When Charity Isn’t Charitable
President Obama’s proposal to reduce the tax deductions enjoyed by wealthy individuals who give to charity has led to a predictable wave of protest from the philanthropic sector. I’ve just published a book arguing that people who are financially comfortable ought to increase their donations to help those in great need. So I too must be opposed to the proposed changes, right?
Not exactly.
In my new book I point out that, according to UNICEF, 27,000 children under 5 die every day *around the world from avoidable, poverty-related causes. That’s an emergency that we ought to be doing much more to prevent. If Obama were to *increase the tax deduction for donations aimed specifically at reducing that terrible death toll, and the extreme poverty that causes it, I’d applaud.
But that doesn’t mean that I want to subsidize every charitable donation made by an American taxpayer. By far the largest slice of the roughly $300 billion dollars that Americans give to charity goes to religious organizations. I’m not religious, and I don’t see why people should pay less in taxes because they give to their church, synagogue or mosque.
No doubt some religious organizations do some good, but others definitely don’t. To give just one example, no desirable public purpose is served by Answers in Genesis, a Kentucky-based charity that upholds the literal truth of the first book of the Bible and seeks, in its own words, “to expose the bankruptcy of evolutionary ideas, and its bedfellow, a ‘millions of years old’ earth (and even older universe).” Let’s be clear: If donations to Answers in Genesis are tax deductions, then all the rest of us American taxpayers have to pay more for the government services we need. Why should taxpayers be subsidizing such absurdities?
I also don’t want to subsidize all of the museums, art galleries, theaters and performing arts organizations that are registered as charities. Not that I’ve got anything against promoting the arts, but let’s face it, most of the patrons of these cultural institutions earn more than the median American income, so giving tax deductions to them is regressive — it means that the less well-off have to pay higher taxes so that the rich can go to the opera. If people enjoy opera, why shouldn’t they pay the full cost of it?
That’s not the only example of charitable giving that benefits the rich rather than the poor. In the United States, public schools in poor districts tend to start from behind when it comes to funding, because the property tax base just isn’t there. And rich school districts can tip the balance even further in their favor because their residents can better afford to donate money to their local schools. Such giving is often done through tax-deductible donations to nonprofit organizations and foundations that channel money to specific schools and districts. Since the rich are taxed at a higher rate than the poor, and are more likely than other taxpayers to itemize their deductions, the government actually gives an additional subsidy to schools in affluent districts.
In Sweden, these kinds of issues are avoided because there are no tax deductions for charitable donations. Compared to America, Sweden has a smaller private philanthropic sector and a larger public sector. Yet, in proportion to the size of its nation’s economy, the government of Sweden gives more than three times as much money to help the world’s poor as America does in governmental and private-sector aid combined. That contrast should make us question whether America’s present system of charitable tax deductions is the best way of aiding the truly needy.
Since Americans cherish their private philanthropic sector and are suspicious of government, they are unlikely to adopt the Swedish model. So here’s an alternative: Few countries are as loose as the United States in granting the privilege of tax-deductibility. Let’s set criteria so that it is granted only where there is a broad consensus that an organization is serving a valuable public purpose.
While we wait for the reforms we really need, however, Obama’s proposal to reduce the charitable tax-deduction for America’s highest earners is a step in the right direction. It would redirect money that is now being used to reward the philanthropic choices of the wealthy — whatever those choices might be — and devote it to purposes chosen by our democratically elected representatives. If Obama gets his way, the resulting revenues would be applied to fixing our badly broken health care system. That certainly beats subsidizing organizations whose mission it is to convince us that the Earth is only a few thousand years old.
Peter Singer is a professor of bioethics at Princeton University. He is the author, most recently, of “The Life You Can Save: Acting Now to End World Poverty” (Random House, 2009).
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