Peter Orszag is full of “creative ideas.” Among other things, he helped shape Obamacare.
This time President Obama’s first budget director proposes that the charitable tax deduction be eliminated for anyone deducting over $50,000 a year, but that the government make up for this by “matching” a non-deductible gifts to charity 15 cents to the donor’s dollar. He notes that religious charities might have to be excluded for constitutional reasons.
What a perfectly terrible idea.
First it is another fig leaf proposal. It seems to reimburse charities for an expected reduction in gifts flowing to them but doesn’t really do so. The match would have to be much more than 15 cents.
Second it is adding yet another layer of complexity to our sickeningly complex tax system. The only beneficiaries of all this complexity are politicians who use it to generate campaign donations.
Third it will result in all kinds of discussion about whether a government check really should go to charity XYZ, which will lead either to an end to the checks, the homogenization of charities, or more and more government control. The last is most likely. And as government gets more involved with the charitable sector, guess what you should expect, apart from bureaucracy and wasted money? That’s right. You should expect more crony capitalism.
We already have crony capitalism in the charitable world as it is. Campaign donors set up foundations and tell politicians that they can direct the checks from these foundations. Fannie and Freddie set up foundations and took steps to be sure that the money from them went to key congressional districts. Rules against earmarks (legislative favors to constituents and donors) lead to setting up charities to receive the earmark instead of the campaign donor. We don’t need more of this.
In socialism, government owns everything. At least that way we know whom to blame when things go wrong. In crony capitalism, also known as fascism “lite,” the government doesn’t own everything; it just controls everything. That in turn creates massive corruption. Haven’t we had enough of that?