Charity begins at home—and that means taxes

About a month ago the Nonprofiteer received a note from a public relations officer at the Jewish Federations of North America describing the Federations’ opposition to placing caps on tax deductions.  Being well aware that the debt ceiling negotiations are completely out of her control (and probably out of anyone’s control at this point), this letter failed to move the Nonprofiteer to leap to her telephone and urge her Congressbeing to beat back this latest assault on the nonprofit sector.

But it wasn’t mere laziness that kept her from the front lines in this particular battle; it was actual disagreement, based on the letter’s own summary of the horrifying proposal:

Specifically, the Administration has proposed limiting tax benefits for charitable contributions for those earning over $250,000 (married) or $200,000 (single). The tax benefit of all itemized deductions, including charitable contributions, would be capped at 28 percent and the Jewish Federations want the charitable portion to be exempted.

Thus, an extremely modest proposal for assuring that the wealthiest citizens pay some additional portion of our shared tax burden is considered a threat to the health and well-being of the hundreds of thousands of people served by the Jewish Federations.  This, despite the fact that deductibility’s impact on giving is far from clear.

Listen up, gang.   You want to see a threat to health and well-being?  How about cuts in Medicaid, in Medicare, in the Affordable Care Act, in Social Security, in food stamps, in child care, in education?  The fundamental problem of the American economy is that we don’t pay enough in taxes to support the services we very reasonably demand.  We don’t pay nearly as much in taxes as our quite conservative neighbors to the north, or our counterparts in Europe or Japan.  So we don’t have the health care, the educational system or the family support services we need.

Even complete abolition of the charitable deduction wouldn’t make much of a dent in the shortfall we’ve created out of pure political cowardice and foolishness.  The deficit is not the result of social spending but of three simultaneous wars piled on multiple tax cuts.  So the hideous notion of a cap on deductions fails on the Willie Sutton basis: you don’t rob nonprofits because that’s not where the money is.

But.   If there were what Everett Dirksen called “real money” hidden in the charitable deduction for wealthy families, it absolutely should be subject to revision, for the same reason every other deduction and credit and tax dodge should: because those dodges enable the wealthy to pay less than their share, and because this society needs more money than poor people’s taxes provide to continue those services necessary for us to remain a member in good standing of the developed world.

The Jewish Federations’ objection to this proposal—while completely understandable from their perspective—suggests that even the nonprofit sector has become infected with the shortsighted quarter-to-quarter thinking which addles Wall Street.  Rather than consider the long-term good of the society they serve, the Federations are concerned about balancing next year’s budget.  And while the Nonprofiteer doesn’t blame them for that—that’s their job—you’ll pardon her if she sides with (and cites) a different giant of the American Jewish community, Samuel Goldwyn*:

“Include me out.”

———————–

*Per Wikipedia: “In 1916, Goldfish partnered with Broadway producers Edgar and Archibald Selwyn, using a combination of both names to call their movie-making enterprise the Goldwyn Pictures Corporation. Seeing an opportunity, Samuel Gelbfisz then had his name legally changed to Samuel Goldwyn, which he used for the rest of his life. “

Could this possibly be because the alternative combination of their names is Selfish?

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5 Responses to “Charity begins at home—and that means taxes”

  1. Dan Says:

    I can’t agree more. Nonprofits like this are falling prey to the “what’s in it for me” mentality rather than attempting to work for the common good.

  2. Nancy Worssam Says:

    Here, here! Plugging tax loop holes and special exceptions may be the only way we begin addressing the real challenges that confront us in regard to tax law.

  3. Anita Bernstein Says:

    I seldom agree with Thou Shalt Not Tax Me ideologues and won’t start now. But what if the idea is flawed for reasons other than Federations’ bottom line? Maybe rich folks really will donate less if the charitable deduction is capped. Even if they don’t, any extra revenue taken in won’t necessarily go to good places in the federal budget.

    Big nonprofits might be serving Mammon and themselves, but if the proposal is unsound (I can’t run the projections myself), or part of some bad-faith Beltway deal, nobody else will make the necessary stink.

    • Nonprofiteer Says:

      Excellent point–particularly about the possibility that the money will go to the Pentagon or someplace else less deserving than the Federations. But I still think it’s important to keep beating the drum for the important of the public sector in determining the public interest, and that means fighting these things out in Congress rather than trusting to the enlightened thinking of philanthropic people.

  4. Beyond “Will not!” “Will so!” « The Nonprofiteer Says:

    [...] impact on giving of increased marginal tax rates and a cap the charitable-giving deduction.  While some of us have been arguing that both of these moves toward social justice should be supported by t…, and others have been arguing that the world will come to an end if every penny of tax savings [...]

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