Wednesday, January 08, 2025

Tax Policy Impact on Charitable Giving

If you happen to be a Rip Van Winkle sort, and have spent decades asleep in the woods, it may come as a surprise that the U.S. Tax Code is highly skewed towards favorable treatment for the wealthiest members of the leisure class. For the rest of us the idea that we aren't playing on a level field is anything but news.

Two simple examples are (a) the IRS depreciation rules for racehorses which are giveaways to those tippy-top members of the horsey set. and (b) the detailed and onerous IRS rules for tipped workers to ensure every nickel and dime is extracted from these hard-working poor Americans.

As Warren Buffett, whose current net worth is 140.8 billion dollars, said, 

"There's class warfare, all right, but it's my class, the rich class, that's making war, and we're winning." - Warren Buffett

To begin to understand what happened to the U.S. to give working people the shaft you could start with the infamous Powell Memo of the 1970's or at the Reagan/Thatcher regimes of the 1980's or the WTO/Clinton era of the 1990's or go back to the anti-New Dealers that came on the scene in the 1930's to oppose FDR's programs. Playing the game of Monopoly may illustrate the point - once all the wealth has been distributed the game becomes boring, pointless and not enjoyable for those without capital.

You could also gain a broad understanding of what happened by considering the history of humankind from any era.  You will conclude that absent any moral sentiment the strong will exploit the weak. With power as the only determining factor man becomes more beastlike red in tooth and claw participating in a war of all against all where life is solitary, poor, nasty brutish and short.

In other words, since money is power, the rich will exploit the poor unless checked by law, or a moral code adhered to voluntarily. In case you hadn't noticed we don't have either of those checks in our current society.

Back to tax policy...

The 2017 Tax act passed by the Republican-controlled Congress nearly doubled the amount of the standard deduction. What this did was to make itemization of deductibles an exercise that only makes sense for the wealthy. As this July 2024 report from the AEI, a right-wing corporate-captured think tank, says - the 2017 Tax law has made itemized charitable giving a luxury of the rich.

Crucially this law caused charitable giving to decrease by 20 billion dollars annually according to this study by a Notre Dame economist.

I don't know what the Republican (or Democratic) parties of today stand for or who they represent. Maybe they represent the 1% and the 10% respectively? The idea that a party would remove an incentive for working class people to donate to non-profits seems perverse and pointless. 

Living in a plutocracy means our political and economic policies and structures are subject to the whims of the .1% of rich people in accord with the old golden rule - those that got the gold - rule. Or as Karl Marx put it less succinctly,

"The ideas of the ruling class are in every epoch the ruling ideas, i.e. the class, which is the ruling material force of society, is at the same time its ruling intellectual force. The class which has the means of material production at its disposal, has control at the same time over the means of mental production, so that thereby, generally speaking, the ideas of those who lack the means of mental production are subject to it. The ruling ideas are nothing more than the ideal expression of the dominant material relationships, the dominant material relationships grasped as ideas."

We are left to hope that those who fate has been kind to and endowed with great wealth and power would have a sense of noblesse oblige

Unfortunately for us little people - the big money people have been overrun by immoral, self-interested twits - possibly and probably dangerous but twits just the same. 

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