Some little while ago I asked rhetorically whether giving or taxation felt better. We have a tax system that taxes the wealthy far more than the poor or middle income. Recently we have had Bill de Blasio wanting to tax 'the rich' in NYC more. What about the unintended consequences?
Michael Goodwin wrote a terrific article on this issue. He notes that charitable giving soared under Michael Bloomberg, and the amount and proportion of charitable money that supports the arts in NYC. This is one article among numerous ones making the same point in broader terms. Simply put, the 1% account for a highly disproportionate amount of giving. While the US has a remarkably high degree of charitable participation, the very large bulk of money comes from the 1%, through foundational giving, personal donation and death bequests.
Among the western industrial democracies we lead the world by a mile in chartiable giving, both in participation and proportion of income given. This is hardly a surprise. In other countries taxes are collected for social services and museums. Here churches continue to fill social service roles, paid for and staffed by people giving for religious reasons. It is religion that drives the charitable giving of low income families, while high income households are driven by a desire to give to the community.
There is a fair amount of talk about how our society should look more like Canada, or France, or whatever. We should not have guns. We should not be violent. We should be openly tolerant of extra-marital sex, of gays, of drugs, etc, etc. What is missed in such arguments are other aspects of American ethos. Communal effort and giving of time and money for others.
In NYC, 5000 families pay 30% of all NYC income taxes. Two years ago, in 2011, the NYC property tax produced 17 billion dollars. Right. Billion. NYC income tax (not state or federal) produced 7.6 billion. de Blasio proposes to increase income tax 0.5% on income over 500,000.00. This is trivialized in a variety of articles. For a person making 10 million dollars the extra bill is 51,000.00. That's a lot of money, the average income of a family of 4 in the US, but not a back-breaking amount to a person earning 10 million.
But those same people contribute most of the money to NYC's arts, and also to its charter schools. If their giving is reduced by double the tax increase (a typical ratio) then it will go down by 1%. Since the wealthy give about 8% of their income to charity this is a 12% reduction in charitable giving in return for 0.5% in tax revenue.
The New York Times lays out the argument for taxes instead of charity. Being a republican I think the argument is wrong. If we are to follow the Times' argument, however, de Blasio better be ready to pony up in a big way for all the stuff his despised 1% pay for- opera, MOMA, MMA, charter schools, etc, etc. he must be ready not simply to see charitable donations decline but to see people move away.
Since de Blasio's election New Yorkers have purchased 1 billion dollars of Florida real estate.
Go ahead, Bill. Show us you're a more evolved life form. Raise those taxes. And here's a third finger salute from those who can give it. Pay for your own damned schools!
Ted
Michael Goodwin wrote a terrific article on this issue. He notes that charitable giving soared under Michael Bloomberg, and the amount and proportion of charitable money that supports the arts in NYC. This is one article among numerous ones making the same point in broader terms. Simply put, the 1% account for a highly disproportionate amount of giving. While the US has a remarkably high degree of charitable participation, the very large bulk of money comes from the 1%, through foundational giving, personal donation and death bequests.
Among the western industrial democracies we lead the world by a mile in chartiable giving, both in participation and proportion of income given. This is hardly a surprise. In other countries taxes are collected for social services and museums. Here churches continue to fill social service roles, paid for and staffed by people giving for religious reasons. It is religion that drives the charitable giving of low income families, while high income households are driven by a desire to give to the community.
There is a fair amount of talk about how our society should look more like Canada, or France, or whatever. We should not have guns. We should not be violent. We should be openly tolerant of extra-marital sex, of gays, of drugs, etc, etc. What is missed in such arguments are other aspects of American ethos. Communal effort and giving of time and money for others.
In NYC, 5000 families pay 30% of all NYC income taxes. Two years ago, in 2011, the NYC property tax produced 17 billion dollars. Right. Billion. NYC income tax (not state or federal) produced 7.6 billion. de Blasio proposes to increase income tax 0.5% on income over 500,000.00. This is trivialized in a variety of articles. For a person making 10 million dollars the extra bill is 51,000.00. That's a lot of money, the average income of a family of 4 in the US, but not a back-breaking amount to a person earning 10 million.
But those same people contribute most of the money to NYC's arts, and also to its charter schools. If their giving is reduced by double the tax increase (a typical ratio) then it will go down by 1%. Since the wealthy give about 8% of their income to charity this is a 12% reduction in charitable giving in return for 0.5% in tax revenue.
The New York Times lays out the argument for taxes instead of charity. Being a republican I think the argument is wrong. If we are to follow the Times' argument, however, de Blasio better be ready to pony up in a big way for all the stuff his despised 1% pay for- opera, MOMA, MMA, charter schools, etc, etc. he must be ready not simply to see charitable donations decline but to see people move away.
Since de Blasio's election New Yorkers have purchased 1 billion dollars of Florida real estate.
Go ahead, Bill. Show us you're a more evolved life form. Raise those taxes. And here's a third finger salute from those who can give it. Pay for your own damned schools!
Ted
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