Taxes vs. Philanthropy
By Arnold Kling
The New York Times‘ Louis Uchitelle writes,
When it comes to wealth, one in every 325 households had a net worth of $10 million or more in 2004, the latest year for which data is available, more than four times as many as in 1989.
As some have grown enormously rich, they are turning to philanthropy in a competition that is well beyond the means of their less wealthy peers…
Fighting AIDS and poverty in Africa are favorite causes, and so is financing education, particularly at one’s alma mater.
“It is astonishing how many gifts of $100 million have been made in the last year,” said Inge Reichenbach, vice president for development at Yale University, which like other schools tracks the net worth of its alumni and assiduously pursues the richest among them.
I think that the conflict between private philanthropy and government taxation is going to be one of the most explosive political issues of the next ten years. The people with the kind of net worth Uchitelle talks about probably have the option of contributing all of their income to charity without having to sacrifice any consumption. The result would be that they would pay no taxes. My guess is that this sort of thing drives the Left nuts, while the Right sees it as a win-win, with civil society getting stronger and government getting weaker.
UPDATE: commenters have pointed out that there is a 50 % limit on charitable contributions–you can only claim deductions up to 50 percent of adjusted gross income. If you contribute more, you can carry over contributions to next year, but for this year you are limited. In any case, don’t rely on this blog for tax advice.