I work for a non-profit, actually one and a half: I work part time as a pastor at a church and full time as a webmaster for a the administrative body of a mainline Protestant denomination. Non-profits and churches are at the mercy of the goodness of people. A church stays open because people give offerings to help with the upkeep of the church. Sometimes churches are propped up by a few big givers.
In America, we have decided that it makes sense for a person to deduct what they give to charity from their tax bill. President Obama's proposed budget is planning that those at the top bracket (whose taxes will rise to 39 percent because of the expiration of the Bush tax cuts) would not be able to deduct what they give to nonprofits at the 39 percent level, but cap them at the 28 percent level.
Now, I have no problem seeing the tax rates rise back to what they were during the Clinton years. I never thought the Bush tax cuts made sense. That said, I am against capping the deduction amount at 28 percent for high income earners. Now, Obama is correct that people who give to charities will do so for reasons other than getting a deduction. I agree, but there is something sort of mean spirited to in a way punish high income earners who want to give. It's one thing to say that the rich should pay more in taxes, it another thing to say that they are limited in what they can write off to a favorite charity.
Conor Clarke over at the Atlantic Money Channel isn't as sympathetic. He seems to thumb his nose at the whole notion of private charity:
...I take it that Marty Feldstein thinks charity is something we should all consider good.
I think charity is pretty good too, but there are still two problems. First, the tax code does not define charity narrowly. You can claim the same deduction on giving to an amateur sports league as you can for founding a hospital. I'm not in a position to say which of those is more beneficial to society as a whole. But neither is Warren Buffett or Eli Broad. Decisions about what will make our community better should be made communally -- by pooling revenue and making collective decisions about where and how it should be spent.
The second problem is deeper: It's a mistake to think about charity as an entirely selfless and personal sacrifice on the part of the donor. It is also charitable spending. High income individuals give to charity in part because they derive some benefit from the gift: They get their name on the building, or the continued benefit of an opera in their hometown, or the warm glow admiration from their peers. Why feel confident that this kind of spending should be subsidized?
There are several assumptions here that I take issue with. First is Clarkes' belief that someone who gives to a charity is not in the position to determine what makes a community better. Who does? Let's repeat what he said:
Decisions about what will make our community better should be made communally -- by pooling revenue and making collective decisions about where and how it should be spent.
In essence, decisions on what makes a community better should not be the sole choice of any common joe, but should be made by the government through taxes.
Please hear me out: while I tend to be right of center, I am not some anti-government, anti-tax nut. I am not against raising taxes for programs that might better society.
But I am enough of a conservative to believe that government is not society. Society is made up of different institutions, public and private. Non-profits are an important part of society and part of the fabric that is America. Government to me has its place and it is a necessary function. But so do those churches and other agencies that work to better our society.
Clarke also seems to think that rich folk who donate only think about what they can get from the donation. Maybe, but then, I don't think anyone gives without some self interest. Let's face it, self-interest can be a motivator to do good: look at all the swag you get when you donate to public radio.
I remember how many liberals made fun of Bush the elder when he talked about "a thousand points of light." He was urging folk to go out and volunteer to make a difference in society. It was panned as a way of ignoring the needs of the poor. Maybe it was a way to skirt the issues of poverty, but maybe not. I think Bush could see that Americans wanted to do more than pay taxes and let the government do the rest, they want to get involved. They want to build houses for Habitat for Humanity, or donate to a food shelf or give money for Tsunami relief. We want to support local symphonies and other artists, we want to paint the house of a neighbor. America is a volunteer society and it has prospered because people rich and poor have decided to get involved, by writing a check or rolling up their sleeves.
Government has a needed place. But so does charity.