The gratification liberal blue-bloods will get from raising taxes on the wealthiest 2% of Americans (those that already pay 60% of the tax) is multi-layered. The dirty little secret that the Obama administration is keeping to themselves is that fewer charitable donations by the wealthy will have a significantly positive impact for the government.
How’s that you ask? It’s quite simple- as charitable contributions decline, the very people that rely on those contributions will become that much more dependent on the government for assistance. Take money from the rich and simultaneously make the poor more dependent upon your services- that my friends is the reach-around of all time.
Research indicates the wealthiest Americans give $285 billion per year to various charities. It remains to be seen how much of that money will be at risk but there is no doubt a good portion of it will. Reports indicate billions will be lost. This amid some reports that indicate the wealthy could give tens of billions more than they already are.
Here’s how Team Obama is going to get it done- top-bracket tax payers are currently able to make deductions up to their current bracket, either 33% or 35%. Obama’s plan is to back that down to 28%. What that means is for a wealthy individual that donates $1 million in 2010, that donation will cost them $70,000 more than it does today (assuming they’re in the 35% bracket).
$70,000 doesn’t sound like a lot to “pursuit of fairness” liberals, we’re talking about the super rich after all. But apply that 7% differential to the whole ($285 billion) and there’s an immediate exposure of nearly $20 billion of personal income.
This will not bring charitable giving among the wealthy to a hault, far from it. A recent survey indicates 47% of high net worth individuals in North America give because of a sense of social responsibility. But I have no doubt the “discretionary giving” will be substantially impacted. The wealthy will continue to give to their favorite churches and charities but all the other groups that hit these folks up for one-time donations will be substantially affected.
The difference in the margins is incentives. I won’t paint the wealthy as needing incentive to give, as many liberals do, rather, providing incentive for wealthy folks to give to groups they normally wouldn’t is the benefit created for the greater good, and is the more appropriate role for government.
Don’t bother speculating either, the facts are plainly laid out to see. This article for example, clearly indicates wealthy Americans are far more generous than equally wealthy Brits. Why? Because, wealthy Americans have more incentives in place to encourage that giving. Bully for us.
Even the alleged bi-partisan Congressional Budget Office (CBO) in a report published in 2001, stated that there is significant elasticity between tax rates and charitable contributions. That means as taxes increase, giving goes down.
The ugly truth is- Obama and the people he’s in league with know all this. They’re smart folks. They know they can accomplish the largest expansion of government in U.S. history by painting the middle class as victims and the wealthy class as the villains, and they’re flawlessly executing that plan. Just us ordinary citizens left to stop them. Call you elected official today.