U.K. Backbencher “Ashamed” of Prime Minister’s Charity Tax Deduction Plan

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April 14, 2012; Source: Daily Mail

The debate in the U.K. regarding Chancellor George Osborne’s proposal to set a specific cap on individuals’ tax deductible donations to charities has spawned a debate comparable to what we saw in the U.S. when President Obama proposed to cap charitable deductions (and all other itemized deductions) for very wealthy people. Except for one thing. In the U.S., while the nonprofit and philanthropic sectors, led by their national trade associations, mobilized to lobby extensively, we heard very little from members of Congress on the issue one way or the other.  The president’s proposal sat there, the nonprofit sector by and large reacted in high dudgeon, but lawmakers said relatively little, including members of President Obama’s Democratic Party, who never seemed to fully embrace or even utter the proposal in public.

Anyone who has ever watched C-SPAN’s rebroadcast of the “Prime Minister’s Questions,” the weekly question time with the Prime Minister on the floor of the House of Commons, knows that the most junior backbenchers on up love to engage the PM in a verbal donnybrook on all sorts of policy proposals. It’s a bit livelier than the pro forma speeches to the cameras of many U.S. senators and representatives.

So it should not be surprising to find a backbencher taking on Chancellor Osborne’s charity tax proposal in an op-ed published in the Daily Mail, except that Zac Goldsmith is a Conservative backbencher—a member of the same party as Prime Minister David Cameron. Making no bones about his feelings, Goldsmith says he is “ashamed that a Conservative Chancellor has not only announced measures that will undoubtedly depress giving in this country; he has spun a narrative in which philanthropists are now the enemy.” Goldsmith calls the Osborne proposal “this Government’s single costliest mistake.”

His argument is that the Prime Minister Cameron’s government has advocated a “Big Society” concept in which charities work with government, the idea being “that the state cannot and should not do it all alone.” His critique of the proposal is that “the Government is pulling the rug out from beneath the very champions of Big Society, and in a manner so brutal that it has taken days for the news to sink in, and for the backlash to start.” 

Sounding like a press release from one of America’s nonprofit or foundation leadership organizations, Goldsmith says, “I believe we need more, not less philanthropy, and that giving should become an ever-greater part of our culture… [A]s the Charities Aid Foundation has pointed out [about the Osborne proposal], ‘it will not be the rich who will lose out. It will be the most vulnerable people in society, and the causes charities support.’”

Calculating the impact of the Osborne proposal on a potential donor who earns £1million a year and wants to give £500,000, Goldsmith shows that the Osborne proposal will provide that wealthy donor with less tax incentive to make the gift. He generally acknowledges that the wealthy do not do enough for charity and that the tax incentive is important to wealthy donors.  Goldsmith admonishes, “Not all wealthy people share enough of their wealth, but those who do should be recognised and supported at every opportunity. I am astonished that the Government, of which my own party holds the ruling hand, no longer has that view.”

The young Conservative backbencher concludes his argument ominously: “One way or another, I believe there will have to be a retreat. Either that, or this will for ever be remembered as the Government that smashed the charity sector in this country.” Can NPQ readers think of a member of Congress who was similarly exercised about President Obama’s charitable deduction cap?—Rick Cohen