Congress is currently contemplating a plan that would trigger a drop in charitable giving of $13.1 billion annually, according to research analysis. The cuts would come from decreasing current incentives for charitable gifts through tax deductions.
Unfortunately for Congressional leaders focused on trimming government spending, charity losses will simply trigger corresponding increases in spending on government social programs, to pick up the slack left by hobbled charities no longer able to provide social services.
That potential transfer of responsibility and expense from charities to government should remind lawmakers why historically Congress has not taxed citizens when we give our money away to help others.
It's really quite simple: charities do work and fund programs that government otherwise would have to do, and charities hold advantages that can deliver help more efficiently and effectively.
Of course, the government does certain things that no other organization can, such as maintaining a military force, administering justice and building an infrastructure for commerce. But when it comes to social services programs, even well-intentioned government programs all too often bog down in cumbersome bureaucracy, duplication among agencies, expensive overhead, a maintenance mentality and a byzantine tangle of people, policies and politics.
Government agencies often add to these obstacles a yawning gap of physical distance and detachment from those who need help.
All these encumbrances make it much more difficult for government agencies to realize and respond to changes at the local level, or to adjust policies and approaches, or to mobilize quickly to address crises.
The larger the organization and the more distant the source of help, the less likely it is to succeed in the same way that a more directly responsive local source of help can succeed.
Charities, by contrast, are usually much smaller and nimbler than government bureaucracies and much less encumbered by bureaucracy and employee policies that retard accountability. Unlike government, charities don't have the luxury of a bottomless (compulsory) income source to create and sustain such a bureaucracy, and they learn to operate more efficiently.
Because charities typically operate on the local level, where they can see, hear and respond to the needs of service recipients, their results are more likely to prove more effective than programs managed from a distance.
Thus the Tenth Amendment to our Constitution, framed by colonists who had experienced government oppression:
"The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."
Employees and volunteers of charities often bring to their work a remarkable resolve and intensity fueled by faith and compassionate concern for those they serve.
Some years ago, I visited a charitable health clinic in Philadelphia and noticed donated food in one of the rooms. The director explained to me that the food had been donated to feed the medical staff, who had gone without paychecks in order to keep ministering to patients during the charity's financial crisis.
What had caused the financial crisis? Staff and their families had been forced to go without pay because the health clinic was still waiting on government reimbursements due three years ago.
When Government replaces the private and charitable sectors, individual freedoms--including freedom of faith--tend to decrease and oppression tends to increase. Just ask the prisoners of the former Soviet Union or the desperate citizens of Venezuela who are rioting for food.
In the mid-nineteenth century, Alexis de Tocqueville wrote of Europe's trend toward a more powerful and expansive government:
"Everywhere the State acquires more and more direct control over the humblest members of the community, and a more exclusive power of governing each of them in his smallest concerns. Almost all the charitable establishments of Europe were formerly in the hands of private persons or of corporations; they are now almost all dependent on the supreme government, and in many countries are actually administered by that power. The State almost exclusively undertakes to supply bread to the hungry, assistance and shelter to the sick, work to the idle, and to act as the sole reliever of all kinds of misery."
The good news is that in order to accomplish tax reform, Congress need not travel down the perilous path of ceding more and more power and responsibility to the State. Charity leaders have proposed a "universal deduction" to allow all Americans—not just those who typically itemize—to deduct their charitable gifts.
After all, why should the government tax us on money we give away to help others?
1 thought on “Congress, don’t tax giving: Charity helps people while saving government costs”
We try to give about 40% of my take-home pay to charity every year. If the charitable deduction, is removed, we’ll continue giving, but won’t be able to afford as much. We give to charities ranked 4-star on charity navigator, so the money is used well, I’m sure much more efficiently than most government programs.