I have to say, I never thought I’d read a blogger on NRO endorse the notion that all of the money you earn belongs to the state. I certainly never thought that read it twice in a year. But here we are, again … and I feel compelled to engage in an excruciating debate with Robert VerBruggen of Phi Beta Con.
Question: Is there any substantive difference between the government cutting you a check or cutting your taxes?
I attempted to illustrate where he had gone wrong in his thinking by taking his positions to an extreme. To my surprise, VerBruggen agreed with my modest proposal to eliminate all charitable tax deductions and credits and capitulate comprehensively to the welfare state
More specifically: “The feds should eliminate the charitable tax deduction and send out the average (tax-forgiven) amount donated per adult to every citizen in the country to donate as they wish!”
VerBruggen supports a “charity entitlement” over charitable tax deductions. He favors a “social security” model for “kind of a ‘forced charity’” over tax deductions.
I’m not sure if he’s thought his rather radical and odd argument through to the end point.
Many of the citizens receiving their “charitable donation” check would be low-income. That means they didn’t earn the money they have been given, someone else did. Furthermore, they are qualified for government “charity,” which means they can use their “charitable donation” check on themselves; housing, food, healthcare, addiction treatment, maybe the opera or a class on origami.
What VerBruggen supports is not charity; it’s a massive new welfare program.
And in addition to the new, wildly unrestricted welfare program, he supports forcing wealthier folks to hand money to less wealthy folks to “donate” to things those folks like. What is it that someone wrote on PhiBetaCon about how careful we are with other people’s money? Oh, right, George Leef referenced some guy named Friedman.
And just imagine how one might go about enforcing the use of the voucher in the first place. What happens if a person never donates it? Do we need special accounts from which to spend the money, or should we mandate one donation, with the check signed over to a single registered charity? What does this interesting new program look like?
The citizens who earned VerBruggen’s “charity” money can’t decide how it should be used. The government, in conjunction with citizens who did not earn the money, decides how it is to be used.
VerBruggen claims none of this matters. After all, tax deductions are a subsidy of private charity. “Charity” vouchers are a subsidy too. Ergo, there is no difference between vouchers and deductions. “The better solution,” writes Robert, “End charitable deductions (and most other deductions!) entirely.” I’m curious what deductions he thinks worthy of survival.
VerBruggen’s formulation is a cartoon version of the real world and the issues at stake. And his proposed “solution” would be an unmitigated disaster.
Government is heavily invested in the business of “charity.” The government supports health, housing, parenting, addiction, jobs and retirement programs. It supports scientific research, the humanities, the arts, recreation and of course education at all levels and in every field and stage of life. Federal, state and local governments are massive “charity” machines which collect some people’s money according to their success in earning it, allocate it to other people according to the preferences of still another set of people, as translated through the relevant political and bureaucratic system, who then spend said money on one final set of people. The support of all these people and things is required by the government.
In the libertarian Shangri-La, no subsidies of charity would exist. Let’s say the government collects taxes only for the common defense, policing, the courts, etc. In this state of nature thought game, he is correct that any charitable tax deduction would raise the effective tax burden on those who did not use the deduction. It’s a subsidy, and each non-deducting taxpayer is effectively compelled to support to some degree the donation of a deducting taxpayer.
Of course if every taxpayer takes a deduction, then there is no coercion; everyone benefits and the required increase in the tax rate would fall equally as well. In addition, each taxpayer would be free to direct his donation. In the case of a “charity” voucher, however, each taxpayer would be compelled to support the choice of non-taxpayers and lesser taxpayers. (There is also the minor difficulty of how one might enforce the use, and legal use, of a “charity” voucher sent to every citizen.)
In other words, vouchers require compulsion, and tax expenditures do not.
Much more important, however, the government would not be in the business of providing “charity” itself. In our libertarian state of nature, which would be the least of evils; equal taxation in support of government-provided “charity,” or an equal amount forgone in charitable deductions available to all taxpayers? In the former case, everyone is compelled to support all government “charity.” In the latter, only those not claiming a deduction are compelled to subsidize the charitable deductions of others. Fewer people are compelled to support a particular kind of charity, but those who are compelled pay comparatively more.
But instead of proposing as his solution the elimination of the welfare state, VerBruggen promotes the elimination of the charitable deduction as his preferred state of affairs and the redistribution of charitable donations as an improvement on the status quo.
He insists that “charity spending does not offset government spending in the slightest,” yet also agrees that “voucherizing the tax subsidies for charity would remove the incentive to donate” to the range of charitable and social welfare activities the government supports.
Charity does not reduce pressure on the welfare state? The billions of dollars donated to health, education, welfare … these offset nothing in the public sector? In the absence of tax expenditures for employer-provided health care, how likely is it that the U.S. would have retained a relatively robust private medical market?
The charitable deduction allows the people who earned the money our governments spend on public “charity” to keep some portion of what the government would otherwise have spent on government “charity” or some other wasteful project.
If VerBruggen is concerned that the tax burden will marginally increase on some citizen as the result of another’s charitable deduction then the answer is to balance that lost revenue with a reduction in government “charity,” not to eliminate the deduction.
Perhaps most concerning is VerBruggen’s breezy assumption that all income belongs to the government. He insists that “taxpayer money is already allocated” in the form of deductions for charity, and therefore that “voucherizing the total amount of the deductions wouldn’t change that …”
Really? Tax credits and deductions belong to the taxpayer who earned them. They are not government funds; that is a legal and logical statement. To insist otherwise is to argue that all income is the governments, and what it does not claim is ours. The money that a taxpayer spends is HIS money, not the government’s.
And, as is noted above, voucherizing charitable deductions will convert a huge portion into direct welfare payments and eliminate the core of the charitable act; giving away one’s own money.
In merciful conclusion, VerBruggen is confused and incorrect on a long list of issues.