Column #020. First published in the St. Cloud Times Mar. 24, 2009
Funny how something you hear wrong can help you see something right.
Here's what I heard: President Obama's budget eliminates deductions for charitable contributions.
For years I headed a nonprofit that depended on the generosity of donors, and my wife and I contribute to several organizations. Tax deductibility is part of the background that we factor in when making decisions, and was part of the calculation when the Collegeville Institute's supporters wrote their checks.
So, my first reaction, even though I'm a big fan of Obama, was "No, you can't do this." But then I thought further, and came to a very different conclusion, which I'll tell you about shortly.
First, however, I need to set the record straight with information I'm glad I didn't initially have, because if I had, my thought process wouldn't have been triggered.
The Office of Management and Budget Web site makes clear that what I heard is far removed from reality. The policy proposal would affect only those with annual incomes of $250,000 or more (no effect on my wife and me), and it doesn't eliminate the deduction. It simply reduces the deductible percentage from 35 percent to 28 percent for the top 5 percent of the national income distribution. No big deal.
Back to my original mistaken impression — that charitable contributions would no longer be deductible, period. I came to realize that not even this should be a big deal, for at least two reasons.
First, why should my (or anyone's) backing of an organization depend on a tax benefit? Isn't the work of groups funded by United Way, for example, worth my support in and of itself? What would it say about my commitment to an organization's mission and vision if I withdrew my financial assistance because it would cost me the full amount of my contribution? It's weird that one's first consideration about charity is tax planning, not doing good.
Second, and much more important, taxes and philanthropy are not polar opposites. Opponents of taxes (and often, by extension, of government itself) celebrate statistics that show Americans more generous in charitable giving than citizens of any other nation. Even then, the overall figures are underwhelming: total American individual giving is about 2 percent of personal income, and more than a third of that is given to religious congregations.
But still, the argument goes, America is superior because we give money individually, not like "those Europeans" who "let" the government do the work and are, in consequence, taxed heavily.
Facts belie the claim that because we rely on charity more than taxes, we do better. On what I consider the most compelling measure of a society's moral worth — the condition of its children — the record of our United States is dismal. According to 2005 UNICEF statistics, childhood poverty in America — at 21.9 percent — exceeds, by a wide margin, that of every European nation and Japan, Australia, Canada and New Zealand.
The much-maligned Scandinavia? Denmark 2.4 percent, Finland 2.8 percent, Norway 3.4 percent, Sweden 4.2 percent.
Let me repeat: United States 21.9 percent. One of every five kids!
And the hurtful effects of that poverty ripple through our economy, our schools, our whole society and certainly Central Minnesota.
The citizens of those other nations aren't less generous than Americans. They just don't think of their governments the way we have been trained the past 30 years to think of ours — as an enemy of the people. Those citizens have given their governments — that is, themselves — the authority and the resources to fashion an economic and social system that works for everyone, especially the children. No way can our philanthropy make up the difference.
When the question is — as it always should be — "How can we meet our challenges for the benefit of the whole community?" — the answer is both charitable giving and taxes, not either/or.
Charitable contributions are something "we" do, yes, but so are taxes something "we" do, not something "they" steal from us for "their" purposes. Taxes are an essential way that we — all of us together — demonstrate our care for one another.