5 ms·

They can. But without a tax break, people will give less.

Retric 8y ago
But, the government ends up with more money. In theory charities fill in gaps that the public does not want to spend government money supporting. So, why spend public money supporting people giving to charity? It’s not like Tax breaks create new money they just redistribute resources.
- charlesdm 8y ago
  Because generally local initiatives driven by people are better executed or better managed than government projects. Even if the government wanted to redistribute the same money to charities, there is a significant overhead cost of people that need to be employed to sift through viable projects. I live in Belgium, where the system is a bit different (you get a 45% tax deduction on money donated if a charity has an accreditation) and the tax deduction is a significant part of why I give to charity. If there would be no deduction, I would still give, but a lot less.
  - Retric 8y ago
    The problem is not that charities are efficient or not, it's that your spending public money on a tax deduction without vetting what projects are being worked on. Effectively, you collect money from people and then deny those same people a say in what it's spent on. As you say, even the ones you support are not worth giving much of your money to. But, you are also directly supporting charities with your tax money that you actively disagree with. EX: Direct Food Aid is generally (though not always) considered a bad idea, but if even a small portion of people disagree then everyone chips in.
    - charlesdm 8y ago
      I'm not saying they're not worth giving money to however. In the case of Belgium there is proper vetting, and not every project can get an accreditation. But the deduction incentivises giving. I tend to gift double the money I would without the deduction, because the cost is exactly the same to me. The US system is probably too generous when comparing both. I personally don't oppose the deduction. Most are not investment vehicles but actual charities, doing something good in the world. I wish more people would do something good in the world. I'm sure more money goes lost every year due to political corruption and graft, than through the charity tax deduction.
      - Retric 8y ago
        > I tend to gift double the money I would without the deduction, because the cost is exactly the same to me Then you give ~exactly the same money, it's the public that's giving more money. Forcing everyone else in your country to chip in just a little more for roads is not the same as giving more money.
    - prostoalex 8y ago
      > without vetting what projects are being worked on There's a sort of pre-vetting in the charity's original 501(c)3 application. A charity can also be investigated and stripped of its status if it's found to be non-compliant with the public benefit clause.
  - deleted 8y ago
    [deleted]
- throwaway34241 8y ago
  In your question you call it 'public money', and while it's true that there would be more tax revenue without the deduction, it's not obvious to me that money that goes to a society-agreed-upon charitable cause instead of you personally is really part of your 'income' which is what is being taxed. A similar question applies with state taxes. One possible answer to 'why' question: Assume the tax rate is 50%. If the deduction encourages someone to give money they wouldn't otherwise, now 100% of the donated money is being used for a society-agreed-upon cause instead of 50% of it. In those cases, you could view it as a spending boost if the goal is to have more money spent publicly. To me the more important reason is the different structure of public vs private money. If the government was perfect at directing money wisely, there would be no need for private investment or businesses at all. But sometimes there are advantages to a few people directing a small pool of money, instead millions of people directing an enormous pool of money. You can have a greater variety of projects since not everyone needs to agree. And huge organizations can be less efficient/less likely to be held accountable, since even though there are many stakeholders their attention is limited (relative to the scope of what goes on). I think it's valuable to have a pool of 'risk money' for charitable causes in addition to the much bigger government-directed pool. And keep in mind that money is still directed some by the public with restrictions on what it can be spent on - if those are too lax it might be better to tighten them up than get rid of them all together.
  - Retric 8y ago
    > it's true that there would be more tax revenue without the deduction, it's not obvious to me that money that goes to a society-agreed-upon charitable cause instead of you personally is really part of your 'income' which is what is being taxed. You pick the cause. An advocacy group like MADD https://www.charitynavigator.org/index.cfm?bay=search.summary&orgid=4129 https://www.charitynavigator.org/index.cfm?bay=search.summar... is a charitable donation. Calling it a 'public good' when people specifically disagree with their viewpoint and someone could also get a tax deduction for supporting a different viewpoint is a net loss to society. I can't see a difference between that and spending the same money on Beanie Babies or whatever.
    - 8y ago
lotsofpulp 8y ago
Do property taxes, sales taxes, and all the other taxes cause people to give less too? The point is that a society needs funds to function, and in a democracy, society gets together and decides what to do with their pooled resources. We vote on what we want to prioritize, such as military, research, education, infrastructure, spying on its own citizens, etc. Everyone contributes to these causes via taxes, except if you set up your own little organization and call it a "charity". Then you can opt out society's liabilities and fund your own little pet causes, regardless of whether or not they are actually beneficial to everyone. And you can increase opacity since you're not subject to open records (like the government should be ideally), and in general, add a layer of bureaucracy for no reason. I don't see a compelling argument that all the added overhead of lawyers and accountants and inspectors who then need go around checking every stupid charity offset whatever benefit the charity provides. Instead we should be focusing our efforts on making government transparent, reducing waste, and pursuing efforts to benefit all in society.
- fjsolwmv 8y ago
  If the money goes to taxes instead of charity, you still have the same need for lawyers and accountants and inspectors to check that the funds are used properly and not diverted
  - lotsofpulp 8y ago
    There are economies of scale to be had there from not having to deal with fewer laws and individual organizations so I don't see why there would need to be as many lawyers and accountants.
- prostoalex 8y ago
  > Instead we should be focusing our efforts on making government transparent, reducing waste Why is this stipulated on charitable deductions going away?
  - lotsofpulp 8y ago
    It isn't, but the people I'm replying to are suggesting charity is better than taxes because government is wasteful, to which I'm arguing that if that is the case then the solution is to fix government by making it transparent, not opening up more avenues for corruption by giving tax deductions for charity.
lmm 8y ago
If they were genuine donations, then people will donate the same amount of pre-tax income as before (it's just that less of that pre-tax income will go to private charity and more will go on democratically accountable government expenditure. I call that a win). If people "donate" less because they're now getting less "value for money" out of whatever they were buying with their donations, that suggests that these weren't true donations and we're better off with less of them.

But, the government ends up with more money. In theory charities fill in gaps that the public does not want to spend government money supporting. So, why spend public money supporting people giving to charity? It’s not like Tax breaks create new money they just redistribute resources.

charlesdm 8y ago
Because generally local initiatives driven by people are better executed or better managed than government projects. Even if the government wanted to redistribute the same money to charities, there is a significant overhead cost of people that need to be employed to sift through viable projects. I live in Belgium, where the system is a bit different (you get a 45% tax deduction on money donated if a charity has an accreditation) and the tax deduction is a significant part of why I give to charity. If there would be no deduction, I would still give, but a lot less.
- Retric 8y ago
  The problem is not that charities are efficient or not, it's that your spending public money on a tax deduction without vetting what projects are being worked on. Effectively, you collect money from people and then deny those same people a say in what it's spent on. As you say, even the ones you support are not worth giving much of your money to. But, you are also directly supporting charities with your tax money that you actively disagree with. EX: Direct Food Aid is generally (though not always) considered a bad idea, but if even a small portion of people disagree then everyone chips in.
  - charlesdm 8y ago
    I'm not saying they're not worth giving money to however. In the case of Belgium there is proper vetting, and not every project can get an accreditation. But the deduction incentivises giving. I tend to gift double the money I would without the deduction, because the cost is exactly the same to me. The US system is probably too generous when comparing both. I personally don't oppose the deduction. Most are not investment vehicles but actual charities, doing something good in the world. I wish more people would do something good in the world. I'm sure more money goes lost every year due to political corruption and graft, than through the charity tax deduction.
    - Retric 8y ago
      > I tend to gift double the money I would without the deduction, because the cost is exactly the same to me Then you give ~exactly the same money, it's the public that's giving more money. Forcing everyone else in your country to chip in just a little more for roads is not the same as giving more money.
  - prostoalex 8y ago
    > without vetting what projects are being worked on There's a sort of pre-vetting in the charity's original 501(c)3 application. A charity can also be investigated and stripped of its status if it's found to be non-compliant with the public benefit clause.
- deleted 8y ago
  [deleted]
throwaway34241 8y ago
In your question you call it 'public money', and while it's true that there would be more tax revenue without the deduction, it's not obvious to me that money that goes to a society-agreed-upon charitable cause instead of you personally is really part of your 'income' which is what is being taxed. A similar question applies with state taxes. One possible answer to 'why' question: Assume the tax rate is 50%. If the deduction encourages someone to give money they wouldn't otherwise, now 100% of the donated money is being used for a society-agreed-upon cause instead of 50% of it. In those cases, you could view it as a spending boost if the goal is to have more money spent publicly. To me the more important reason is the different structure of public vs private money. If the government was perfect at directing money wisely, there would be no need for private investment or businesses at all. But sometimes there are advantages to a few people directing a small pool of money, instead millions of people directing an enormous pool of money. You can have a greater variety of projects since not everyone needs to agree. And huge organizations can be less efficient/less likely to be held accountable, since even though there are many stakeholders their attention is limited (relative to the scope of what goes on). I think it's valuable to have a pool of 'risk money' for charitable causes in addition to the much bigger government-directed pool. And keep in mind that money is still directed some by the public with restrictions on what it can be spent on - if those are too lax it might be better to tighten them up than get rid of them all together.
- Retric 8y ago
  > it's true that there would be more tax revenue without the deduction, it's not obvious to me that money that goes to a society-agreed-upon charitable cause instead of you personally is really part of your 'income' which is what is being taxed. You pick the cause. An advocacy group like MADD https://www.charitynavigator.org/index.cfm?bay=search.summary&orgid=4129 https://www.charitynavigator.org/index.cfm?bay=search.summar... is a charitable donation. Calling it a 'public good' when people specifically disagree with their viewpoint and someone could also get a tax deduction for supporting a different viewpoint is a net loss to society. I can't see a difference between that and spending the same money on Beanie Babies or whatever.
  - 8y ago

lotsofpulp 8y ago

Do property taxes, sales taxes, and all the other taxes cause people to give less too? The point is that a society needs funds to function, and in a democracy, society gets together and decides what to do with their pooled resources. We vote on what we want to prioritize, such as military, research, education, infrastructure, spying on its own citizens, etc. Everyone contributes to these causes via taxes, except if you set up your own little organization and call it a "charity". Then you can opt out society's liabilities and fund your own little pet causes, regardless of whether or not they are actually beneficial to everyone. And you can increase opacity since you're not subject to open records (like the government should be ideally), and in general, add a layer of bureaucracy for no reason. I don't see a compelling argument that all the added overhead of lawyers and accountants and inspectors who then need go around checking every stupid charity offset whatever benefit the charity provides. Instead we should be focusing our efforts on making government transparent, reducing waste, and pursuing efforts to benefit all in society.

fjsolwmv 8y ago
If the money goes to taxes instead of charity, you still have the same need for lawyers and accountants and inspectors to check that the funds are used properly and not diverted
- lotsofpulp 8y ago
  There are economies of scale to be had there from not having to deal with fewer laws and individual organizations so I don't see why there would need to be as many lawyers and accountants.
prostoalex 8y ago
> Instead we should be focusing our efforts on making government transparent, reducing waste Why is this stipulated on charitable deductions going away?
- lotsofpulp 8y ago
  It isn't, but the people I'm replying to are suggesting charity is better than taxes because government is wasteful, to which I'm arguing that if that is the case then the solution is to fix government by making it transparent, not opening up more avenues for corruption by giving tax deductions for charity.

lmm 8y ago

If they were genuine donations, then people will donate the same amount of pre-tax income as before (it's just that less of that pre-tax income will go to private charity and more will go on democratically accountable government expenditure. I call that a win). If people "donate" less because they're now getting less "value for money" out of whatever they were buying with their donations, that suggests that these weren't true donations and we're better off with less of them.