To the Editor:
James Piereson and Naomi Schaefer Riley miss the mark (“The Givers and Their Attackers,” December). We should not be distracted by the way in which the “givers” earned their wealth or the relative merits of the recipients of their donations. The fundamental point is that charity is defined by giving away one’s own money, not other people’s money. Providing a tax deduction for charitable contributions means that for every dollar donated, another 50 cents (or more for the high-tax states) is forcibly contributed by other taxpayers
The charitable tax deduction is immoral in concept, and it incentivizes fraud and corruption in practice. The benefits accrue exclusively to high-income taxpayers who itemize their deductions. Lower-income Americans contribute their hard-earned dollars but receive no tax benefit, because they take the standard deduction. Moreover, the tax deduction applies only to monetary and property donations but not to the time and effort donated by millions of hard-working Americans.
The corruption, both legal and illegal, associated with donation of property is endemic. Donations of stock are valued at their appreciated worth, but taxes are never paid on the gain. Thus, wealthy “benefactors” such as Ted Turner gave away appreciated stock to the UN, and more than 75 percent of the value was recouped in the tax avoidance and deduction. Rich environmentalists like the board members of the Nature Conservancy donate the “value” of easements to protect the views of their beach houses. Donations of art and vehicles are routinely overvalued for tax deductions. Foundations, such as the infamous Clinton Foundation, are established to employ friends, relatives, and political allies, with the payments for staff, contractors, and luxurious travel expenses subsidized by the taxpayers.
The idea that a tax deduction is needed to support charitable institutions is flawed, and it demeans the motives of donors. The vast majority of Americans donate their time and money with no contribution from unwilling taxpayers. The current system is designed by the rich for the benefit of the rich—it undermines the moral value of charity.
The authors are correct that the end result of government-supported charity will be government-controlled charity. Their concern is warranted. If you accept government funding, you must live by government rules. But the only solution is to end the tax deduction for charitable contributions as soon as possible. Let people give away their own money, not other people’s.
James Piereson and Naomi Schaefer Riley write:
Much of what Seth Schwartz says about the charitable deduction is accurate. There is no doubt that the charitable exemption is abused in many cases. On the other hand, charitable donations fund a large nonprofit sector that employs 10 percent or so of the U.S. workforce and does a great deal to strengthen America’s civil society.
But our piece was not intended as a defense of the policy. We are mainly disagreeing with the increasingly popular idea that the charitable deduction requires wealthy people to donate charitable dollars to the poor, or to causes favored by liberals. Indeed, many of the charitable deduction’s critics (including Rob Reich) suggest that the effectiveness of tax policy with regard to philanthropy—indeed, philanthropy itself— should be judged only based on how much it redistributes wealth. This judgement reflects not only a misunderstanding of the policy’s purpose but also an overly narrow and shortsighted view of America’s generosity.