Bloomberg News has an interview with David Koch, a businessman and philanthropist whose net worth the wire says is estimated by Forbes at $17.5 billion. Mr. Koch will be honored tonight by Michelle Obama at the American Ballet Theatre's opening gala. The article goes on about ballet and Mr. Koch's other charitable interests, which include prostate cancer and the dinosaur wing of the American Museum of Natural History. But for our purposes the key quotes come lower down in the story:
Koch said he's concerned about the impact of U.S. federal tax increases on future charitable donations. Next year, income- tax rates for the highest earners will go up to 39.6 percent up from 35 percent, and the capital-gains tax will rise to 20 percent from 15 percent.
"Those increases will be detrimental to wealthy people to give to nonprofits," he said.
This is an interesting and somewhat unusual point because the traditional argument made by the national advocacy groups for non-profits, especially about the estate tax, is that a higher tax rate helps non-profits, because it makes the charitable tax deduction more valuable to the contributors. For an example, see this briefing on the estate tax by the Independent Sector, an advocacy group for non-profit organizations, which says, "The estate tax has been a critical incentive for people of great wealth to give back through their estates to support the work of charitable organizations that improve the quality of life in communities throughout the world."
On one level, the issue is somewhat complicated because of things like the effect of state tax laws (some have income taxes, some don't) and phase-outs of deductions at certain income levels. On another level, it's not complicated at all. The more the government taxes Americans, the less money that individual Americans have to give away to causes that they choose to support, and the more that the politicians in Washington have to give away to the causes that they (and the lobbyists and canpaign contributors who have their ears) choose to support.
