Alliance for Charitable Reform Opposes Buffett Rule

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April 16, 2012; Source: Alliance for Charitable Reform Blog

The denouement of the Buffett Rule proposal suggests that the nonprofit sector has a stake in tax policy regardless of whether the charitable deduction, the sacred element of recent national nonprofit advocacy, might be at stake. By most accounts, the Buffett Rule vote was an exercise in politics, not policy, as it had no chance of being enacted by the Republican-controlled House or by the less-than-60-vote Democratic Senate, and as predicted, it fell in the Senate by a vote of 51 to 45. Had the Buffett Rule been enacted, tax deductions for million dollar earners would have been in jeopardy—except for the charitable deduction, which the Obama White House pledged to leave intact, perhaps an indication that the charitable deduction is the least-objectionable deduction (or the deduction most beneficial to society) afforded to very wealthy taxpayers. It was unclear, as the NPQ Newswire previously noted, how the White House could exempt the charitable deduction from the Buffett Rule while continuing to propose a 28 percent cap on other high income (but less than million dollar) taxpayers. In any case, the charitable deduction was not in jeopardy with the Buffett Rule.

Nonetheless, the Alliance for Charitable Reform (ACR), a public policy advocacy organization affiliated with the Philanthropy Roundtable, an association generally consisting of conservative-leaning foundations, came out against the Buffett Rule. On April 16th, the ACR blog stated, “ACR believes that entrepreneurship and wealth-creation is vital to sustaining charitable giving.  A minimum tax levied on high-income earners ultimately leaves them with less to give and it is these Americans that, study after study has shown, give the most.” In other words, the argument goes, making the tax structure more equitable by increasing taxes on the superwealthy so that people like Warren Buffett pay at a rate no lower than their working class secretaries undermines entrepreneurship, wealth-creation and philanthropy driven by the very rich. 

The proposed Buffett Rule is based on the notion of creating a tax structure that is more fair, that gets the superwealthy to pay at rates equivalent to or higher than middle income working people.  The ACR position is to protect very high income earners from higher tax rates because lower taxes for the rich means that they have more disposable income that they might—might—give to charity and philanthropy. What about the rest of the nonprofit sector? Leaving aside the political theater of the Buffett Rule, how do NPQ Newswire readers feel about the Buffett Rule itself? Should the superwealthy be afforded lower tax rates to help them accumulate more wealth, some of which might go to charity, or should nonprofits advocate for a tax structure that would make those with the means pay more, even if it leaves millionaires with somewhat less money in their accounts?

One more question: Since ACR had the courage of its convictions to stand against the Buffett Rule in the name of charity and philanthropy, what did the other national nonprofit and foundation trade associations say—if anything—for or against the Buffett Rule?—Rick Cohen

  • Jerold Kappel

    Philanthropy has been between 1.7% and 2.1% of GDP, and tax structure does not seem to make a difference. Under the Clinton era tax rate structure it was about the same as under the Bush cuts tax structure. However, because of the tax cuts, the deficit, and the budget restrictions being enacted, there is less federal and state funds going to human services and other community resources such as parks, libraries, and education. Philanthropy has not, nor, I believe, will not, make up the difference between government cuts and the cost of providing these basic services. Will the Buffett rule itself ad enough to the federal coffers to offset government cuts? No. Will the Buffett rule discourage wealth accumulation, job creation, and charitable giving? Of course not.

  • Wayne Smith

    What a disgracefully self-serving position. Absolutely despicable for an organization that claims to serve the public good. The canard that fair taxes destroy jobs should be stomped on. Fair taxes and well funded social services would put some charities out of business, and wouldn’t that be a good thing?

  • Prosper Waukon

    It is of course, something to consider but if really depends on if you are a small non-profit or a large non-profit, similar to if you are a small business or a large corporation. Large corporations create large foundations that give to large non-profits. It is the same with the tax differences for large corporations and small businesses. The large corporations should pay a higher rate because they are using more of resources, natural and otherwise that belong to all of us in this country, in order to make their profits. Large non-profits are well-seasoned corporations who are adept at raising large amounts of capital from corporate foundations and other wealthy donors because they have similar values and beliefs as the dominant culture. This leaves the small businesses and/or small non-profits to fight over the depleted resources left over. It is not about paying more, it is about fairness. Many would like to begin with the bootstraps of the rich and famous but many would be just satisfied with attaining the bootstraps of the rich and famous.
    And it not about sharing your resources, it about creating opportunity for all. I agree, that we should all be given the opportunity to work and to have equitable compensation for our work. The gap between the rich, working class, and poor is getting wider.

  • John

    The “Buffet” rule is a red herring. IF Buffet was so concerned he would pay the 1 billion in back taxes that he has been fighting the IRS over for roughly 10 years. Also, the overwhelming majority of super wealthy do not pay income tax because their money is from capital gains, which, was taxed the first time they made it. So, capital gains taxes just become the second tax on that money. Also, if Buffet paid the 1 billion think of the Pell grants that would not suffer. Pay attention to rhetoric. Speaking of Buffet, he owns BNSF. So what you say? Well that is the railroad that will carry the crude oil from Canada to the USA for refining. So what you say? Buffet and Ben Nelson from Nebraska are good friends and Nelson owns about 6 million in Berkshire Hathaway. So what, right? Nelson is why the Keystone pipeline won’t be coming to America because he was the main objector. Environmental reasoning or the price of his shares in BH?

    What I am saying is we should not be basing tax policy on the suggestion of one man who has a very shady past and current life full of conflicts of interest.

  • krom

    If we had a system where high income earners were taxed at a higher rate, we kept the charitable deduction so those using it can lower what they report and lower their tax rate based on how much they give through donations, would that not generate even more incentive to give to charities rather than hoping they will decide how much to give out of their disposable income?