It provides a major motivation to spend wealth via charities. The extent to which that corresponds to doing good to others is what's in question.
> Thought experiment: what would the charitable landscape look like if charitable donations deducted directly from tax burden, not from taxable income? (Perhaps with some upper limit.)
Even worse, I would think.
The tax break is equivalent to a matching program coming from public funds. Thought experiment: if you were setting up a matching program that used public money (i.e. tax income), what would your criteria be? Is that an appropriate use of public funds at all? I can see that some causes might be good enough to contribute public funds to (though in that case why not spend tax money directly on that issue, rather than via a private foundation?), but any and all organizations that happen to be structured as charities?
No, not even remotely. It's a mechanism to reduce public funds and leave more money in people's hands. In accounting terms, a tax deduction doesn't belong in the "expenses" column; it decreases the "revenue" column.
> Thought experiment: if you were setting up a matching program that used public money (i.e. tax income), what would your criteria be? Is that an appropriate use of public funds at all?
Almost never, no. The only case I can think of that would ever be appropriate might be as a means of allowing people to direct spending in a particular area already considered within the purview of government, allowing people to select from a variety of competing services while amplifying their spending power to allow them to afford something considered a necessity. As a means of re-introducing competition to improve quality, it might make sense. (But only after carefully determining that the expenditure in question should actually fall within in the scope of government.)
Waste is insidious. The US government spends more per person on healthcare than Canada and get's far less for it's money.
Apart from that, taxation already burns up a fair bit of people's goodwill; it's a lot harder to get people to donate when they're already involuntarily "donating" to a wide range of causes they don't support. A tax break for charitable donation gives people the ability to support causes they actually do support.
The ones that are incredibly efficient are the ones that deliver on their mission well for the amount of dollars that go into them; this may or may not correspond to a low share of money spent on administration.
In charities -- and the same is true for public agencies -- people love to complain about high administrative overhead, but then also love to turn around and complain when ineffective administrative oversight results in non-administrative uses of funds being wasteful or ineffective, asking why controls weren't in place to prevent that.
Further, overhead is only part of the problem. Many fund crap.
That's an incredibly entitled attitude (specifically, "entitled to other people's money"). Paying less in taxes is not equivalent to "taking money" from others. If you want to take less money from everyone, decrease taxes, or eliminate actual tax loopholes and deductions that don't provide a net good in the world (or serve any function at all other than rewarding those who bought and paid for them).
Let's setup a charity to lower the drinking age. I am sure we can get some donations from here and there.
Not at all. Taking away a tax deduction is equivalent to raising taxes, and will do absolutely nothing to decrease taxes for anyone. Now, if you wanted to propose a bill that eliminates a tax deduction and simultaneously lowers the tax rate to keep it revenue-neutral, then at that point you could argue for the benefits of that tax cut. But a tax increase in any form defaults to becoming more revenue, and tax cuts occur separately. (I'd love to see those two things inherently connected by law, but that hasn't happened.)
Also, if you actually proposed that bill, opponents of it would reasonably ask, of all the sources you might use to fund your tax cut, why you decided to start by raiding charitable donations instead of a thousand different items in the "expenses" column. Do you really believe that, of all the possible ways to fund a tax cut, the most important would be to target charitable giving?
> Further, your sidestepping the crap argument.
If you think some charities shouldn't receive 501(c)3 status, I'd agree, and I'd argue for stricter review processes. If you think all charities shouldn't, then I invite you to make that argument to the general public and see how they respond to it.
The burden (the cost source of the tax) exists. How the burden is served can leverage individual self-interest to create, maintain, or change behavior (tax deducations). A change in available cost sharing tactics (taking advantage of a burden reduction as it exists or does not) is not a change in the burden. It is not the same as raising taxes (ie tax rate).
I am not interested in stepping into how terminology between rates and fixed fees is confused across a multitude of localities.
If you did absolutely nothing else it would reduce government debt. Which reduces future taxes.
I understand your position, and I'd actually favor a tax structure that has a much lower rate and almost no deductions (making everyone's taxes far simpler than even the one-page 1040-EZ, and completely automatic). That would leave people more than enough for charitable giving and many other things. But unless that comes as a package deal eliminating all deductions and lowering taxes accordingly, I wouldn't support eliminating a tax deduction for charitable giving while leaving the myriad other deductions.
Of course our GDP and tax rates has grown over time, but not nearly as quickly as debt interest. So, without doing excessive analysis we would probably have a national surplus if literally nothing else changed in the tax code or spending.
Granted, arguments about lowered GDP and other knock on effects are reasonable. But, suggesting no long term tax breaks seems unlikely.
Thought experiment: what would the charitable landscape look like if charitable donations deducted directly from tax burden, not from taxable income? (Perhaps with some upper limit.)
That said, I don't think the "donor-advised funds" mentioned in the article make sense; the tax break should occur when actually donating to a registered charitable organization, not just when setting the money aside for an eventual donation.