(Editor’s note: This is Part 2 of a two-part series titled, “To hell with charity.” Read Part 1 here.)
Imagine it’s Christmas Eve in your local church and the offering plate is passed to help a local orphanage build an addition because there’s “no room in the inn.” But just when you’re about to give generously to the cause, you all of a sudden recall that Washington, D.C., recently voted to reduce tax-deductions for charitable giving.
So would you give as much under reduced charitable deductions?
Despite that charitable deductions are the 10th most popular tax break (nearly 40 million Americans claim them annually), Washington is willing to roll the dice with that deduction that you’re going to give as generously in the future without it. But is their gamble with your wages a good one?
Here are four reasons why reducing charitable tax-deductions in any form is bad business for America:
1) Any reduction in charitable deductions is a step toward elimination and rocks the applecart of our already-fragile economy and charitable-giving basis and purpose. Reducing charitable deductions is the wrong solution at the wrong time (recession) to fix Washington’s budget problems.
Reducing, capping or eliminating charitable deductions would yield miniscule revenue compared to the massive increases in debts, deficits and future expenditures brought on by the Obama administration, such as with Obamacare. Even according to the White House, reducing charitable deduction would add only $239 billion between 2013 and 2017 to the federal income.
As Seth Giertz, the University of Nebraska economics professor who co-wrote the Congressional Budget Office’s May 2011 analysis of options for the charitable giving deduction, told ABC News, “Given the fiscal problems we’re looking at, you can’t just scale back the charitable deduction. Problems are just too big for that.”
And as J.D. Foster from the Heritage Foundation also explained to ABC News, “In my view, the central fiscal problem we face is the federal government spends far too much, and will soon be spending far more as the entitlement programs balloon.” He added, “Until the President gets serious about this and puts forward substantive ideas on how to reign in federal spending, especially the entitlements, then there is not even a wisp of justification for talking about any tax hikes.”
There are far better options than reducing charitable deductions and penalizing American givers and charities: like radically reducing Washington’s spending; going after tax evaders among the 46 percent of tax filers who, according to Politifact and the Urban Institute-Brookings Institution Tax Policy Center, paid no federal income tax at all in 2011; and completely trashing the present tax code for a fair or flat tax, which incorporates all residents in America and doesn’t allow any to avoid taxes by simply charging the same percent of taxes for all consumptives.
Way back in February 2009, then-Director of the Office of Management and Budget Peter Orszag confessed, “Above all, though, the best way to boost charitable giving is to jump-start the economy and raise incomes.”
Maybe the Obama administration should go back to the drawing board and start there: with jumpstarting the economy and raising incomes, not taking away from them.
2) Reducing charitable deductions will trickle down, tying the hands of the wealthy, crippling charities and hurting the middle class and the poor – who are often managing nonprofits or are the benefactors of them.
This is no time for equity wars over giving. Now is not the time in America’s history or fragile economic recovery to be engaging in class warfare, monkeying with beneficial tax laws or trying to separate the wheat from the chaff among charitable givers. Reducing charitable deductions will affect people’s willingness to give!
If Michael Ettlinger, vice president for economic policy at the liberal think tank Center for American Progress, explained to ABC News that, “Eliminating [charitable deductions] would undermine activities that help low income people, that pay for the arts, that do a number of other things,” how can we not say that reducing it would increase the propensity for doing the very same things?
As Stephen L. Carter, professor of law at Yale University and the author of “The Violence of Peace: America’s Wars in the Age of Obama,” explains, “Maybe in a perfect world nobody would worry about whether gifts to a particular organization were tax-deductible. In the imperfect world in which we live, however, charities fight to preserve their 501(c)(3) status, and with good reason: The deductibility of contributions affects people’s willingness to give.”
Carter added, “But the argument once more misunderstands the purpose and function of the deduction. Its principal beneficiaries are not those who give, but those who receive. If I donate money directly to a local soup kitchen rather than requiring it to wade through the layers of paperwork and volumes of regulation required for obtaining even the mere chance of a direct government subsidy, everyone is better off – especially those who eat there.”
(Not even under discussion is how the Obama administration has already thrust the sword of secular progressive values via Obamacare down the throats of religious charities and institutions by undermining and forcing them to abandon their core values about contraception. This past year, however, the White House was glad to boast that it was “Partners with Hindu American Seva Charities for Historic Gathering.”)
3) Charitable tax deductions were granted to motivate Americans to contribute and build up the public good – something needed now probably more than any point in America’s history.
The charitable tax deduction was first enacted during the War Revenue Acts of 1917 – four years after the income tax was legislated and taxes increased to cover World War I costs, for the very reason that legislators worried that wealthier Americans would not give to charity after paying their taxes, according to the Tax Policy Center and ABC News.
The intent behind the deduction, as explained by Rep. Carl Curtis, R-Neb., and concurred again by Carter from Yale, is that charitable giving is “exempt from taxation” for the very reason that it represented “an expenditure for the public good.” But now this expenditure is being hijacked from American citizens by the federal government so Washington can in turn spend more of our monies as they wish instead of how we want!
4) The additional “costs” of reducing charitable contributions is that Americans have less freedom over their finances and less incentive to give to charities, while the federal government’s power and pocketbook grows exponentially.
Again, as Carter from Yale eloquently explained, “Democrats and Republicans alike have come to refer to the charitable deduction’s “cost” to the government. This language, however, only makes sense if one concedes that government has first call on every dollar earned in America. It isn’t obvious why this starting point is the correct one. It is just as easy to begin with the proposition that the earner owns the money, in which case it is the removal of the deduction – or the tax itself – that is a cost.”
Even Michael Ettlinger, vice president for economic policy at the liberal think tank Center for American Progress, labeled the discarding of charitable deductions as “a bad idea” that would “leave America either more dependent on the government or facing austerity,” according to ABC News.
That is why I said in my last column that this president and his administration are not taking their cue from the good of the American public but from the playbook of their coach, Saul Alinsky, who encouraged this narcissistic, dog-eat-dog dogma, “To hell with charity. The only thing you get is what you’re strong enough to get – so you had better organize.”
In the very midst of the season of giving, the last thing we should even be discussing is transforming America and Americans into the scrooges of charity. What would our forefathers say to an America that, instead of pondering ways to help charities in December, discussed ways to penalize them? It’s foolish, pointless and preposterous!
Gone are the days when presidents like Ronald Reagan fought for churches and charities and celebrated the Christian faith in a national broadcast, like he did in his Christmas address from the Oval Office on Dec. 24, 1982.
If you care about the future of America, call the White House today at 202-456-1111 or send an email. Then call or write your representatives and tell them all to stop penalizing givers and charities to appease their political whims and wild spending. My wife, Gena, and I share a mission with our nonprofit foundation for kids (KickStartKids.org), which is dependent upon the generous gifts of others, I speak for thousands of charities when I say, “Thank you!”
There is still no greater example and charitable act than the Gift that God gave the whole world on Christmas Day: His Son. More than 2,000 years ago, the angel proclaimed to the shepherds: “For unto you is born this day in the city of David a Savior, who is Christ the Lord.”
Now that’s charity worth believing in and modeling!
From my wife, Gena, and I, Merry Christmas, Happy New Year, and keep fighting for America!