I read through it, and my takeaway was that it’s practically impossible to compare different countries. For example, the US has far and away more charitable giving as a percent of GDP, but the US is also far richer. For comparison, Germany has much less, but they exclude the church tax – if you include that (a direct subsidy, I guess, from the government to the church), they look a lot more like the US. Or, if you excluded church-giving in the US, you may find we’re more comparable to other countries.
Also, there is huge variability in how various countries deal with tax deductions for this giving, but I couldn’t untangle any correlation between that and the amount of giving. The graph that shows how wealthy a country has seems to correlate pretty well, but that could be confirmation bias on my part.
If you have background in this area, maybe you can make more sense of it.
I don’t know, still seems like hand-waving to me (please don’t misunderstand, I also believe the government has a role in society and that non-profit theater groups are good for society).
For example:
Then, if tax deductions for non-profits are a public good, wouldn’t a tax credit be even better? (I think I have that terminology correct – a tax deduction reduces your income for tax reporting purposes, whereas a tax credit reduces your tax bill directly, one-for-one) Maybe a 2x tax credit?
How do you get around the problems with my tax money effectively going to causes I don’t agree with? Staying as neutral as possible, if I’m pro-life, I don’t want tax-deductible giving allowed for abortion clinics, or conversely, if I’m pro-choice, I don’t want tax-deductible giving allowed for anti-abortion organizations.
To use a real life example, there was an outcry (not by me) when the National Endowment for the Arts was found giving tax money to that photographer, can’t remember his name, I think he took pictures of semi-nude children or something. Actually, I think the NEA was giving money to museums that showed his work. Mapplethorpe, maybe? Anyway, tax-deductible giving for a non-profit museum or artist foundation or something is really the same thing.
But even then you’re not going to be able to exclude donations to church-run operations, like many hospitals in this country.
How do we ever get around that problem? My tax money goes to PLENTY of activities I don’t agree with. And in those cases, it’s my actual tax dollars, rather than the incredibly indirect and implied tax dollars that might have been raised via charitable giving.
OK, well, if you could help me use that report to figure out how effective the tax deductibility of charitable donations is, and whether we should push for more or less deductibility, I would be grateful.
But, at least as far as direct tax subsidies go, you can work to defeat politicians that support causes you disagree with. It’s indirect and you don’t have that much leverage, but gather a bunch of friends and you can start a movement. Pro-life and pro-choice groups actively work to accomplish exactly this – allow more/less tax money to be used for/against performing/preventing abortions.
And, I think tax deductibility for charitable giving is a direct tax subsidy, not indirect and implied, but I’m willing to be convinced otherwise. If you and I would both owe $100 in taxes, but because you’ve given to a charity, you now owe less, then my taxes have to go up directly by that amount. Right?
Isn’t it better if people willingly give their own money to a cause you don’t like, than having the government seize some of your income to fund that same cause? It makes me far less uneasy if an abortion clinic, for example, is funded by donations than by taxes because in the second case I’m in no way directly involved in supporting said clinic.
So, then you should be against a tax deduction for charitable giving, right? Because, if there’s a tax deduction, then you ARE supporting it with your taxes (I think – see my example above), and you have no way to vote against the person sending (in effect) your tax money to that cause.
I’m not opposed to charitable giving. My question, and what I’m trying to figure out here, is whether there should be tax deductions for it.
To use your abortion clinic example, if I give $10,000 to a clinic, I save, what, $2,000 in taxes. The government has to get that $2,000 from someplace. Pair everyone off – if you and I are paired off, that $2,000 is coming from you so I can send money to the abortion clinic. And, there’s nothing you can do about it – you can’t vote me out of office for sending money to the abortion clinic. With my gift, your taxes went up by $2,000 so I could send that money to the clinic.
This would only be the case if the federal budget was a zero sum game, and it’s not. If it were, we’d have no spending that isn’t offset by taxing, and clearly we do not, or else we wouldn’t have deficits. The government taking less money from you does not translate into taking more money from everyone else in order to fund the budget dollar for dollar.
Most studies on this subject of which I’m aware have determined that charitable giving deductions do not motivate more giving than they give up in tax dollars. In fact, the effect is generally found to be close to one to one (i.e. people will give more to charity at exactly the same amount that it is lost to tax system).
Thus, the efficacy of charitable giving sort of relies on your opinions on whether the government, or individual donors, are wiser at choosing where to spend money on social services/charity.
See? This is what I’m looking for. If you could actually point me to a study, I’d love to take a look.
Assuming you’re right, than I would probably rather have the deduction eliminated. People will still give, maybe it would encourage people to volunteer their time instead of just writing a check (people do this anyway, but are at a disadvantage, as pointed out above), and at least I have some, diluted, remote control over how the tax dollars are spent.
{hijack}
Maplethorpe. Due to the outcry you recall, I made a point of taking in an exhibition of his when I was in Vienna. The pictures, albeit some nude, of children were not pornographic…they were, however hung in the same room, and in some cases on the same wall as photographs of gay men engaging in B&D sex play, close up photographs of male and (rarely)female genitailia, and gay and hetero couples engaged in sexual acts. In truth, one needn’t have been too far toward the up-tight end of the scale to find the subject matter offensive. If the NEA had any idea what he was going to do with the money, then they should have expected the shit storm they got.
{/hijack}
I don’t think that’s a hijack – it’s a perfect example of one of the issues I see with tax-deductible charitable donations. In this case, it was tax dollars paying for what some thought was offensive work – there was a shitstorm and changes were made to the law or funding rules or whatever, in accordance with taxpayer wishes.
Now, if someone were to give charitable donations to some cause that I find as offensive as some people found Maplethorpe, there would be nothing I could do about it, even though they are effectively transferring my tax money (or a portion of it) over to that cause.
I donate money rather than time. My reasoning is thus.
When I work professionally, I bill my time at $150.00 an hour. The work that I do involves setting up electronic toys for the ultra-rich set. There are not any charities that have any use for these skills.
I"m sure that I could answer phones, stuff envelopes or lift and carry things about as well as anyone on the street. That kind of labor currently commands about $10 an hour in my area.
So I can work 30 hours for the charity and do $300 bucks worth of work. Or I can work 2 hours for myself…on some days this may involve little more than going to someone’s mansion, resetting the circuit breaker that they swore they had checked, and going back home. I can then give that $300 to charity and they can turn my 2 hours of “work” into 30 hours of work.
BTW, I did read somewhere just today that if you hire a babysitter to free up your time so you can do charitable work then the babysitter money is deductible.
I think you are confusing “my money” with “your money”, which is an understandable side effect of today’s political climate.
I handle my own charitable donations in a way that may make this easier to understand. I will select several small projects a year and donate all the proceeds from these projects to charity.
I get to pick the charities because this is MY MONEY, money I worked to earn.
Now let’s say these charities are deemed unnecessary or unimportant and the government decides it wants this money instead.
I am in no way obligated to earn this money and pay taxes on it to the government (and, by extension, you). When I am offered the opportunity to take on these projects I could say “Thanks, but no thanks, I think I would rather lay around on my couch and watch Judge Judy and Peoples Court and eat Doritos in my jammies on Monday.”
Then I stay home. I am better off financially than if I worked and made the contribution anyway, because then I am not liable for taxes on this money I never intended to keep. What I have lost is the intangible benefit of using MY MONEY to help others in a way of MY CHOOSING.
Now, I have my favorite charities, I tend to favor those that help people in MY neighborhood or people suffering from diseases that have impacted MY life. It’s highly personal. Other people choose where to send THEIR money based on their personal experiences and while these causes may not be important to me they are important to someone. There are very few charities that I find morally objectionable and those that are are funded by MONEY THAT IS NOT MINE.
On the other hand, I find many of the causes that the government spends my money on to be totally objectionable…unnecessary wars and welfare for corporations and people that are irresponsible rather than unlucky. You can try to to say " no, the extra money we take from usurping your charitable contributions is going to health care" but money is fungible…it would be like someone saying "yes, I used the $50 bucks I begged from you for food, I used my OTHER money for this Armani suit.
And while charities may vary in efficiency ( this is something that’s easy to check out before you donate), I can’t for the life of me understand where you are getting the impression that the government can do things more efficiently than a private organizations. You would have better luck convincing me that rock and roll groupies are known for their chastity than you would in convincing me that government is known for effective use of money.
I don’t think I am. If the government needs $200 to do what the voters through their representatives have asked them to do, and you and I would each owe $100, but you’ve decided to give to charity, reducing your tax burden to $70, then my tax burden has to go up to $130 (on average, over time, etc. – debt has to be paid off sometime). So, my additional tax money is subsidizing your charitable giving.
Hey, good for you. I don’t think charities should be banned and you can do whatever you like with YOUR MONEY.
I’m not sure I follow this. It doesn’t seem all that relevant to this debate. Work as much as you want and give how you like. I think that’s great.
At least you have some control over how tax money is spent – you can vote out the bums who start the unnecessary wars or whatever offends you. If you decide to give money to some awful, inefficient charity that works against my interests, you’re really spending my tax money on something I can’t stand and I can’t do anything about it.
When come back, bring data. I don’t really think anti-government rants are a good way to debate.
You’re oversimplifying. It’s not like we all have equal tax burdens and charitible gifts are the only exception.
Let’s assume the above example is true. Then let’s say I decided I liked spending a few days a week eating snack foods and watching TV instead of working and I didn’t much care if I made half as much money. So this move reduces my tax burden to $50. Then---------by your example-------yours goes up to $150. So have I stolen your money through my laziness?
Now, take the above example and assume my reason for taking a 50% income cut is that I decided to chuck my high paying soul-sucking executive position and become a social worker. My tax burden is still reduced to $50.00. Has my life-changing decision resulted in you losing money? Do you or the government have the right to maximize my productivity in order to keep my tax burden at a certain level? What about other tax deductions? Are my children being raised with “your” money because I get a tax reduction in order to offset the expenses of feeding and clothing them?
No. The “church tax” in Germany is a donation you make to the church of your choice but which is collected by the German equivalent of the IRS. Basically, you check the “Lutheran Church” slot, and the extra money you paid with your taxes goes to the Lutheran Church. Or you check nothing and pay nothing extra (I understand that German congregations tend to check whether or not you “registered”). It’s not a subsidy, rather the government collect money on behalf of churches, probably for some historical reason. (And not being German, I wouldn’t know if those donations to churches are tax-deductible or not). I understand that you don’t get to choose how much the donation will be, but that it’s some percentage of your income or something similar (but I could be mistaken).
For the record, here, not all donations are deductible. The definition of non-profit organizations that can receive deductible donations is pretty broad (actually, all donations I ever made were deductible) but not everything would go. I’ve no clue, for instance, if a donation to a soccer club would qualify. I’ve no clue either about what a small charity (say, set up by my neighbours) would have to do to qualify. Also only 2/3 or 3/4 (I don’t remember) of the donation is deductible, and only up to a limit of 20% of the taxable income.
There are also, separately, tax reductions for the funding of political parties and for fees paid to unions.
A calculation was made during the Johnson years (I think) that for every $1.00 sent to the feds only $0.50 was returned in work. I am going off memory and could be wrong so do not ask me to sight the report.
In the 1950’s my dad was on a school board when they were planning to build a new school. A member of the board can up with the Idea to get a federal finical help at the last minute, at that time the feds would pay 1/3 of the cost. When the builders heard about the finical help they insisted that they would have to adjust their bids. My dad was worried about the timming and asked how long would it take to recaculate. the contractor told him it will take only minutes, we just double everything. The board canceled the request to the feds.
I do not donate to charity to get the tax deduction. Some times it means that I can give a little more.
And I never donate to a charity that I do not know. Some charities are very effecient and some have high paid staff. You need to check out yours.
In the US most charities must apply for and receive tax exempt status from the IRS, otherwise you can’t deduct contributions made to them. There are exceptions to this law, most notably for churches and other religious organizations.
Don’t get me wrong - I am not criticizing giving money by any means. I think your rationale works, in part at least. I would like to see a tax break available for donating time…
That makes sense, but the discussion in this thread had led me to think that donations to any organization that fitted the legal definition of non profit were deductible in the USA.