Cutting taxes encourages giving
July 2nd, 2008 by Jason PyeBelow is a press release sent out today from the campaign concerning recent news that Americans gave more than $300 billion to private charities in 2007.
“One of America’s great strengths has always been the willingness of Americans to organize to solve social problems,” notes Bob Barr, the Libertarian Party candidate for president. The great French classical liberal Alexis de Tocqueville commented on American social activism nearly two centuries ago in his classic Democracy in America. “We see this same commitment today, with the news that Americans donated more than $300 billion to charity last year, a record level, despite increased economic uncertainty,” Barr observes.
Most of this money came from individuals. “Americans are the most generous people on earth,” notes Barr. “They even gave $13 billion to international organizations, a form of personal foreign aid.”
Barr adds, “Unfortunately, Senators John McCain and Barack Obama remain mired in a government spending mindset. Indeed, the major parties have even worked to hook private agencies on public funds.” President George W. Bush initiated the so-called faith-based initiative, supported by Sen. McCain, to provide increased grants to religious organizations. Sen. Obama also has endorsed this approach.
However, “it would be far better for Americans to directly support such groups. Then politics would not determine the choices of recipient or affect the organizations’ operations” explains Barr. Moreover, getting more Americans involved would further strengthen the independent sector.
Instead of expanding government social spending, “Washington should encourage Americans to take on greater responsibility in meeting charitable needs.” First, taxes should be cut. “This year Americans will spend almost four months working just to pay for government,” observe Barr. “That leaves far too little for the famous little platoons which do so much to improve American society.”
Second, “we should consider creating a special tax credit for charitable giving, to provide Americans with a dollar-for-dollar tax reduction for money contributed to social services. We could then deduct an equivalent amount from the federal welfare budget. This would enable Americans to shift welfare from the public to the private sectors,” says Barr. It would also avoid the inevitable politicization that accompanies government grant-making.
“Private charity is a better mechanism for helping people because it is more flexible and cost-effective, and is able to speak to more than financial needs—it can help meet the many often complicated problems faced by people and their families,” he explains. Government by its nature must be rule-bound and bureaucratic. But “neighbors helping neighbors at the local level is the way Americans traditionally aided those around them in meeting difficult family circumstances and other social needs.”
There are many costs to Big Government. “One of the worst is creating a bureaucratic state that has absorbed functions once performed by individuals, groups, and communities,” notes Barr. “We must begin to reverse this process.”
July 2nd, 2008 at 11:27 am
Contrary to popular belief government-managed quasi-charities, grant programs, and government social programs in general are not more transparent than similar private endeavors. The money is not necessarily managed any better, either. This point was made crystal clear when Social Security funds quickly became just another federal asset to be reallocated at any time by act of Congress.
July 2nd, 2008 at 11:28 am
Good article!
John McCain and Barack Obama don’t understand these principles. Government aid hasn’t helped, in the long run, the communities it targets, it gets them hooked on support.
Who is going to be the donor, when everyone wants to be the recipient?
Large non-profits that are hooked on government money, make the same bureaucratic mismanagement of funds that government agencies themselves make! I know this from personal experience dealing with one of them. Economic principles become upside down!
They consider small profits to be ‘losses’ because they don’t support the ‘cost structure’ of the organization.
You find in a true non-profit, not hooked on money, that they consider all pluses to be pluses, and all negatives to be negatives, and they operate in a sane way.
My friends from the former Soviet Union also understand ‘not sane’ economics….its important to keep costs as hurt, and not a benefit. But in the upside down world of government subsidies, greater need equals greater budget.
I hope people donate immediately today. McCain and Obama will have money. Barr’s campaign is important for the themes it brings up, and real action requires commitment.
July 2nd, 2008 at 11:55 am
let’s get rid of IRS!!!!!!!!!!!!!!!!!
July 2nd, 2008 at 1:32 pm
The government has used the taxation angle to encourage and discourage many different types of behavior. Don’t want people to smoke? Tax cigarettes. Don’t want people to consume alcohol? Tax beer, liquor, and wine. Don’t want people to drive? Tax gasoline. Don’t want people to give to charity of their own free will? Tax everything (or don’t provide a decreased credit for donations). By raising taxes, the government discourages giving charitably, since people budget their personal needs above others. If taxes take a bigger piece of their paycheck, they won’t be able to give.
The biggest issue I have with the government-mandated charitable giving is that the individual that is ultimately paying for the donation through taxation of their earnings has no choice about whether his or her money should go to those specific charities. Who is choosing what charities are worthy of the money and who decides how much money should be donated? On top of these questions, there is the inevitable inefficiency of government that will waste some of the funds in the administration of the charitable giving. Ultimately, that reduces the amount of money available for use by the charity in comparison to what could have been donated privately without government inserting itself in the transaction and taking its piece.
July 2nd, 2008 at 1:34 pm
DJ,
you are absolutely correct. Companies providing services, etc. to the government entities gorge themselves with padded expenses, etc. It is the nature of government contracts and spending, where corporations have found abundance in feeding at the public tax trough. It also flies in the fact of the most basic elements of individual liberty and freedom.
I am simply extra glad that I fulfilled my pledge today for the July 2 money bomb! Without Bob Barr, there would be no significant voice for the real spirit of America within the general election for president. I just ask those who have fault with some aspects of his past or positions to put him side by side with the other 2 significant candidates that are active, McCain and Obama, and see which of the three stacks up the best for individual liberty and the Constitutional principles.
July 2nd, 2008 at 8:39 pm
I don’t think charity is more effective than government - for example, look at higher education costs since the student loans were capped. But cutting taxes by each dollar you spend on charity would definitely encourage charitable giving, especially by conservatives and libertarians, and I think it could possibly reverse that and MAKE charity more effective. Great idea, Bob! Dan from PA
July 4th, 2008 at 12:00 pm
Daniel,
I’m not sure what your point about higher education is. Can you elaborate? Are you saying costs have gone up BECAUSE loans were capped or IN SPITE of loans being capped? And what does that have to do with charitable giving? I’d really like to know more about your point.
While, in general, I agree that government contractors ‘gorge themselves’ on government money there are a few points I’d like to make.
- Not ALL contractors soak the government. I work for a VERY large defense contractor that practically self-flagellates over cost control and maximizing value for the customer. Unfortunately, this successful model has made them an undeserving target of suspicion. From the inside, I can say that that contractor tries harder to contain costs than the ‘customer’ (the government) even in a ‘cost plus’ contract environment.
-Ultimately, the government is responsible for the gorging of taxing dollars by contractors. They write the RFPs, write and award contracts and authorize changes to those contracts that result in higher costs and grant the award fees each period. Contractors only get away with what the government will let them.
July 7th, 2008 at 2:24 pm
I do agree with what he is saying about taxes; however it is the same structure that the FAIRTAX would provide. Why wouldn’t BB sponsor the fairtax. I am sure they would support and work towards his election.