Virginia Tomorrow

If there is any single policy decision that illustrates the difference between those biased towards government and those towards the private sector, it is the President’s proposal to decrease the amount of the charitable tax deduction available to the “wealthy” when they donate to private charities.

 Money here is fungible.  Somebody gets it and somebody doesn’t.  To the extent that the amount of the deduction discourages charitable giving, money is transferred from private charities to the government, both federal and state (states generally take the federal taxable income as the starting point for state income taxes).

 Anyone familiar with the operations of most (not all, but the overwhelming majority) of private charities knows them to be efficient, economical and reliable stewards of the money entrusted to them.  Can the same be said of government?  Hardly. 

 Alexis De Toqueville’s remarkable work, Democracy In America, extolled a major difference between early 19^th century America and Europe:

I have often admired the extreme skill with which the inhabitants of the United States succeed in proposing a common object for the exertions of a great many men and inducing them voluntarily to pursue it.

That quality has endured throughout our history and today is manifest in charitable giving that in 2007 exceeded $300 billion for the first time in history. 

 THREE HUNDRED BILLION DOLLARS. 

Admittedly the economy is in the ditch.  No one disagrees with that.  And most agree that some form of “timely, temporary and targeted” federal spending initiatives were and are necessary.  But the President and his allies in Congress abandoned the Three Ts test in favor of a massive spending bill and another onslaught to follow that includes tax increases, one of which, reducing the charitable donation deduction, will shift dollars from private charity to government.  Not a good idea.

 The President and the Democrats in Congress now control the apparatus of the federal government.  Their choices will impact all of us for years and years in the future. 

I hope they will place more faith in the American people and less in the institutions of government. 

The decisions are not easy.  The issues are complicated.  But a choice such as the one over charitable contributions reveals an unhealthy preference for government over the private sector inherent in the President’s tax proposals and permeating so many other choices he must make.

Wyatt Durrette is a Director at DurretteBradshaw, PLC (www.durrettebradshaw.com) and co-founder of the XDL Group. He served three terms in the House of Delegates and was the Republican candidate for Governor in 1985.