Posts Tagged ‘taxation’

Taxing Wealth Instead of Income

November 19, 2012

This very smart proposal for addressing inequality probably has zero chance of adoption, before or after our skid toward the fiscal cliff; but its central point–that wealth inequality grows faster than income inequality and is thus more pernicious–should be an answer to all the people clamoring for the abolition of estate taxes.  Don’t let them fool you by calling them “death taxes”–dead people don’t pay taxes.  The question is whether people who inherit their money should have to pay taxes on it just like people who work for their money.


Taxes vs. philanthropy: the view of a raving lefty

January 11, 2012

I am distressed by the sight of poverty; I am benefited by its alleviation; but I am benefited equally whether I or someone else pays for its alleviation; the benefits of other people’s charity therefore partly accrue to me.  To put it differently, we might all of us be willing to contribute to the relief of poverty, provided everyone else did.  We might not be willing to contribute the same amount without such assurance.

Therefore, this wild-eyed radical continues, the government must step in.  If poverty is to be alleviated, everyone must be taxed so that no one gets a free ride to the benefits of poverty eradication.

How appalling!  How socialistic!  Of course, what else could one expect from an ivory-tower academic complete with Nobel prize?

No, not that one (or even that one): Milton Friedman.

When the man said “There ain’t no such thing as a free lunch,” he meant it.

H/t Allen R. Sanderson.

Of water bills, credit unions and self-help

November 7, 2011

Alarms are sounding in the Nonprofiteer’s home town of Chicago today about the first budget proposed by Mayor Rahm Emanuel, which requires nonprofits to pay for water and sewer services they previously received free.  A sector-wide outcry produced one modification—a phasing-in of the charges over three years at smaller nonprofits—but generally the Mayor is keeping a campaign promise to ask nonprofits to bear their “fair share” of municipal costs.

He also seems to be following the lead of the Illinois courts which, as previously noted, are re-examining the nonprofit status of several of the state’s hospitals.  The Nonprofiteer’s colleagues at The Nonprofit Quarterly characterize Emanuel’s move as over-reaching, in that it affects nonprofits other than hospitals.  But the Nonprofiteer has no difficulty identifying non-hospital nonprofits whose water and sewer bills she doesn’t feel like subsidizing: the YMCA of Metropolitan Chicago (which, notwithstanding the social services it provides, is mostly a very successful health club that uses a lot of water); the Art Institute of Chicago (which, notwithstanding the educational programs it provides, is a wealthy institution with very low personnel costs because every art-history major wants to work there); the University of Chicago (whose housing and athletic facilities use as much water as any suburban development and whose property tax exemption is secured by the Illinois Constitution).  And let’s remember that the smallest nonprofits are renters, most of whom get water and sewer as part of their leases from for-profit landlords, and won’t be affected in the least.  So a bit less howling, okay?

Especially as we contemplate this past weekend’s flood of accounts transferred to nonprofit credit unions in reaction to the obvious greed of the largest banks, particularly Bank of America.  (Even a major philanthropist has moved his accounts to protest B of A’s failure or refusal to modify a reasonable number of mortgages).  Maybe if the credit unions get wealthy enough they’ll be able to provide the rest of the sector with the working-capital loans it can rarely get from commercial banks.  Maybe they’ll offer special water-and-sewer-bill loans.

And maybe a little taste of self-help will remind the sector that it’s supposed to be independent.  Political trends come and go but the work we do must continue, and it’s our business to organize ourselves so it can.

Charity begins at home—and that means taxes

July 13, 2011

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?

Bankers: Don’t try to use charities as human shields

January 11, 2010

The Nonprofiteer comes roaring out of seclusion to point out that big-bank donations to charity, and/or big banks’ making donations to charity mandatory among their employees, are NOT substitutes for big banks’ and bankers’ payment of a fair share of their earnings in taxes that support the operation of the United States government.  (You’re welcome to translate “fair share” as “the 90-plus percent banker-bonus tax recently enacted in the United Kingdom.”)

While the Nonprofiteer is as enthusiastic as anyone about the work of the nonprofit sector–all of its work, whether advocacy or arts or higher education or social services–she hardly thinks that donations to the Metropolitan Opera and Harvard should be considered an appropriate alternative to making tax funds available for health care or schools or housing or child care–or even the military.

Taxation is the expenditure of our common funds on common purposes.  Expenditure of private funds on private purposes–however worthy–is something else entirely, and the latter can’t be offered in trade for the former.

If the big banks want to dampen public outrage over the enormous bonuses they’re paying, they should take the simple step of not paying them.  And, as they seem unlikely to do anything that sensible or decent, public criticism should be made law in the form of taxes and regulations to recapture the windfall profits the banks made with public money.

Charities are real entities with real work to do.  We shouldn’t be treated as fig leaves for the worst excesses of capitalism.

And the Nonprofiteer certainly hopes we don’t hear from self-appointed sector spokespeople hastening to tug their forelocks and say “What a swell idea!  Thank you, thank you, Goldman Sachs!”  It’s not just the public at large: even nonprofits are better off with a government suitably supported by taxes than with a temporary infusion of tax-free guilt money.