Debate du Jour: Religion, Government Spending and Giving

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Todays Special

August 28, 2012; Source: Philanthropy Daily

The NPQ Newswire recently remarked about the response of Mitt Romney’s team to the federal tax payment controversy and the suggestion that Romney should really be judged based on his taxes plus his tax-deductible charitable contributions. We have previously noted that we find the melding of tax payments and charitable contributions to be somewhat off-base.

Writing for the Capital Research Center and Philanthropy Daily, both politically conservative outfits, Jacqueline Pfeffer agrees. She writes:

“Taxes are compulsory; philanthropy is voluntary. Many taxpayers are oblivious to what they’ve paid in taxes because their taxes are withheld by their employers and remitted directly to the IRS. Philanthropy requires attention; at a minimum, the philanthropist must write a check and forgo the enjoyment of money that was already in his or her bank. And, even small-time donors often spend at least some effort getting to know a charity and volunteering time as well as money.”

She suggests, agreeing with the University of Indiana’s Les Lenkowsky, that when Romney (or his advisors) combine his charity and philanthropy, it makes him look defensive, as if he is somehow trying to mask his low tax rate of 13.9 percent. However, Pfeffer goes on to take issue with Alan Wolfe, who criticized a Chronicle of Philanthropy report on the higher charitable giving of southeastern states, which is attributed to the fact that Southerners tend to be more religious than those in some other areas of the U.S. Wolfe suggests that the higher taxes that people in other states pay, compared to the low-tax southern states, lessens the need for charitable giving in the less-religious parts of America.

She suggests that Wolfe is doing what Romney (or his advisors) did: equating and blending paying taxes and giving to charity. Without defending Wolfe’s framing of the issue, we can understand his argument, not that taxes and charity are equivalent, but that when government takes on a major role in providing for the social welfare of a population, the need for charity, as seen by individual donors, may be somewhat reduced. If the focus is on religious givers, remember that 32 percent of all charitable and philanthropic distributions go to religion, according to the latest Giving USA report, and about half of individual giving is for religious entities.

Given the small amount of religious giving that goes for other than sacerdotal purposes (we’ve seen reports putting the number as low as three percent, and it’s certainly below ten percent), Wolfe’s argument has some resonance. It isn’t that tax payments and charitable giving payments are fungible dollars, but that some states with higher tax requirements often tend to put those revenues toward meeting social needs, needs which may not be well met by religious giving.

Maybe what would help the Pfeffer/Wolfe debate is to cull out giving to religion (for the purposes of religion) from the overall charitable giving totals attributed to individual donors. Then the remaining charitable giving could be compared more like apples to apples, and the impact of a factor like government taxes or government spending could then be better understood.—Rick Cohen

  • Michael Wyland

    It’s interesting that the issues of taxation and philanthropy are framed in terms of social impact. Traditionally, taxes were compulsory and philanthropy voluntary for slightly different reasons.

    Taxation was compulsory because the government, regardless of its form and regardless of the consent of the governed, extracted funds from inhabitants to support goevrnment-sanctioned activity. The success of the compulsion rested on the power of the government as expresed through its laws and police power. The extent to which taxes raised in a polity went to support the common good was extremely variable.

    Philanthropy, traditionally, wasn’t about social impact, outcomes, results, or any other “other-directed” concerns. Philanthropy was about living the virtuous life. It was an expression of the individual’s love of, and care for, his fellow man. The virtue was in the act of giving; whether others benefitted from such generosity was a fortunate consequence of the giver’s expression of virtue.

    Today, some have turned this difference on its head. Philanthropy is about outcomes, impact, and societal change. Discussions of taxation are only incidentally concerned about the costs of government and government’s spending priorities. Instead, taxation is about who “deserves” help and who should “pay one’s fair share”.

    When did you last hear a discussion of how much money government needs to operate, where it currently comes from, and where is should come from? Conversely, when did you last hear a conversation about the virtue of philanthropy for the donor, without regard to the potential target for that philanthropy (muich less the potential deductibility!)?