Thursday, October 27, 2005

Private Donations

The title of an article today, "In Hurricane Tax Package, a Boon for Wealthy Donors ," is misleading. It suggests that provisions that allow greater tax deductions for charitable donations are good primarily for the wealthy.

The recipients of charitable donations should be even more happy about the provision. It serves to encourage donations on a much larger scale. For example, "Mr. Wilson said that he and his siblings gave away several million dollars a year and that the amount could double this year because of the provision," according to the article.

Noting the generosity of Americans, some are looking at the reduction in tax "revenues" as a problem associated with the provision. "Robert F. Sharpe Jr., a fund-raising consultant whose clients include the American Heart Association and the University of California, Los Angeles, estimated that the provision would spur $4 billion to $10 billion in additional giving this year; 2005 giving was already expected to exceed last year's total of $248 billion.

Mr. Sharpe said the additional giving would result in $1 billion to $3.5 billion in lost revenue for the Treasury, more than the $819 million Congress anticipated."

Let's see - $4-10 billion voluntarily given versus $1-3.5 billion surrendered under the threat of force. Which is the better deal? It seems that both the wealthy and not-so-wealthy benefit from this arrangement. If this is the case, why change the tax provision only because of the recent natural disasters? If people will voluntarily give more than the government can pry from their wallets, why should we involve the government in charity at all?

The rest of the language of the article merely praised Congress for its benevolence. Since we've been good and given to charity, "Congress was willing to give up some revenue" as our reward. Or, more properly stated, Congress will temporarily be stealing less of our pay if we donate it to charity. Nice to know that Congress is willing to give up some of my money, provided I choose not to keep it and instead donate it to an approved charity.

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