Charity is not a loophole

As the country’s congressmen dither over who gets the blame for our ongoing budget uncertainties and sequester-fueled cutbacks in services, lots of notions about tax reform are floating about.

Image from yobucko.comSome of the ideas involve closing tax loopholes, which would certainly be a good thing if they target true tax dodges such as the offshore accounts, shell games, and various means of hiding assets that many big businesses and rich individuals use to avoid paying their fair share of taxes.

One of the scarier ideas being talked about tags charitable giving as a tax loophole. It’s true that the government loses potential income when taxpayers use the allowable tax deduction for contributions to non-profit organizations like churches and social service agencies, but that’s more than balanced by what the country gains.

At their best, churches and ministry-based nonprofits provide amazing services to the country worth far more than the taxes that could be paid on donations. They help hold communities together and provide services that feed stomachs as well as souls, offer comfort to the sick as well as the sinful, and offer shelter to the homeless as well as the hopeless.

That is not to say that all churches or service agencies are as worthy as others. Sadly, some are led by pastors or directors who draw mega-salaries and perks far beyond what they offer in return, and it might actually be worth considering legislation that could revoke or limit the tax-exempt status of organizations that clearly take more than they give back.

But those are a small minority among the hosts of local charities and churches that pour themselves into their communities with hours upon hours of volunteer labor organized by low-paid leaders whose main motivation is compassion and a sense of calling to make their world a better place.

I do not suggest that tax-reformers shouldn’t re-examine which “non-profits” qualify for tax exemptions. Things like political action committees and even direct political contributions are questionable, for example, and certainly not charitable. Businesses and individuals who plow millions of dollars into political lobbying and elections are not providing a service, but generally trying to buy influence that will be to their own advantage.

When there’s no truly charitable motive — when the contribution is for the donor’s benefit rather than the community’s — it ought to be taxable.

But when donations are intended to build and maintain the network of community services and spiritual harbors that we so desperately need, their exempt status should remain untouched.

1 Comment

  1. Well said, mostly. In fact, your implicit point is as valuable as your explicit point. The truth is that churches and charities are far more efficient and effective at helping the needy than the government could ever hope to be. Whereas the government throws money at many problems in hopes some good will be done, churches and charities can be more targeted in helping actual people rather than solving large "problems." Which is why there is far less waste and far more per capita good accomplished when money is spent at the local level.

    Which is also why many people with means–who are careful with how their money is spent–are less enthusiastic about the government taking more of their money and redistributing it as the government sees fit. More often than not, big government's idea of one's fair share leads to more fraud, waste, and abuse per capita. If we really want the world to be a better place, leave money in the hands of those whose compassion and common sense lead them to target money in efficient, effective ways.

Pin It on Pinterest

Share This