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It took me a long time to be convinced of this, but the tax-advantaged nature of philanthropy in the United States is regressive and anti-democratic. The US go

by habosa 8y ago

It took me a long time to be convinced of this, but the tax-advantaged nature of philanthropy in the United States is regressive and anti-democratic. The US government basically says: you have to give us X% of your money ... unless you spend it first on something philanthropic. Well the problem is that basically anything that doesn't make a profit can be a philanthropy. It can be your church, your college, a soup kitchen, or an organization that wants to give every stray dog a funny hat. So if you suddenly become a billionaire, you can just set up a foundation and "tax yourself" by donating the money to what YOU think should happen rather than what the goverment (as elected by others) think should happen. Furthermore the system of deductible donations benefits the rich much more than the poor. My tax rate is about 40%. So if I donate a dollar to charity I am effectively only losing $0.60. The government was going to take $0.40 anyway. If you make less money and your tax rate is only 20%, then it costs you $0.80 to give $1 to charity. Some good reading: https://www.economist.com/briefing/2012/06/09/sweetened-charity https://www.economist.com/briefing/2012/06/09/sweetened-char... P.S. given that our system is what it is, I do donate quite a bit to charity because I can afford it and because I see worthy causes around me.

batmenace 8y ago
I agree that there is definitely a lot in terms of abuse when it comes to philanthropy and, more specifically, thr foundations that are set up. As always, those people who want to will find a way to cheat the system for their advantage. That being said, I don't think that it is really fair to extend this to philanthropy as a whole. A good idea isn't bad simply because some people abuse it. It just means that the rules need to be defined more clearly. Tax deductions make sense to an extent as they encourage donation to charities, and the principle does work. Not perfectly, but to an extent. While there are obvious cases of charities being used to avoid taxes and the like, there are also other examples. The Biill and Melinda Gates foundation is one of the largest funding bodies of scientific reserach globally. Bloomberg's 1.8 billion dollar donation to John's Hopkins helps accessibilit for lower income students. Of course, philanthropies come with challenges. There's always opportunity cost, there are always other areas of funding that could use the money. There will always be people who diisagree with the use of the money. Of course, there can be a motivation behind some funding. Bloomberg gave to Hopkins because it's his alma mater. Is that completely fair? No. But let's not pretend that the government in the US is completely unbiased with grant allocation and funding... Philanthropy should never be the only way money is given to worthwhile causes, and not all causes that are funded will be seen as equally important as others. That does not make it bad, though. Private donations should fill a role that the covernment cannot, in that moment, fill. Perhaps that is funding for smaller, experimental projects that have a higher risk of failing. Perhaps it's projects that are beneficial for one state, but not another. Or projects that do not align with the current goals of the administration (e.g. climate change). Rich people should not be allowed to use charities as a way to avoid taxes. But not every rich person is evil. Some donations may genuinely be given simply to help causes. Even if it's the soup kitchen. The rules imposed on how these bodies are set up should be stricter, yes. But I think that foundations can provide a good balance in funding allocation to the government.
- deleted 8y ago
  [deleted]
- habosa 8y ago
  I think philanthropy is great. It's the tax-advantage of large-scale philanthropy that I object to. The super rich should give anyway, even without the 40% break.
UncleEntity 8y ago
> given that our system is what it is, I do donate quite a bit to charity because I can afford it and because I see worthy causes around me. Which is the whole point of the government encouraging donations to charities by giving tax breaks, your worthy causes aren't my worthy causes so would go underfunded if they were up to majority rule. As it is you get to "vote with your pocketbook" which is about as pure as democracy gets.
- deleted 8y ago
  [deleted]
- habosa 8y ago
  Unfortunately that's not democracy. It's anarchy for a good cause. In democracy we vote together and then the most-popular thing happens.
eecc 8y ago
I was about so say roughly - if not exactly - the same thing. With philanthropy, very wealthy people can significantly alter the priorities of a society, without any consultation with those people that have been democratically given the task to manage societies' agendas. Small donations don't have that influence unless they add up, becoming again a form of majorities's expression (not necessarily democratic,) but given enough cash in hand, an individual can tip the balances significantly.

by habosa 8y ago

batmenace 8y ago

I agree that there is definitely a lot in terms of abuse when it comes to philanthropy and, more specifically, thr foundations that are set up. As always, those people who want to will find a way to cheat the system for their advantage. That being said, I don't think that it is really fair to extend this to philanthropy as a whole. A good idea isn't bad simply because some people abuse it. It just means that the rules need to be defined more clearly. Tax deductions make sense to an extent as they encourage donation to charities, and the principle does work. Not perfectly, but to an extent. While there are obvious cases of charities being used to avoid taxes and the like, there are also other examples. The Biill and Melinda Gates foundation is one of the largest funding bodies of scientific reserach globally. Bloomberg's 1.8 billion dollar donation to John's Hopkins helps accessibilit for lower income students. Of course, philanthropies come with challenges. There's always opportunity cost, there are always other areas of funding that could use the money. There will always be people who diisagree with the use of the money. Of course, there can be a motivation behind some funding. Bloomberg gave to Hopkins because it's his alma mater. Is that completely fair? No. But let's not pretend that the government in the US is completely unbiased with grant allocation and funding... Philanthropy should never be the only way money is given to worthwhile causes, and not all causes that are funded will be seen as equally important as others. That does not make it bad, though. Private donations should fill a role that the covernment cannot, in that moment, fill. Perhaps that is funding for smaller, experimental projects that have a higher risk of failing. Perhaps it's projects that are beneficial for one state, but not another. Or projects that do not align with the current goals of the administration (e.g. climate change). Rich people should not be allowed to use charities as a way to avoid taxes. But not every rich person is evil. Some donations may genuinely be given simply to help causes. Even if it's the soup kitchen. The rules imposed on how these bodies are set up should be stricter, yes. But I think that foundations can provide a good balance in funding allocation to the government.

deleted 8y ago
[deleted]
habosa 8y ago
I think philanthropy is great. It's the tax-advantage of large-scale philanthropy that I object to. The super rich should give anyway, even without the 40% break.

UncleEntity 8y ago

> given that our system is what it is, I do donate quite a bit to charity because I can afford it and because I see worthy causes around me. Which is the whole point of the government encouraging donations to charities by giving tax breaks, your worthy causes aren't my worthy causes so would go underfunded if they were up to majority rule. As it is you get to "vote with your pocketbook" which is about as pure as democracy gets.

deleted 8y ago
[deleted]
habosa 8y ago
Unfortunately that's not democracy. It's anarchy for a good cause. In democracy we vote together and then the most-popular thing happens.

eecc 8y ago

I was about so say roughly - if not exactly - the same thing. With philanthropy, very wealthy people can significantly alter the priorities of a society, without any consultation with those people that have been democratically given the task to manage societies' agendas. Small donations don't have that influence unless they add up, becoming again a form of majorities's expression (not necessarily democratic,) but given enough cash in hand, an individual can tip the balances significantly.