OPINION:
In 1957, Dr. Seuss published his classic children’s book “How the Grinch Stole Christmas,” telling the story of a selfish character who seeks to steal Christmas. A generation later, we face a new Grinch seeking to eliminate the charitable deduction, pejoratively labeling it a tax loophole.
Despite their unwillingness to reach agreement on virtually any issue, Republicans, with their flat-tax proposals, and Democrats, with their desire to raise revenue from the wealthy, appear poised to yield to the allure of eliminating the charitable deduction.
In 2008, approximately $300 billion in charitable deductions were taken by taxpayers, reducing government revenue by $47 billion. Proponents of the deduction have their eyes on those dollars as a means of reducing the deficit and maintaining government programs.
If we look closer, however, we see that elimination of the charitable deduction would be foolhardy.
Bryan A. Gallagher, president and CEO of United Way Worldwide, recently noted in USA Today: “Though some might support what is perceived as a way of increasing a tax on the wealthy, tampering with this deduction would simply transfer money to the government that would otherwise go to charities.”
Mormon Elder Dallin H. Oaks, in turn, testified before the Senate Finance Committee that elimination of the deduction reflects the view that “the personal income we think is ours is really the government’s because of its choice to take it away by taxation.” Eliminating the charitable deduction is, in fact, a tax increase for the charitable among us.
Proponents of eliminating the deduction argue that government can more wisely decide how to spend dollars than taxpayers of conscience can. This reasoning is dubious.
While I was serving as a college president, students regularly came to my office reporting that they could not afford to remain in school. Many were the first in their families to attend college or came from families whose breadwinner had lost his or her job. We assisted them through the generosity of charitable donors to our scholarship fund.
Private giving also keeps faculty and staff working at our private colleges. Charitable giving to private education stimulates the economy through employment and provides an educated workforce at minimal cost to the government.
I know of no government programs that can boast of such results. The government, with its cumbersome bureaucracy and politicized decision-making, cannot compete with private charitable giving.
Some oppose the charitable deduction because it benefits religious organizations. They argue: 1. Strict separation of church and state mandates that religious organizations should not receive any benefit from the state; and 2. The loss of tax revenue outweighs the benefits of charitable giving to religious purposes.
The Supreme Court settled the first issue. It has held repeatedly that because the charitable deduction is nonpreferential - does not prefer one church over another - it is constitutional.
As to the second objection, religious organizations do much for our economy. Their employees pay taxes. Inspired by their religious beliefs, members of religious organizations also provide untold hours of voluntary humanitarian service, needs that the government otherwise might have to meet. The cost of losing the giving of religious institutions and their members by elimination of the charitable deduction may be much higher than anyone anticipates.
Morally, eliminating the charitable deduction is indefensible. James Madison, the father of our Constitution, said, “Conscience is the most sacred of all property.” Donors make charitable gifts because they believe as a matter of conscience in the ends of a charity, whether religious, humanitarian, educational or environmental.
Conscience - believing in values greater than self - is something we need much more in this country. Such conscience is the basis of morality, patriotism and ethics and should be supported, not undercut, by our government.
Private and public ethical scandals result in costly increases in government regulation of what ought to be self-regulated as a matter of personal conscience. President John Adams was right when he wrote, “Our constitution was made for a moral and religious people. It is wholly inadequate to the government of any other.” Government support for conscience is wise policy.
In Dr. Seuss’s book, the Grinch does not prevail, because he is exposed. May the Grinch who is seeking to eliminate the charitable deduction also die of exposure.
Rodney K. Smith is a professor at Thomas Jefferson School of Law in San Diego and was president of Southern Virginia University.
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