Obama on Charitable Tax Deductions: Give Away Everything and Owe 11.6%!
Watch these brief remarks by Barack Obama and then consider the consequences.
I realize that this is not a recent development, but we can’t forget about it. Obama’s tax changes will limit the charitable tax deduction to 28% as they raise the top tax bracket to 39.6%. To give an example of what this could mean for a wealthy donor, consider this. A philanthropist earns ten million dollars in taxable income from their business activities and they decide to GIVE ALL OF IT AWAY. Under the existing rules, they will pay no taxes. Once we are living under Obama’s rules, this donor will owe over a million dollars in federal taxes (nearly 11.6% of $10,000,000, but slightly less due to some earnings subject to lower tax brackets)!!
Does the prospect of this sound fair? Does this degree of munificence seem implausible? It certainly shouldn’t since Bill Gates and Warren Buffett have pooled their fortunes in order to give them away. Throughout the history of our nation philanthropy has enhanced our civil society. Those who built great industries bequeathed art collections and named universities. What doubt do we have that, on average, those who have grew fortunes through free exchange and the inventive harnessing of the synergies of nature can compose plans to advance the state of their fellow man superior to those dictated in the halls of Congress? Even when these eminent men should err in judgment, or have malicious intent (see Soros, George), almost none of them possess budgetary discretion of the magnitude of the key players in our federal government, so their mistakes are more easily contained, and swamped by their successes through the law of averages.
Indeed, a true irony here is that we have no comprehensive national research university, that virtually all of our top campuses are private, and that even public universities are replete with institutes and professorships named after donors targeting perceived needs in society. Despite all of this, it is within these halls of academia that we witness the beneficiaries of these ‘malefactors of great wealth’ pontificating about the need for the diversion of private capital to the hands of those who by their own rankings of scholarly prestige use it least ably.
Let us also not forget certain branches of the non-profit sector are heavily favored by the current administration over others. Although I do not recall single gifts to traditional religious institutions of the same magnitude as to those entities mentioned above, works of charity executed by non-secular groups are vital to the fabric of society. Their local nature affords them a sensitivity to the needs on the ground unobtainable by a distant state agency. The donors are humble, typically anonymous, and often offer their elbow grease and ethical oversight to the causes they support financially. It is also these groups which are most threatened by Obama’s limitations upon charitable deductions, for while the diversion of direct bequests to universities may well be replaced by federal largesse, religious charities will not see this circuitous path to funding. Indeed, it isn’t much of a stretch to infer that redistributive philosophy in academia is actually self-serving.
This is not accidental. You are witnessing the opening of an economically strategic front in the culture war. The reduction of this tax deduction is designed to diminish the influence of our non-governmental safety nets, thus creating chaos and providing an opportunity for federal men of action to come to the rescue and remake society in their own foolish image. The eradication of civil society by leftists is truly dangerous. For although we can love our neighbors, the government is incapable of love, and a society whose needy are left wholly dependent upon an entity that cannot love them will have no hope of restoring their ability to independently prosper.
If these tax ‘reforms’, purportedly introduced out of ‘fairness’, are implemented, then a person who could have donated $10,000,000 to the charity of their choice will now only be able to donate about $8.9 million. The rest of it will go to Uncle Obama’s pet projects. They won’t get their name on a mail truck, packages of government cheese, or section 8 housing vouchers. (They may, however, be thankful that the Palestinian media will not give them a credit as a co-producer on whatever children’s video is the next successor to the Farfour series!) The beneficiaries of these federal gifts will not know how the industry and generosity of man have provided them. They will attribute their bounty to the providence of President Obama, their local pork barreling legislator, and his redistribution czars, and it is this ignorance that will leave them forever infantile in their outlook and dependent upon the growing welfare state.