Study: Eliminating the charitable tax deduction means fewer jobs

August 20, 2013

A new report, "The Economics of the Blank Slate" published by the Tax Foundation, finds that eliminating the federal charitable tax deduction would slow economic growth and reduce employment. The Nonprofit Times has more: Losing the charitable deduction would cause a slowdown in U.S. economic growth because it would increase people’s taxable incomes, pushing more of them into higher tax brackets, reducing incentives to work, save, and invest, according to the study. This estimate may actually understate the harm because the Tax Foundation’s simulation model does not estimate the social or other benefits in turn provided by the charities, hospitals, and educational institutions supported by donations. If the revenue gain from eliminating the deduction were put back into an across-the-board cut in individual tax rates, however, the lower marginal rates would soften the tax system’s biases against investment and work, which would expand the quantities of both labor and...

Peter Buffett’s misstep on philanthropy

July 29, 2013

Peter Buffett — son of the man famous for being rich, Warren Buffett — wrote an op-ed appearing in The New York Times deriding what he terms "philanthropy colonialism." The process goes something like this: Wealthy donors try to alleviate the guilt they feel for their success by taking part in philanthropic enterprises, but they don't possess the knowledge to really know how to solve the problems at hand. The end result is perpertuating a system of inequality while assuaging the consciences of the rich. "The rich sleep better at night, while others get just enough to keep the pot from boiling over," Buffett writes. But Howard Husock, writing in Forbes, takes issue with Buffett's premise: Buffett stands in a tradition of heirs to great fortunes uneasy about the source of their wealth–one that dates at least to John D. Rockefeller Jr., who stepped away from the management of Standard Oil.  He is not wrong  in all his somewhat rambling observations: the idea that...

For whom are the liberal arts?

July 26, 2013

That's the question asked by Jacqueline Pfeffer Merrill in this blog post in Philanthropy Daily: The late Earl Shorris had a radical answer to that question: the liberal arts are for those of all socioeconomic backgrounds, including those who are poor. This is a quite radical assertion. Traditionally, a liberal arts college education was a privilege of the economic elite, or at least of the upper middle class. In the United States, the GI Bill made liberal arts education the province of the middle and even working class—although accompanied by the expectation that a liberal arts education should lift graduates out of the working class at least into the middle class—that is, a liberal arts education is for those who come from, or aspire to, the upper socioeconomic classes. In his posthumously published book (Shorris died last year), Shorris describes how he pitched the liberal arts course he designed for poor people to prospective students: “You’ve been...

Freeing the nonprofit sector from government encroachment

July 22, 2013

Writing in The Wall Street Journal, James Piereson of the Manhattan Institute suggests that Americans revaluate the charitable tax deduction in light of the large number of nonprofits that now rely heavily on government funds to operate: Debate continues in Washington over limiting the charitable deduction for the wealthy to help balance the budget. Billionaires Warren Buffett and Bill Gates, in addition to influential advocacy groups like Independent Sector, an umbrella organization of 600 charities, insist that the charitable deduction is vital to preserve America's vibrant voluntary tradition. Yet the nonprofit sector has problems beyond the charitable deduction. For much of U.S. history, nonprofits have operated as a check on government by providing private avenues to serve the public interest. Unfortunately, American charities—and more broadly, the entire nonprofit sector—have become a creature of big government. Piereson makes a practical suggestion: create an online...

Religion, political conservatism markers of generosity

July 17, 2013

Americans who are religious, politically conservative, of moderate income, and who reside in rural areas are the most generous givers as a percentage of income, according to a new cover story in Philanthropy magazine, a publication of the Philanthropy Roundtable. "Measured by how much they share out of what they have available," writes report author Karl Zinsmeister "the most generous Americans are not generally those in high-income, urban, liberal states like California or Massachusetts. Rather, people living in areas that are more rural, conservative, religious, and moderate in income are our most generous givers." North Carolina ranks 9th on the list of the top 10 most generous states. Utah, Mississippi, Alabama, and Tennessee round out the top. Nevada, New Jersey, North Dakota, and Wisconsin round out the bottom tier. Zinsmeister writes: It is easy to think of philanthropy as something done by the very wealthy, or big foundations, or prosperous companies. Actually, of...

The need for conservatives to embrace community

July 16, 2013

Writing at Philanthropy Daily, Scott Walter blogs about a recent column ("All You Need is Love: How Community Can Save Conservatism") that emphasizes the need for conservatives to understand, and support, the idea of community: A conservative from the American Enterprise Institute (AEI) must be shocking some Atlantic readers with his new article, “All You Need Is Love: How Community Can Save Conservatism.” Author Michael Strain quotes and endorses the claim Rep. Paul Ryan recently made in a speech at AEI: People “hunger for a community,” because “we’re happiest when we’re together.” What are these right-wingers doing talking about love, happiness, and community? Isn’t conservatism only about marginal tax rates, budget stats, and rugged individualists? Not exactly. Strain lauds Edmund Burke’s “little platoons” and stresses, above all, “the mediating institutions of civil society,” which include the family, churches, soup kitchens, scout...

Free enterprise is the most ‘effective altruism’

July 15, 2013

Anne Bradley and Jay Richards — two scholars at the Institute for Faith, Work & Economics — argue in this column against the notion of philanthropy as the greatest form of altruism. Instead, the greatest altruism is produced by businesses in the free-market economy. They explain: “Effective Altruism” encourages young and old to pursue the jobs that earn the highest paycheck for the sole purpose of giving most of their income away philanthropically.  This treats philanthropy as if it were the only, or at least the most effective, way to act altruistically—that is, for the benefit of others. It also implies that business pursued for its own purpose is morally suspect. In reality, the primary way widespread poverty is alleviated is with plain vanilla factors such as business, hard work, property rights, a reliable dispensation of justice, and enterprise. The Gates Foundation has saved an estimated 5 million lives thus far. But we rarely hear of the countless lives...