, 2009 at 10:14 AM | PERMALINK

Let's not forget that most charitable giving is done by those from income brackets far less than those being effected such as myself. Why should they give $1000 and receive $35 back on their taxes and when I give $1000 only get $18 back on my taxes?

Posted by: corall on March 4, 2009 at 10:15 AM | PERMALINK

You must understand that caring for people is not a governmental function - unless the funding for it is provided directly to Catholic & Baptists churches - without any oversight or strings.

Society functions best when the wealthy make the determinations of who should receive assistance. After all, accumulating great wealth is a sign of the blessings of God and displays the intellect & hard work of those so blessed.

When poor or working or otherwise needy persons receive assistance from the government, how are we to know that they are truly worthy of that assistance. When the wealthy bestow their blessings and contributions on a charitable organization, we can know that only the deserving will be assisted.

What is the matter with you progressives who fail to understand such simple logic? Pretty soon you will be claiming that all persons should receive education and health care!

Posted by: RepublicanPointOfView on March 4, 2009 at 10:15 AM | PERMALINK

This is just another example that points to the fundamental reasoning behind the Right being so afraid of responsible government regulating media content for fairness and honesty: If they always had to tell the un-spun truth, they'd have nothing to say. So---in honor of Paul Harvey---I'll just use his words and say:

Now you know the REST of the story....

Posted by: Steve W. on March 4, 2009 at 10:18 AM | PERMALINK

I thought rich assholes didn't need a tax deduction to give away their money?

Posted by: Breezeblock on March 4, 2009 at 10:21 AM | PERMALINK

Atanarjuat is right. Robbing the rich to give welfare to the poor is terrible policy on two levels. First, it's simply immoral. Second, it will drive anyone with the will to succeed away from America. That such simple concepts as these are lost on proponents modern liberalism is the sign of a bankrupt ideology.

Everyday, the market tells you that Obama is destroying American wealth at a record pace. Like FDR, Obama is going to drive this country to decade or more poverty.

Posted by: Tom on March 4, 2009 at 10:25 AM | PERMALINK

And now, Atanarjuat and Tom will regale us with empirical data demonstrating beyond the shadow of a doubt the mass exodus of rich people from the United States during the latter half of the 20th century, when the top marginal tax rates were far higher than the 39.6% rate proposed by President Obama!!! Then they will demonstrate that rich people moved back to the United States in droves during the Reagan years, only to flee again during the Clinton years after Daddy Bush raised taxes!!! Ready . . . set . . . prove it!

[crickets]

Posted by: The Fabulous Mr. Toad on March 4, 2009 at 10:30 AM | PERMALINK

holy mother of god... the galts have arrived!!!

run for your lives...

(or at least turn your coffee-swilling face aside your monitor... or all that swag you were gonna give to all the downtrodden and all the do-gooder orgs on accounta yuh got yer income down to $249,999.99 will just hafta go for your new snazzy selfish monitor.)

Posted by: neill on March 4, 2009 at 10:30 AM | PERMALINK

As a matter of fairness, Dems should be making the case that the highest income earners pay the least for deductible items, not just charity. If three people pay $1000 each for deductible medical expenses, the person in the 35% bracket pays a net $650 after taxes. The person in the 28% bracket pays $720 and the person in the 15% bracket pays $850.

Posted by: Danp on March 4, 2009 at 10:33 AM | PERMALINK

Danp makes a really good point. If the top marginal rate were around 90%, as it was for much of the mid-twentieth century, then a person in that tax bracket making a tax-deductible charitable donation would essentially be using nine of the government's dollars for every one of his own. But a person in a 20% bracket is using eight of his own and two of Uncle Sam's.

Posted by: The Fabulous Mr. Toad on March 4, 2009 at 10:37 AM | PERMALINK

Second, it will drive anyone with the will to succeed away from America.

It might drive a few of the wealthiest away, but not the ones with a will to succeed. And frankly, I can't think of a better reason to double the estate tax. I'd hate to envision the day we worry about people like Paris Hilton leaving.

Posted by: Danp on March 4, 2009 at 10:42 AM | PERMALINK

Also remember that a lot of the charitable giving at the high income level goes to non-profits that the rich themselves tend to use, like art museums, symphonies, and operas. While these are still public goods, cutting down donations to them are less likely to impact food banks and homeless shelters that we have have a greater need for today.

Posted by: marku on March 4, 2009 at 10:42 AM | PERMALINK

btw, i'm happy to accept what gerson has to say: given a choice between slightly higher private giving to any ol' charity and public health insurance coverage, i absolutely think the public interest is better served by the latter.

Posted by: howard on March 4, 2009 at 10:43 AM | PERMALINK

I suspect the moneis charities potentially lose because of different tax laws is miniscule compared to what they have lost thanks to Madoff.

Posted by: martin on March 4, 2009 at 10:43 AM | PERMALINK

Where on earth would the uber rich go? Srsly, how is this a real threat? If minor tax rate increases are going to make them move elsewhere then how screwed up are their priorities?

As someone mentioned on a thread over at balloonjuice, if the dems really wanted to watch gop heads explode they'd simply propose to restore the upper teir tax brackets to the ones that existed under Reagan. If 39& makes them scream like little babies they should look into what the rich paid under Reagan- apparently Reagan was a bigger commie pinko than Obama.

Posted by: zoe kentucky on March 4, 2009 at 10:51 AM | PERMALINK

I suspect the moneis charities potentially lose because of different tax laws is miniscule compared to what they have lost thanks to Madoff.

You may suspect; charities KNOW.

Again, the complaints are just partisan sabre rattling, unconnected to the facts.

Posted by: gwangung on March 4, 2009 at 10:56 AM | PERMALINK

Any word on whether charities that spend more than half their funds on expenses might get the axe in some way too?

Posted by: toowearyforoutrage on March 4, 2009 at 11:01 AM | PERMALINK

We're talking about a small drop off affecting a small percentage of donors, which wouldn't even take effect until 2011 (so it's not as if charities would see fewer contributions during the recession). At the same time, the tax change would help finance a health care system that would necessarily "greatly reduce the burden on non-profit organizations."

But...but...isn't one of the tenets of faith-based movement conservatism that government support of the poor isn't necessary because conservatives support private charity (also known as the "Are there no workhouses?" argument).

Now you're saying that the wealthy only donate to charity for the tax break, and won't if it's deductible? I'm shocked! Shocked!

(By the by, charitable giving as a self-selected tax shelter is another very good reason for the inheritance tax.)

Posted by: Gregory on March 4, 2009 at 11:31 AM | PERMALINK

Posted by: Atanarjuat on March 4, 2009 at 10:14 AM

Oh, swell, Balloon Juice's parody troll takes his act on the road.

You forgot "Country First".

Posted by: Gregory on March 4, 2009 at 11:45 AM | PERMALINK

The charitable giving will go down, thus hurting food banks meme is crap anyway. Huffington Post and Slate have both done articles documenting the propensity of the very well-off to give to "lifestyle" charities, art museums, opera, symphony, endowing business schools. While a large minority certainly do give to health and welfare endeavors, and the symphony does deserve support; I don't think those groups are on the same plane as health care, food and housing for those hurt by the currently plummeting economy. Mr. Faith-based Michael Gerson is full of crap in his assertions, and his faith isn't much either if, in following a man whose precepts on virtuous life include "I was hungry and you fed me", he needs to stop and figure out what it does for his tax return. Can you say Pharisee? I thought you could.

Posted by: kimora on March 4, 2009 at 12:01 PM | PERMALINK

These assholes want to get rid of the estate tax, one of the biggest incentives for charitable giving in U.S. law. What a bunch of jokers.

Posted by: Liberal Chris on March 4, 2009 at 12:16 PM | PERMALINK

"Once the rich have been soaked and have departed for financially friendlier shores..."

If the rich are so fucking important to our economy, then why isn't their precious presence in this country saving us now? I say let 'em all roll perpetually on one of those 'round-the-world cruise ships. And if they want to disembark here, tear up their fucking passports. Good riddance.

Posted by: MissMudd on March 4, 2009 at 12:25 PM | PERMALINK

Suggesting that "rich people" will leave to cheaper countries, is like suggesting that "rich people" will chose generic products over more expensive brands. Except that's not the case, as luxury brands would almost certainly not exist (why would anyone pay $1000 for a handbag).

We believe that America is a great product, and worth paying a little more for.

And as our friends on the right will tell us, if these people don't like America, then they are unpatriotic unamerican traitors!

Posted by: royalblue_tom on March 4, 2009 at 1:50 PM | PERMALINK

Robbing the rich to give welfare to the poor is terrible [...] -- Tom, @10:25

Don't fret, dear heart. We'll let you keep your diapers and your hankies (to mop up the crocodile tears with). You'll live.

Posted by: exlibra on March 4, 2009 at 2:51 PM | PERMALINK

It's the great liberal shell game:

When liberals want more government handouts, they increase taxes on the rich.

When the economy takes a huge downturn, they blame the rich.

When the economy tanks further, thanks to the two strategies above, liberals argue for further redistribution of the wealth.

No matter what, the rich end up being the villains while those who keep trying to steal their money are somehow the heroes.

And then you America Last dead-enders wonder why so many rich people are placing more and more of their wealth into offshore bank accounts, where they can't be filched by welfare-grubbing slackers (liberals in general)?

I don't wonder at all.

-A

Posted by: Atanarjuat on March 4, 2009 at 3:12 PM | PERMALINK

Of course the rich seem like villains. They can't possibly work 1000 times harder than the company janitor, there aren't that many hours in the day! But that's what they get paid! And then they try and get out of paying the share of the cost of running America, that society as a whole deems their contribution, for ensuring America stays a prosperous world brand. Villains indeed.

Posted by: royalblue_tom on March 4, 2009 at 3:50 PM | PERMALINK

If you're worrying about the tax deduction you're going to get for your donation(s), then it's not charity.

Posted by: Doug on March 4, 2009 at 7:39 PM | PERMALINK
I don't wonder at all.

First accurate thing you've said all day, dear.

And, yeah, this is one of BalloonJuice's resident performance artists, so don't feel compelled to take it seriously. Just marvel at the accuracy of the spoof and move on.

Posted by: PaulB on March 4, 2009 at 9:39 PM | PERMALINK




 

 

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