Tax Subsidy for Charities or Jobs

Reader comment on: Richard Epstein on the Charitable Deduction

Submitted by Eugene Patrick Devany (United States), Jan 30, 2013 11:04

It is counterproductive to use tax money to encourage the loss of investment and jobs in the private sector. The charities in the U.S. have amassed $2.7 trillion in net wealth and they provide proportionately little help to the poorer 50% of the population. Some think it a little obscene that half the country now has only a fifth of the assets of the wealthy charities. Of course many charities are not intended to help the poor and represent only monuments to divergent political ideals and all manner of foreign causes. The tax subsidy has made it profitable for the wealthy to donate appreciated assets to avoid capital gains taxes. The inflated value of the charitable deduction offsets taxes owed on other income. The taxes of the poor are higher than necessary to subsidize the tax deduction of the rich and the charities they tend to favor.

I believe that reform of the tax exemption for charitable deductions should primarily help those charities that help the poor in the U.S. This can be done by eliminating the charitable deduction and using the additional revenue to provide a guaranteed part time job for every man and woman that needs one. The jobs would provide training and supervision by charitable organizations and local governments in positions most likely to lead to private sector jobs. To encourage the transition to the private sector, the jobs would have to pay a bit less than the private sector. For charities willing to put people to work, any loss in contributions would be offset by free labor to accomplish their charitable and public service work. Those charities that do little more than buy advertising for political purposes, set up endowments which have not reduced the cost of education or operate churches which do not have programs to help the poor in the U.S. will simply have to make do with contributions that are not subsidized by the taxpayers.

Underemployment is far better for the economy and the person than unemployment and government handouts. Our charities should make the sacrifice for the poor.

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