An appraising stare down the gift horse’s gullet

Jane Mayer’s excellent piece in this past week’s New Yorker about the brothers Koch, oil billionaires who’ve donated hundreds of millions to nonprofits promoting right-wing causes, finally clarified for the Nonprofiteer her unease at Bill Gates’s campaign to persuade billionaires to donate half their estates to charity.  It’s not a question of who has or hasn’t taken the pledge, though that’s an entertaining parlor game.  Nor is it the fact that the generosity of extremely wealthy people may not be what the rest of us have in mind when we hear the word “charity.”  (The Kochs’ “charity,” for instance, is a term of art encompassing donations to all kinds of institutions, predominantly think-tanks churning out rationales for the economic interests of wealthy people and front groups to make it appear that defending those economic interests is the political will of the non-wealthy majority.)

What’s troubling about the billionaires’ pledge remains so even when the receiving causes are unexceptionable.  Gates, for instance, has very generously underwritten substantial efforts by the Global Fund to Fight AIDS, Tuberculosis and Malaria.  Good for him, and for the world.

But.

Even the best-intentioned best-directed private donations are a way for moneyed people to work their will on the public, while the rest of us have nothing but the vote.  And when the level of contributions is discussed in fractions of $1B, it’s no longer charity within a democracy: it’s benevolent dictatorship.

Maybe our country should be giving less to treat AIDS et al and more to eradicate infant and maternal mortality through the UN Population Fund; maybe not.  That’s a decision to be made by the people of the United States, through our government.  It’s really not a decision for a single person.

Why not?  Well, for starters, the “single person” in question is a billionaire, and thus always a man.  That means almost by definition that the highest levels of charitable giving will overlook women, though we constitute more than a majority of the population.  And if that’s the case—if society’s needs are met by individual whim instead of collective decisions about the greatest good for the greatest number—then what, actually, is left of self-government?

Of course, billionaires have plenty of assistance in the task of allowing economic power to trump political will.  The Supreme Court’s decision in Citizens United, holding that corporations are “persons” with First Amendment rights violated by limits on their campaign spending, already put the nation quite a way down that road.  But somehow it’s worse when something that sounds so benign—“half my estate to charity, because I’ve been so fortunate”—actually translates as “I set the agenda for the future of this country, because I’ve been so fortunate.”

What we really want from billionaires is for them to pay a lot more in income taxes: say, the 87% of taxable income paid in 1954,  or even the 70% paid at the start of the 1980s.  And then we as a group can decide where our group’s money goes.  All contribute, all decide.

And what we really want from billionaires’ heirs is for them to pay the 77% estate tax rate in effect in 1941, or even the 70% estate tax rate in effect in 1976.   (And let’s not hear any nonsense about “death taxes.”  The dead aren’t the ones paying.)  Why shouldn’t people who get money by inheritance have to pay taxes on it, just like people who get it by working?

Merely to ask that question is to answer it: no democratic society decides that people who don’t work should be privileged over those who do.  Societies like that are called “aristocracies,” and all those so-called Constitutional Originalists running around hijacking elections by screaming about excessive taxation should take a moment to remember that our Constitution was designed precisely to interfere with the establishment of a government by inheritance.

The Constitution prohibits not once but twice the granting of any title of nobility; but the Framers didn’t rest there.  They fought to cripple and ultimately abolish entail and primogeniture, the primary devices by which English law kept family fortunes together.  Why?  Because they realized that, if you’re founding a republic, it’s really not a good idea to let money keep piling up generation after generation in the same few pairs of hands.

Self-governing societies can’t operate on noblesse oblige, and societies that do aren’t truly self-governing.  As Dr. Franklin said, “A republic—if you can keep it.”

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10 Responses to “An appraising stare down the gift horse’s gullet”

  1. Tom Cannon Says:

    Kelly,
    One of your best columns ever. You’ve held up a very clear mirror that not only says a lot of where are today as a society, how we got there, and what we left behind at our peril. This was written by an adult for adults; well done.

  2. Matt Says:

    I’m not sure you’ve thought this through. Taxing the wealthy at the % you listed is completely different than taxing the wealth in the 1940’s and 70’s. Capital flight is attained much easier these days. I fear you will achieve the exact opposite of your stated goals.

    Plus, you assume government (through the people) will act responsibly with additional funds attained through increased taxes. I challenge you to list a few government programs that were able to maintain a responsible budget throughout their lifetimes.

    I disagree with everything you’ve written, but I respect the passion.

    Cheers.

    • Nonprofiteer Says:

      I think capital flight is an unlikely outcome, given that neither the Euro, nor Japan, nor Latin America is as healthy economically than the United States. Perhaps we’ll lose some funds to China, but that will only begin to even out the balance-of-payments deficit we have with that nation.

      And you’re absolutely right, I “assume government . . . will act responsibly.” The Social Security system, Medicare and the Railroad Retirement system are all examples of government programs which maintain a responsible budget–by which I mean, they pay to the people the benefits that they promised to the people. And the Affordable Care Act will do the same.

      I appreciate your gracious tone, and enjoy the opportunity to disagree respectfully–it’s so rare these days! Thanks.

  3. Matt Says:

    “Maybe our country should be giving less to treat AIDS et al and more to eradicate infant and maternal mortality through the UN Population Fund; maybe not. That’s a decision to be made by the people of the United States, through our government. It’s really not a decision for a single person.”

    This is a good point, but I the decision on relative allocations shouldn’t really be made by the people of the United States either – but by the recipient governments and their citizens. The very reason we have large global imbalances in aid delivery is equally due to over-concentration in popular areas by NGOs and official donors.

    Relative allocative decisions should be made in the countries where they are most relevant by those who are most affected by it, not in the home office of donor country, in light with the latest development trend.

    • Nonprofiteer Says:

      Fair point; but even the decision that US foreign aid should be presented without strings is a decision for the polis as a whole!

  4. Matt Says:

    Economic health is a tricky thing to measure. There are some who claim, for example, that US unemployment is above 20%.

    Capital flight refers to individuals with bank accounts in other countries, not necessarily country-based accounts. I think we’d agree that (most) billionaires did not accumulate their wealth by being stupid – so it stands to reason those individuals have/will prepare for increased taxation by moving money – if not themselves – to another location. What then? Prohibit the practice? Slavery in the land of the free?

    I can’t speak for Railroad Retirement, but Medicare and Social Security have been bankrupt for several years. They are only able to make their payments based on borrowed money and/or by extending liabilities by several years. With a dwindling base from which to extract funds (consider unemployment levels and aging population), the pyramid is beyond inverted. I fear a similar situation will emerge with the Affordable Care Act – entitlements outpace production.

    One must produce before one can consume. While the US has been able to pervert that relationship for many years, even our great country must eventually yield to the laws of economics.

  5. The Blog Briefly Known as "Democratizing Philanthropy?" » Blog Archive » Is the answer “taxes”? (part 2) Says:

    […] mean to democratize philanthropy?” is simply “taxes.” The idea, voiced here and here, is that billionaires setting aside the majority of their wealth for philanthropic activity […]

  6. Mike Says:

    I dunno….

    It seems what you want is for Billionaires to shut their mouths and just pay as much taxes as you deem fair at the end of the day. Just because they seem to have more influence via their money than we do is not a good enough reason in my opinion.

    When you say “it’s not a decision for a single person” – I have to disagree. It is in fact, a decision for a single person, if that single person has some money to give. That’s what charity is -“single” people (or groups of people) voluntarily giving their money where they feel it is best spent. If that money is taken from them by govt force as taxes, it ceases to be charity. And as we’ve seen, govt. happily spends their (our) money without really asking our opinion on the matter! God knows where it would all go…

    Philanthropy cannot be “democratized” via regulation. It can only be done voluntarily, but those are an entirely different set of arguments than you’ve set out here.

    “Merely to ask that question is to answer it: no democratic society decides that people who don’t work should be privileged over those who do” — Yet when you seek to tax the billionaires at whatever rate you set under the mantle of “fairness” and redistribute that money to others who haven’t earned it, isn’t that exactly what you’re doing?

    -Just a respectful dissenter. Thanks for the forum!

  7. Eliminating the charitable deduction: It’s the end of the world as we know it, and I feel fine « The Nonprofiteer Says:

    […] is another version of the argument the Nonprofiteer has made elsewhere about the generosity of billionaires versus the reinstatement of a significant inheritance tax.  […]

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