Thursday, September 6, 2007
Are Big Charitable Deductions a Bad Deal?
A fantastic article in the New York Times Business Section discusses the tax implications on large charitable gifts, which have become the fashion lately.
A number of people are complaining that the charitable work being done by America’s wealthy by and through their charitable donations is not as effective as that money would be if it were taxed and collected by the U.S. Government.
Typically, for every three dollars that a high net worth individual donates to charity, the U.S. loses one dollar in estate tax revenue, which some say would be better spent by the Government.
Personally, I agree with a number of America’s wealthy (and hope to one day be so wealthy), that while you have taken away coin from the government’s coffers, you have placed into the world more than the government could have by way of tax collection. Simply stated, those three dollars that you spent on a public good, are three times more than the money the government could have collected. Additionally, that money is guaranteed to go towards a public good, as the tax code and regulations will not permit the deduction of charitable donations unless the gift is actually charitable in nature. Whereas, the government may use the collected revenue in any manner it sees fit, non of which may be charitable, or beneficial to disenfranchised or underrepresented persons.
To the high net worth individuals who continue to donate their capital to the betterment of our nation through charitable works, I say kudos to you, and may you not stop such donations any time soon, as they provide far better good to the country than your lessened tax dollars ever could.