This Christmas season everyone should be upset that the president and Congress may cap charitable deductions.
Charities are very concerned and sent 250 representatives to Washington
earlier this month to talk members of Congress out of one of the worst
ideas to help avert the fiscal cliff.
Giving is not a loophole like accelerated depreciation of corporate jets.
For starters, the ability to deduct gifts to charity has been around for
almost 100 years. The fact that it was included in the tax code just a few
years after the federal income tax was established points to the fact that
it was a respected American practice and not added so that friends of
those in power could escape government obligations like in this
lobbyist-fueled government era.
Individuals would be better off financially by keeping their money and
paying taxes on it than giving it away and getting a partial write off on
Besides, it is a terrible idea to discourage Americans from giving back to
the community at a time when government of all types is increasingly
replacing the work civil organizations used to provide and when so many
need a job and are struggling.
And a cap means that charities that depend on government for their
existence will have more of an edge fundraising if private giving goes
down as a result of tax changes.
But it's revealing that we have reached a point in our culture where a
deduction for giving to charity is considered a "loophole" just like
accounting that can allow oil companies, for example, to buy crude at a
range of prices but pay taxes on their profits from selling it as if every
barrel was bought at the latest, most expensive price.
The president, who has tried to cap deductions with practically every bill
he has submitted, and a willing media are chief proponents of branding
giving as a vehicle for the rich to avoid paying their fair share. But
that label is patently unfair. Studies show middle class Americans donate
a larger percentage of their income than the wealthy, with religious faith
driving a lot of giving.
And interestingly, liberals give less than conservatives, so any changes
would disproportionately impact those who voted for the other guy in the
Some charities, perhaps unwittingly, have done their part to remake
themselves as just another special interest in the eyes of the media by
employing high-priced lobbyists. That smells on the face of it and many
donors won't give to those groups because of it.
But it is like faulting charities for the fact that the government is huge
and complex. They should have the right to navigate it, too, like everyone
else. Besides, the vast majority do not have the money or resources to
petition Washington just like small businesses, which need every employee
focused on making money to survive.
Ultimately, it would be best to get rid of all deductions, simplify the
tax code and broaden the tax base. That would benefit charities and
everyone who cannot afford to pay lobbyists to manipulate the tax code in
their favor. Data from Giving USA buttresses that viewpoint. It shows
that donations have hovered around 2 percent of disposable income for
decades under different tax regimes, signifying that expanding the pie is
the best solution to increasing donations.
But that does not mean in the interim that Congress should treat the broad
swath of Americans who give as if they were serial tax avoiders like
General Electric. It's a dangerous moral equivalency that undermines civil
society and makes government a bigger arbiter in deciding Americans'