Our new Achiever Spotlight tells the story of Cathy Heath, an anti-forced annexation activist who has worked as a volunteer with Americans for Prosperity N.C. and the Civitas Institute: Raising a flag on a hill — that’s the word picture Cathy Heath uses to describe her decade-long fight to reform North Carolina’s annexation laws. Involuntary, or “forced,” annexation has long been a political hot potato in North Carolina. Cathy’s quest for reform began in 2001 when the Town of Cary threatened to annex her subdivision in northwest Wake County forcibly. The change would have meant higher taxes for Cathy and her neighbors. They didn’t want town services or the tax bill accompanying them. Cathy began researching the annexation issue and found that it was a significant problem in North Carolina and across the country. She became co-director of the Stop N.C. Annexation coalition, a grassroots effort to end forced annexation. “There were many communities across North Carolina upset about this issue,” she said. “They needed to start talking to one another. I saw there were enough people interested in this issue to make a difference.” Read more Achiever Spotlights here.
Category: Public Policy
To what degree does your country respect the freedom to be generous? That's the question examined in a new pilot study from the Center for Global Prosperity at the Hudson Institute. The new research explores the climate of philanthropic freedom in 13 nations. The study (PDF download) uses a variety of metrics — including the ease of creating philanthropic organizations and tax policies that either encourage or discourage individual generosity — to determine the level of restrictions in each country. The Hudson Institute's index of philanthropic freedom puts the Netherlands, the United States, Sweden, Japan, Australia, and Mexico at the top. Turkey, Russia, Egypt, and China round out the bottom. The study concludes: Many of the high scoring nations are also high income countries, reflecting the long history of philanthropy and civil society in these countries. Additionally, some emerging economies scored high also, reflecting an improving environment that is conducive to philanthropy in those nations. For example, South Africa, India, and Mexico have implemented policies that promote a healthy civil society and provide tax deductions for donors. Because this study assesses the barriers to civil society organizations and cross-border flows, countries that have restrictive regulations in these two categories scored lower, despite having relatively large tax incentives for donors. For example, countries such as Egypt and Russia provide tax deductions for donors, but the limitations on registration and operations of [charitable organizations] are restrictive. Furthermore, the barriers to the flow of cross-border foreign funds in both countries are tightly regulated and highly restrictive. The Hudson Institute plans to survey all countries in the future to provide a more complete picture.
Is the health of the family related to the health of the economy? John Hood, President of the John Locke Foundation, gives some examples of why the answer is "Yes" in his new daily journal column: In my latest column for Business North Carolina magazine, I argue that policymakers who seek to make North Carolina’s economy more competitive can’t afford to ignore the seemingly unrelated issue of family stability. “Economic and social policy often follow separate tracks,” I write. “But when it comes to the health of the family, the tracks converge. While people can continue to disagree about the religious or moral foundations of family life, there is simply no room for debate about the larger consequences of family stability. Higher rates of divorce and out-of-wedlock births raise the cost of government and, thus, act as a drag on economic growth.” Strong families are the building blocks of strong communities, and thus strong economies. Their economic role as producers of valuable goods and services in the household, and as investors in the human capital of future generations, may not sound romantic or “fun.” But it is fundamental to how human societies really function, or fail to function.
Our new Grantee Profile focuses on the Philanthropy Roundtable, a nonprofit based out of Washington, D.C., that seeks to foster excellence in the world of grant making: In listing societal institutions that are a force against big government, strong marriages, strong families, and strong churches immediately come to mind. But is philanthropy — the generous, voluntary donations to worthy causes — also an indispensible support of freedom? The Philanthropy Roundtable — a nonprofit based out of Washington, D.C., that seeks to foster excellence in the world of grant making — is proof that the answer is “Yes.” “Philanthropy is a huge bulwark of a free and independent civil society,” said Adam Meyerson, who has served as the Philanthropy Roundtable’s president since 2001. “It helps to prevent individuals from becoming too reliant on government. It’s particularly important at this time in history, when the future of independent civil society is at stake.” Bringing donors together to foster liberty and create private opportunities to meet needs in the community — those were the primary reasons that lead to the creation of the Philanthropy Roundtable in the 1970s. In 1991, the organization became an independent organization with its own board of directors. Read more Grantee Profiles here.
Grant-making efforts by Sir Antony Fisher in Great Britain paved the way for Margaret Thatcher's pro-free market reforms, according to Jacqueline Pfeffer Merrill at Philanthropy Daily. She writes: Many tributes have been paid to Baroness Thatcher’s intelligence, fortitude, and statesmanship. And, while these encomia are thoroughly deserved, her successes were not hers alone. Thatcher’s success in changing Britain were in part due to changes in public opinion that preceded her election and may be credited, in part, to Sir Antony Fisher, the remarkable philanthropist who set about to change Britain by changing the views of those we would today call opinion-leaders. Fisher did not set out to be a philanthropist. Serving in the Royal Air Force during World War II, he became a firm opponent of totalitarianism. Persuaded by economist F. A. Hayek’s argument that British socialism tended to totalitarianism, Fisher visited Hayek to ask for advice about how best to check British socialism. Fisher first proposed that he would enter politics and run for parliament. Hayek, however, convinced him that the best way to fight socialism was to inform opinion leaders about its dangers. Hayek was convinced that opinion leaders -- Hayek called them “intellectuals” -- had tremendous sway over policy.
Writing in Forbes, the Manhattan Institute's Howard Husock raises concerns about a component of President Obama's proposed budget that would narrow tax deductions for charitable giving: President Obama’s long-awaited budget proposal, to be released today, does not come right out and say that intends to reduce contributions to charity—but that is almost certainly what would happen were it to become law. Here’s why. The White House has effectively doubled down on a tax change it has been pushing for four years that would limit the value of the charitable tax deduction. The Administration has, since 2009, pushed unsuccessfully to allow only 28 cents on a dollar donated to charity to be deducted—even though the top tax rate for the wealthy donors who make most use of the deduction has been 35 percent. In the budget released today, the President again proposes to cap the charitable deduction at 28 percent—despite the fact that the top rate on the highest earners has increased to 39.6 percent. Think of it this way: the White House proposal would raise the cost of giving to charity from 60 cents per dollar to 72 cents per dollar. That’s a 20 percent increase in what can be called the “charity tax.” When one taxes something more, of course, one gets less of it—and it’s likely that the current $168 billion in itemized charitable giving would decline. Indeed, Indiana University’s Center for Philanthropy has previously estimated that capping the charitable tax deduction’s value at 28 percent—even when the top income tax rate was 35 percent—would lower giving by 1.3 percent, or some $2.18 billion in 2010. The new proposal would likely take an even bigger bite from giving. The Chronicle of Philanthropy reports that the reduction in giving could be as high as $9 billion a year. Later in the column, Husock argues that the charitable deduction is different in several important ways from other deductions, such as the home mortgage deduction. He also posits that, without the charitable deduction, big government will increasingly fill the space once occupied by private philanthropy (emphasis added): Although [the charitable deduction] decreases the tax liability of the affluent, it provides no direct personal benefit that’s the equivalent of a McMansion or gold-plated local schools or parks. It’s true that it leaves more money in taxpayers’ pockets to spend as they wish—but that’s only because of the social benefits their donation is providing, whether in the form of a food pantry or medical research. Indeed, without saying so explicitly, the Obama charity tax increase implicitly assumes, under cover of “fairness,” that Washington will do a better job spending the money than private donors will. But by encouraging philanthropy, we encourage imagination and innovation—in ways the political process, more likely to be constrained by conventional wisdom, will not.
Crony capitalism is destroying the foundation of the free-market system in the United States. That was the message economist Luigi Zingales brought to students at N.C. State University yesterday when delivering the 2013 John W. Pope lecture. Zingales, the Robert C. McCormack Professor of Entrepreneurship and Finance at the Booth School of Business at the University of Chicago, highlighted the core arguments in his new book, A Capitalism for the People: Recapturing the Lost Genius of American Prosperity. The native of Italy said that American capitalism has benefited from the belief among the American people that wealth inequality is acceptable provided there is room for upward mobility. That core traditional American belief has eroded in recent years; many now see the government as working against the best interests of the people. [nggallery id=zingales] The end of entrepreneurship as we know it happens when the key aim of business isn’t to satisfy customers and make a profit but to curry favors from the government, Zingales said. A major pursuit of business nowadays is figuring out how to suck money out of Washington. He said that anxiety over the perception of a rigged system has taken two different forms recently — the Tea Party movement that opposes big government and the Occupy Wall Street movement that opposes big business. They have more common elements than one might at first think. Zingales said: They are fighting, to some extent, two sides of the same problem. They are fighting two faces of the same leviathan. The problem is not government, and the problem is definitely not business. The problem is a dangerous intermingling between business and government. Both sides look only at one side of the picture and they don’t get the complete picture. The big picture is that the intermingling between the two sides is corrupting the system, making the system less fair, less productive, and leading to a deterioration of public support for the system. Zingales’ solution is to adopt a pro-market populism position. “The goal should not be to kill the free-market system, but to kill the crony component of the free-market system,” he said. “We can try to capture that populist outrage, not against the free-market system, but against the degeneration of the free-market system — against the excessive lobbying, against the corruption that is in Washington.” Video courtesy of the John Locke Foundation.