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August 10, 2010; Source: Star Tribune |

In yesterday’s Newswire we wrote about criticisms that German billionaire, Peter Kramer, voiced in Spiegel about the Gates and Buffet billionaire pledge effort. He called the effort, “a bad transfer of power from the state to billionaires.”

Today an editorial in the Star Tribune in Minnesota argues that when wealth is given to charities, the tax base shrinks, making it impossible for the government to do its job.

The author takes on the notion that charitable giving of any sort by these billionaires, or anyone else for that matter, constitutes “an unalloyed benefit to society.” His first argument is one of democracy (though the author calls it accountability or the nonprofits’ purported lack of accountability). He suggests that allowing government to take funds through taxes is fundamentally democratic because the government’s leaders are elected by voters, while in contrast, no one elects nonprofit leaders, they can’t be voted out of office if people don’t like their grantmaking decisions and priorities. “If, as some politicians so vigorously contend, the rich are not paying enough in taxes in Minnesota,” the author said, “they should not be allowed to give away their tax-producing wealth, which allows them to pay even less.”

Essentially, by relying on the charitable generosity of the billionaires, we are saying that we would rather have these billionaires make decisions about tax deductible money in our name rather than having the people we elect to Congress and the White House make those allocations. Maybe the subtext is that the tax rate is too low, rich people pay too little in the way of taxes, and government needs to bulk up the public’s decision-making arena. This debate is going to intensify.—Rick Cohen