Tax-Deductible Contributions

This may come as a surprise to many folks who know me, but during the last presidential primaries I took a quiz to help “identify the presidential candidate who most closely matched my beliefs.” It took only a couple of minutes to answer the online questions. My recollection is that John Edwards was first (there were no questions about marital fidelity at the time), Hillary Clinton second and Ron Paul third.

Ron Paul? Yep, and the topic for this article is one of the reasons why the survey thought Ron Paul might be for me.

I do not think charitable contributions should be tax-deductable. I highly approve of giving to nonprofits. I give to various nonprofits because it makes me feel good, because I think the church or organization will do useful things with my money. I do it because I have more resources than I need to live and believe I should give some back. I give for a lot of reasons, but that doesn’t mean the Federal or State governments should reward me for my generosity.

That kind of libertarian thinking induced the quiz’s authors to suggest Ron Paul might be a good fit for my preferences. Well, if that were all Ron Paul espoused the quiz would have been right. However, Ron Paul and I part company as soon as we start discussing this country’s safety net—of which I am a strong proponent and Paul is not. When I weigh my answers to reflect those issues I think are most important, my views on an appropriate safety net are a lot more important to me than inappropriate taxing schemes.

Anyway, back to tax-deductible contributions. I cannot fathom why, other than that rich people run the country and this provision disproportionately benefits those with money, government should subsidize me when I contribute to the church of my choice, or to a local foodbank or to one environmental group or another.

The argument that these contributions are for “common good” falls apart as we examine contributions to religious organizations. In my mind, fundamentalist churches with their exclusionary teaching do not benefit our common weal. I suspect they would say the same thing about my contributions to the non-creedal, open theology denomination I support. These are personal decisions and should neither be supported nor hindered by the Federal Government and its tax code.

“We’ll lose the (fill in the blank nonprofit) without the tax-deduction,” proponents claim. If the only reason people contribute to a nonprofit is to get a tax-deduction, then I say, “So be it.” Those folks need remedial arithmetic more than they need tax deductions. The government is subsidizing the contribution, not paying for it. It still costs an individual money to make a contribution. Clearly they are not that ignorant of basic addition and subtraction: they are making the contribution for some reason other than the tax-deduction.

If something is so important to a community that its loss is a great concern, then the community should agree as a whole to support it directly, not through the side door of the Federal or State tax code.

In my town in Michigan a few years back, we approved increasing our taxes to pay for a new library because we thought we needed it. Even in the midst of the current recession, we approved continued funding of the library at the same time we voted down the township budget (which did not call for any tax increase). [For the record I voted to approve both.]

When citizens have the chance to allocate money directly through their taxes, over a period of time they tend to make good decisions. When politicians make the decisions for the people special interests carry more weight than common sense.

For those who claim eliminating the contribution tax-deduction is only a backhand way to raise taxes, I say your King has no clothes. We can eliminate tax-deductions and lower tax rates while maintaining the same overall tax revenue.

Raising or lowering taxes is another discussion. This one is about making the system more efficient and our current tax code, including tax-deductible contributions, is terribly inefficient and needs immediate reform.

~ Jim