Taxes and Morality

I swear I am going to write an academic paper on this topic, and I suspect exactly 3 people will read it.

Taxes are a necessary evil and I am glad we collect them because then I don't have to make out fifty different checks to fund roads, schools, libraries, and keep Canada from invading.

Taxes are our social capital, along with charitable donations.  Social capital is the money we are not spending on ourselves, but on the greater good of society.

You hear in the news all the time about big donations, and probably get just as much mail and as many phone calls as I do asking for a donation to this or that. 

Most people know, if you itemize your taxes, you get a deduction from your AGI (adjusted gross income) for those charitable donations.  This is not the same as a tax credit, which is really just redirecting your actual tax payment.  All this means is that you are not taxed on your social capital.

Recently, Congress has been looking into making changes to the deductibility of charitable donations.  Most of these changes center around the idea of reducing the amount you are able to deduct from your AGI.

You may have heard that our government seems to need more money in order to run effectively.  Whether or not that is true is not going to be addressed here.

What troubles me about this is that they are looking into making these particular changes to be able to get more money.

Terrible, terrible idea.  This would have a strong negative impact on so many charities, esp the ones that do the dirty work of feeding the poor, helping the homeless, etc -since these are the charities that tend to run closest to the margin.

But even moreso, I think this is simply a poor ethical choice.

Our complex tax code is actually a mirror of our public, corporate morality.  If you arrange your financial and life affairs in accordance with the tax code, you receive great benefits.  We have deductions for environmental sustainability, having families, buying homes... and giving to charity.  If you buy and sell stock too quickly, you pay higher tax rates than stock you hold on to long term.  We have a graduated tax system so that people with higher income pay more in taxes.

So, what we seem to value as a country is: long term investment, stability, civic duty, environmental consciousness, as a broad brush stroke.  If we valued other things, that too would be reflected in the tax code.

This really is where we, as a country, put our money where our mouth is.

When we consider that these deductions for charitable contributions are simply reducing the income calculated for taxation purposes, we realize that all that means is that this particular income is NOT TAXED.  There is no extra free ride on this.

If we decide to cap this deduction, or eliminate it completely, we are saying as a country that spending for the social good is not important to us.

If this deduction were to be eliminated, we are saying the person who spends $100K feeding hungry children ought to be treated the same as the person who spent that $100K on a fancy car only he will ever drive.

Thus, we are saying, as a country, that the purchase of a fancy car is just as important to our social good as people choosing to feed hungry children.

I accept that some of my taxes (and I actually am part of our society that pays taxes!) go to pay for things I personally find immoral -Gitmo being at the top of that list, not to mention taxpayer funded abortions.  I accept in this great big country of differing ideals that not all the choices are mine to make.  I do pray a culture of LIFE permeates our culture.

I do not accept the fallacy that all expenditures are equal, and I do not accept that charitable giving is simply another option for spending money along with luxuries.

I do not believe that we should ever sacrifice the poor to fund our government, and punish those who are using their private resources for public good.  Reducing the charitable deduction would have the effect of doing both.