NYT’s Misses Point About Charitable Deductions

When those who cry for higher funding for social causes instead fail to reduce the corrupt and self-serving tax drain by those who support them politically, that’s not charity but charitable abuse and political abuse.

In an otherwise informative, long article, “Big Gifts, Tax Breaks and a Debate on Charity,” the New York Times colors the debate over the the ends to which the tax deduction for charitable contributions is used as another case in its crusade against what it considers unfair inequality.

Two views are presented: donations to help the domestic poor versus to build university or concert halls (of course, named in the donor’s honor). There, a legitimate debate can and should occur, indeed broadened, over whether the charitable tax deduction should be so broad as to include many edifices that could otherwise be funded, if really needed at all, and whether many other deductible causes – usually cloaked as “educational” but too often political causes – should be subsidized by taxpayers.

The NYT’s outlines some of the more extreme uses of the deduction:

What qualifies for that tax deduction has broadened over the 90 years since its creation to include everything from university golf teams to puppet theaters — even an organization established after Hurricane Katrina to help practitioners of sadomasochism obtain gear they had lost in the storm.

Criticism also comes from the Right of the use of tax exemptions that do not provide benefits to the poor, a concern echoed by the IRS Commissioner about nonprofit hospitals:

At the other end of the political spectrum, Grover G. Norquist, whose Americans for Tax Reform lobbies for lower taxes, suggests taxing nonprofit hospitals that cannot demonstrate that they provide significant care for the poor.

The NYT’s can’t resist expending considerable focus on the greater tax benefit that the more affluent gain, due to their higher tax brackets, from charitable deductions than those tax benefits the less affluent gain.

What the NYT’s does not address in this article is the extent to which charities are ill-governed, with exorbitant administrative expenses, excessive executive compensation, and often corrupt waylaying of funds. These are concerns that the IRS has repeatedly brought before Congress, and requested additional funds to investigate. Former Senate Finance Committee Chair Charles Grassley was supportive. His Democrat replacement, Max Baucus, however told the interviewer from the Chronicle of Philanthropy (August 2007) that “he does not give high priority to cracking down on charitable abuses.”

How unwelcome would Senator Baucus, or the NYT’s reporters, be at Manhattan cocktail parties populated by highly paid arts and educational foundation leaders if they did give high priority to cracking down on charitable abuses, which are really abuses of those who do pay taxes to subsidize their excesses?