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My understanding is that donating to charity, which would ideally be for the good of the common public, is purposefully encouraged, and that is not fundamentall

by alok-g 5y ago

My understanding is that donating to charity, which would ideally be for the good of the common public, is purposefully encouraged, and that is not fundamentally different than giving money to the governments as taxes. In other words, someone may believe more in a given charity spending money towards social good than on the government itself. I see some arguments along these lines here: https://theconversation.com/explainer-why-are-donations-to-some-charities-tax-deductible-72968 https://theconversation.com/explainer-why-are-donations-to-s... Excerpts: * The main argument for tax-deductibility of donations is that it is a form of government assistance or subsidy for what are considered publicly beneficial causes. * A third argument is that indirect support mechanisms, such as tax-deductibility of donations, facilitates choice. So, taxpayers can direct a certain proportion of their tax to causes they choose, rather than the government determining how it should be spent.

jameshart 5y ago
And the counterargument to that would be: Directing money to a charity, to avoid the money going to the government, is explicitly a way of directing your money away from the common good of the public (which is after all theoretically what the government would spend it on) and towards the specific spending goals which the donor supports. The idea that a wealthy person has a 'better' idea of how to spend their money than the collective will of the people expressed through government is fundamentally antidemocratic. A billionaire spending money through a charity that promotes a particular kind of schooling, rather than paying the money as taxes into the general fund where it would be used to fund education as directed by a democratically elected government, is basically a way of using their wealth to obtain a bigger-than-one-vote say in how education spending works, and to bypass democratic decisionmaking about how to spend money for the common good. Of course, democracies are imperfect decisionmakers and they may not always reflect the spending priorities that will maximise collective good - but at least as institutions they are intended to balance interests, and provide a measure of fairness and equality in how decisions are made. And why would we believe that individual wealthy charity donors will make better decisions on how to direct spending? An individual billionaire deciding that all schools should work the way they would prefer might be a positive way to end-run around institutional inertia and advance the state of schooling for everyone; or they might just pay to have every school library stocked with books about how humans coexisted with dinosaurs. They're one person, unconstrained by how the rest of society would like to improve schools.
- alok-g 5y ago
  Your points are valid. I agree mostly. I was only answering HenryKissinger who missed both your and my points. >> The idea that a wealthy person has a 'better' idea of how to spend their money ... The word 'wealthy' can be taken out here. The said choice is being given to others too if we let go of the nitty-gritties. I agree also that I have no reason to believe that donations should be entirely tax free. The optimal point may be at giving say 10% of the donation amount as rebates while the remaining 90% still is subject to taxes. May be that optimum is at 0% rebate also. >> and provide a measure of fairness and equality in how decisions are made Overall, I do agree to your point. Fairness in decision making is more important. Equality however is different from fairness though. Equality and efficiency bear tradeoffs. See here: https://en.wikiversity.org/wiki/10_Principles_of_Economics https://en.wikiversity.org/wiki/10_Principles_of_Economics Also, I do not see how high earners being subjected to higher taxes is fair (to them). In my opinion, the very premise of taxes being proportional to income has flaws. See my comment here: https://news.ycombinator.com/item?id=27433973 https://news.ycombinator.com/item?id=27433973 >> is basically a way of using their wealth to obtain a bigger-than-one-vote say in how education spending works If my viewpoint in the linked comment above of constant income tax is accepted, then the rich may not even have a bigger-than-one-vote to begin with. Overall, I agree to you though.
  - PaulDavisThe1st 5y ago
    > Also, I do not see how high earners being subjected to higher taxes is fair (to them). The fundamental model behind progressive taxation is that the pain of paying taxes should be roughly the same regardless of income level. The notion of "pain" in this context is closely tied into the concept of marginal utility of income: how much value does a given person get from receiving an extra $X in income (or conversely, how much do they lose by not having $X in income). Give an extra $1000 to person who only earns $12k/yr, and it's a pretty big impact. Given an extra $1000 to a person who earn $12M/yr and its just noise. Taxes follow the same principle, but in reverse. When we tax those with very high incomes, we want them to feel the same "pain" of taxes as those with lower incomes. Because of marginal utility, that requires different marginal tax rates. > the very premise of taxes being proportional to income has flaws. Taxes are not proportional to income. We have marginal tax rates, not all-income tax rates. Someone who earns $40k/yr pays the same taxes on the first (and only) $40k (likely close to zero) as someone who earns $4M/yr. Someone who earns $200k/yr pays the same taxes on that $200k as the person who earns $200M/yr.
cableshaft 5y ago
Are they able to count contributions to organizations that lobby on issues that benefit their business, or to politicians (like a SuperPAC) that would vote favorable to them as charitable contributions? Because if that's the case that's kind of shitty. I honestly don't know though, just occurred to me that might be another way they're taking advantage of this.
- alok-g 5y ago
  That's indeed a valid point, and I bet there would be instances of the same where the charitable contribution serves self-interests besides tax savings.

by alok-g 5y ago

jameshart 5y ago

And the counterargument to that would be: Directing money to a charity, to avoid the money going to the government, is explicitly a way of directing your money away from the common good of the public (which is after all theoretically what the government would spend it on) and towards the specific spending goals which the donor supports. The idea that a wealthy person has a 'better' idea of how to spend their money than the collective will of the people expressed through government is fundamentally antidemocratic. A billionaire spending money through a charity that promotes a particular kind of schooling, rather than paying the money as taxes into the general fund where it would be used to fund education as directed by a democratically elected government, is basically a way of using their wealth to obtain a bigger-than-one-vote say in how education spending works, and to bypass democratic decisionmaking about how to spend money for the common good. Of course, democracies are imperfect decisionmakers and they may not always reflect the spending priorities that will maximise collective good - but at least as institutions they are intended to balance interests, and provide a measure of fairness and equality in how decisions are made. And why would we believe that individual wealthy charity donors will make better decisions on how to direct spending? An individual billionaire deciding that all schools should work the way they would prefer might be a positive way to end-run around institutional inertia and advance the state of schooling for everyone; or they might just pay to have every school library stocked with books about how humans coexisted with dinosaurs. They're one person, unconstrained by how the rest of society would like to improve schools.

alok-g 5y ago
Your points are valid. I agree mostly. I was only answering HenryKissinger who missed both your and my points. >> The idea that a wealthy person has a 'better' idea of how to spend their money ... The word 'wealthy' can be taken out here. The said choice is being given to others too if we let go of the nitty-gritties. I agree also that I have no reason to believe that donations should be entirely tax free. The optimal point may be at giving say 10% of the donation amount as rebates while the remaining 90% still is subject to taxes. May be that optimum is at 0% rebate also. >> and provide a measure of fairness and equality in how decisions are made Overall, I do agree to your point. Fairness in decision making is more important. Equality however is different from fairness though. Equality and efficiency bear tradeoffs. See here: https://en.wikiversity.org/wiki/10_Principles_of_Economics https://en.wikiversity.org/wiki/10_Principles_of_Economics Also, I do not see how high earners being subjected to higher taxes is fair (to them). In my opinion, the very premise of taxes being proportional to income has flaws. See my comment here: https://news.ycombinator.com/item?id=27433973 https://news.ycombinator.com/item?id=27433973 >> is basically a way of using their wealth to obtain a bigger-than-one-vote say in how education spending works If my viewpoint in the linked comment above of constant income tax is accepted, then the rich may not even have a bigger-than-one-vote to begin with. Overall, I agree to you though.
- PaulDavisThe1st 5y ago
  > Also, I do not see how high earners being subjected to higher taxes is fair (to them). The fundamental model behind progressive taxation is that the pain of paying taxes should be roughly the same regardless of income level. The notion of "pain" in this context is closely tied into the concept of marginal utility of income: how much value does a given person get from receiving an extra $X in income (or conversely, how much do they lose by not having $X in income). Give an extra $1000 to person who only earns $12k/yr, and it's a pretty big impact. Given an extra $1000 to a person who earn $12M/yr and its just noise. Taxes follow the same principle, but in reverse. When we tax those with very high incomes, we want them to feel the same "pain" of taxes as those with lower incomes. Because of marginal utility, that requires different marginal tax rates. > the very premise of taxes being proportional to income has flaws. Taxes are not proportional to income. We have marginal tax rates, not all-income tax rates. Someone who earns $40k/yr pays the same taxes on the first (and only) $40k (likely close to zero) as someone who earns $4M/yr. Someone who earns $200k/yr pays the same taxes on that $200k as the person who earns $200M/yr.

cableshaft 5y ago

Are they able to count contributions to organizations that lobby on issues that benefit their business, or to politicians (like a SuperPAC) that would vote favorable to them as charitable contributions? Because if that's the case that's kind of shitty. I honestly don't know though, just occurred to me that might be another way they're taking advantage of this.

alok-g 5y ago
That's indeed a valid point, and I bet there would be instances of the same where the charitable contribution serves self-interests besides tax savings.