SocraticGadfly: Let's end the charitable tax deduction

October 01, 2012

Let's end the charitable tax deduction

Why, you may ask? Because, if you understand the word “charity” the way I do, it’s not a “charitable” deduction, it’s a nonprofit deduction.

A New Yorker article about disgruntled billionaire financial mogul Leon Cooperman is interesting enough for showing him being moronic enough to claim Obama is "anti-private aviation." However, beyond that, the article in general is good for pointing out why we should probably just eliminate the charitable contributions income tax deduction.
Many billionaires have come to view charity as privatized taxation, paid at a level they determine, and to organizations they choose. “All things being equal, you’d rather have control of the money than the government,” Cooperman said. “Even if you’re giving it away, you’d rather give it away the way you want to give it away rather than the way the government gives it away.” Cooperman and his wife focus their giving on Jewish issues, education, and their local community in New Jersey, and he is also setting up a foundation that will allow his children and grandchildren to support their own chosen causes after he dies.

Foster Friess, a retired mutual-fund investor from Wyoming who was the backer of the main Super PAC supporting the Republican primary candidate Rick Santorum, expounded on this view in a video interview in February. “People don’t realize how wealthy people self-tax,” he said. “If you have a certain cause, an art museum or a symphony, and you want to support it, it would be nice if you had the choice.” The middle class anonymously and nervously pays its thirty-five per cent to the I.R.S., while the super-rich pay fourteen per cent, and are then praised for giving five or ten per cent more to pet causes, often with the perk of having their names engraved above the door.
It hugely favors the rich and their "charities" of choice, which are often fine arts groups, not real charities. Just nonprofits. Note that Friess’ two listed types of “charities” were actually nonprofit arts organizations. Not “charities” as I understand them and distinguish them from nonprofits. How much does he, or Cooperman, give to food banks? Goodwill or Salvation Army?

Beyond that, of course, this whole idea that giving to ANY nonprofits, even if they were true charities, is a “self-tax” is bullshit. And, the easiest way to prove it’s bullshit is to get rid of tax deductions for contributions to nonprofits.

True, that may hurt food banks’ middle-class contributions. We could address that by revamping the IRS code to put true charities in a class called human service organizations or something.

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