Little-noticed in recent dialogue over the national debt and taxation is previous comments by President Obama about the idea that the charity deduction should be modified so that the wealthy don’t get a greater benefit from this than average Americans. This may not seem like a big deal, but in fact, it is, and should be of great concern to Republicans and Tea Party advocates as a major issue in the struggle over the role of government. I guarantee that this will be on the table in future budget negotiations, and to me, this is more important than many other issues.
First, let’s cover the basics: if you give money to a non-profit with charitable tax status, you don’t pay taxes on that money. Why is this? Because our previous leaders decided that these gifts helped society so much that the government should not tax you on them. Amen. Some charities find that using a nonprofit Certified Public Accountant (CPA) may be able to help them with tax and accounting needs – see more at http://daveburton.nyc/nonprofit-cpa.
That means that when you don’t like how the government is helping society, and you want to do so yourself, you get to do so, and the government will not get a piece of that. There are times when I become angry with our government, and then go make a contribution to a non-profit that will do what I want instead. Also, giving to charity also makes the “death tax” irrelevant for some people. So… Warren Buffet and many other rich people, someone can just give their fortune to charities and not let the government get that money, through the income or death tax.
In an age when the government wants to take more and more of our money to do things it should not be doing, giving to charity has become our best tool to tell government, “No – I don’t want you to do any of that – I will take care of America without you.”
Therefore, any attack on the charity deduction is the government saying, “No – we, not you, will manage this country with your money. We have the right, not you.” (Don’t laugh – recently I saw a European economist interviewed about the philanthropic activities of the super-rich and he said that it was the state, and not individuals, who had the right to help society.)
So when President Obama and the Democrats say, “It’s time to take away the extra benefit the wealthy get out of charitable deductions” (meaning that they won’t pay taxes at their higher tax rate than a middle-class person not paying taxes at their lower rate for the same monetary donation) this is an attack on private initiative from the government, which thinks it will spend that money for the public welfare better than you would – which is preposterous.
When this idea becomes part of the budget negotiations, those of us who want to fight against the size and scope of government must say “No – the citizens who want to help America are often doing so because the government cannot or should not do that work. To confiscate any of that money that would otherwise help America is an unjust assault on private initiative.”
Be ready for this fight – it is one that matters.