March 27, 2009

Obama, Charity, and Fairness

By Gregory V. Helvering
Leave it to Barack Obama to justify a tax proposal that would significantly reduce the amounts going to charity -- on grounds the proposal is necessary for "fairness."  In his press conference on March 24, the president offered this explanation of his proposal:And so this provision would affect about 1 percent of the American people. They would still get deductions. It's just that they wouldn't be able to write off 39 percent. In that sense, what it would do is it would equalize. When I give $100, I get the same amount of deduction as when some -- a bus driver who's making $50,000 a year or $40,000 a year gives that same hundred dollars. Right now, he gets 28 percent -- he gets to write off 28 percent, I get to write off 39 percent. I don't think that's fair.Obama's example is a useful analytical tool, but the conclusions properly drawn from it are virtually the opposite of his.  To understand why, however, you need to know some basic facts about the tax system -...(Read Full Article)