Commentary: Government support does not undermine our philanthropy
On March 5, The Daily Targum ran an op-ed titled “Solution to Poverty is in Individual Acts.” In it, writer Michael Vespa suggested that poverty in America could be reduced by taxing Americans less so that they can give more to charity because the government “has had no real progress” in combating poverty. But, the article fails to recognize the nuanced nature of charitable giving in the United States, and makes false assumptions about charitable giving.
First, it is important to realize that people do not give to charity entirely out of the good of their hearts. There is an economic benefit to charitable giving in the United States: Tax breaks. When you give to charity, you can take a deduction on your taxes in the process. So when a person donates a large amount to charity, they can expect a good amount of that money to come back in the form of a tax break.
But do a good amount of people give because of tax breaks? Enough to make a difference in tax policy, apparently. When the future of the charitable contributions deduction was on the chopping block in 2009, a staggering 2 out of 3 Americans said they would give less if the deduction was eliminated, according to a MarketWatch article. Ten years later, when the Republican Party overhauled U.S. tax code, the charitable contributions deduction was not simplified into the standard deduction due to how wildly popular it is.
Next, we should know where the $410 billion donated to charities and non-profits are going. At the top of the list are religious organizations such as churches. In 2017, approximately $127 billion was given to religious groups, which make up more than 30 percent of all charitable giving in the United States and more than doubles the next category.
While some religious groups do amazing work to help the less fortunate, some religious organizations do not. It is well-documented that televangelists and mega-churches do much more to line their leaders’ pockets than to help the poor and fight poverty, all while maintaining their religious organization tax-exemption and getting donations from everyday Americans like you and me.
Televangelists and mega-churches are not the only ones dubiously benefiting from the goodwill of charitable Americans. Some charities and non-profits are also guilty of wasting their donations away on “uncharitable acts” like paying for solicitation or increased salaries for board members, which is why it is important to research a charity before donating. So, just as the government can be somewhat ineffective at ensuring public funds go to good use, charities and non-profits can also be just as ineffective.
Contrary to what was suggested in the MarketWatch article, higher taxes do not mean lower charitable giving. In fact, when the tax rate goes up, so does charitable giving. In the 1970s, when the top federal tax rate was 70 percent — which is what some Democrats propose we go back to — wealthy Americans gave more than twice as much money to charity than they did in 2007, when the top tax rate was 35 percent.
Instead of putting the burden to lift the poor out of poverty on everyday Americans, we should instead put pressure on our government to redouble their efforts and urge them to take action.
Doing so will take money, but politicians have sensible plans to raise it. Sen. Marco Rubio (R-Fla.) recently suggested that we tax the $1 trillion spent by companies on stock buybacks, which would result in billions in new revenue. Rep. Alexandria Ocasio-Cortez’s (D-N.Y.) plan to raise the top tax rate to 70 percent would raise billions as well. Sen. Elizabeth Warren (D-Mass.) recently proposed a progressive “wealth tax” which would tax the wealth, not income, above $50 million (at 2 percent) and $1 billion (at 3 percent). This would generate more than $200 billion a year in revenue.
But how should this money be spent to fight poverty? We could increase school funding, especially to low-income and urban school districts, to improve the quality of education of disadvantaged children. We could expand Medicare and ensure that every American does not have to worry that getting sick or injured would drive them into bankruptcy. We could build affordable housing to guarantee that no American is without shelter. The possibilities are endless.
In his article, Vespa made an assumption that really angered me and inspired me to write this response. The assumption was that if our government decided to help the poor more, Americans would want to help less, since there is no longer a moral expectation for them to donate. That assumption is wrong, and could not be any farther from the truth.
Americans will always want to help other Americans. It is part of our national spirit and ingrained in our national identity. Americans donate their time and money to charities and non-profits because we want to make an impact in our community, and because it makes us happy knowing that someone else less fortunate benefitted from our actions. But we can do this alongside our government’s efforts, instead of in place of it.
Matt Fontanilla is a School of Arts and Sciences senior double majoring in information technology and informatics and political science.
*Columns, cartoons and letters do not necessarily reflect the views of the Targum Publishing Company or its staff.
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