Posts Tagged ‘taxes’

Madness

Thursday, July 28th, 2011

A recent story in the NYT documents the impact of the recession on different racial and ethnic groups. In percentage terms, Hispanics were hit the hardest, losing 66% of household wealth between 2005 and 2009 – with African-Americans similarly impacted. But the truly shocking numbers are the absolute figures. Black and Latino households have around $10,000 or less in household net worth – even after falling by more than 10% in the recession, white households have on average *ten times* the household wealth, over $100,000.

What the hell?! Even as we’re rapidly moving toward a “majority minority” society, wealth is so unevenly distributed across racial and ethnic groups. Reminds me of a line from an old Chris Rock routine – “we black people need to build wealth. I ain’t talkin’ ’bout rich, I’m talkin’ ’bout *wealthy.* Shaq is rich; the guy who owns the Lakers is wealthy.”

And now these clowns in Washington are falling over each other to drive our country’s future into a ditch. Holden Karnofsky of GiveWell has a really important piece on the SSIR blog about all the groups in line to help people before individual donors:

  • For-profit businesses
  • Governments
  • Local philanthropy and community
  • Big foundations
  • Other donors

It’s a really illuminating perspective. But what’s missing is scale. The groups in that “line” are not created equal – and if one falls, the ones behind it aren’t necessarily capable of filling the gap. So when government, the second in line after private business, shrinks suddenly – do you think those household wealth numbers will go up? Pell grants, funding to help people mitigate vulnerability? The main reason Hispanic household wealth fell so much during the recession is that much of what folks had been able to gain was in their houses – the value of which tanked. Our infrastructure is Third World already; looks like our social safety net is headed the same way, with what are sure to be disastrous consequences.

Madness, I tell you – madness.

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“Get Off My Lawn” vs. “I Gave at the Office”

Tuesday, November 23rd, 2010

Last week, I developed the idea of needlessly fragile equilibria, states of political balance that are thrown out of whack by false beliefs, which generate unreasonable expectations. Faith in government is one of these, and it’s way out of balance these days.

Jeff Weintraub has a recent post on related issues, “Can democracy work when people are idiots?” It talks about patently false beliefs American voters have about the nature and size of different government expenditures, and how these generate self-contradictory expectations about how to reduce the size of government.

This is related to the idea that people hold unreasonable expectations about their fellow citizens, assuming there are shirkers all about who are leaching off government largesse. You dislike them, and you think the government is either stupid for believing their sob stories or actively complicit in rewarding their shirking. In either case, the needlessly fragile equilibrium of faith in government is thrown out of balance.

How is one’s view of philanthropy and the nonprofit sector affected in such a scenario? Is the problem really the shirking or the public largesse? If it’s the shirking, then you wouldn’t be inclined to give to charity. Call this the “Get Off My Lawn” position: go away taxman, go away charity fundraiser. If the problem is public largesse, and you don’t object to those in need receiving help, but just to having public funds appropriated for that purpose, then you’d probably be generous to charity. Call this the “I Gave at the Office” position: go away taxman, c’mon over charity fundraiser.

For these types of (non)givers, the depersonalized nature of charity in the contemporary world reinforces their positions. If people’s experience of the need for which funds are being raised is arm’s-length, this does nothing to change the (false) beliefs they hold about those in need. Not that that’s any particular charity’s job, necessarily, to change those beliefs, but it points to the role philanthropy can sometimes play in a democratic society. Done a certain way, it reinforces the needless fragility of the equilibrium of faith in government.

What might be another way? Tomorrow, I’ll consider some alternatives, in the context of the “season of giving” that’s coming upon us.

Is the answer “taxes”? (part 2)

Wednesday, September 8th, 2010

Previously, I wondered in the wake of objections to the Giving Pledge if the answer to my question, “what does it mean to democratize philanthropy?” is simply “taxes.” The idea, voiced here and here, is that billionaires setting aside the majority of their wealth for philanthropic activity circumvents the democratic process; that if those funds were taxed, the government revenue would be allocated by democratically elected representatives.

But why not circumvent the representatives, and the appointed civil service that would allocate the funds in practice, and go straight to the people? What if Gates, Buffett, et al. opened their philanthropic giving directly to democratic decision-making? Or made it available in a similar fashion to supplement state budgets, which have been devastated by the recession and are resulting in huge cuts to local services? Now, as is well known, philanthropy can’t make up for shortfalls in government revenue, and it’s unfair and wrong to ask it to try. (Projected shortfall in state budgets this year: $120 billion; annual increase in philanthropy if all billionaires sign the Giving Pledge: $30 billion.) But a few billion sure would help safety-net programs, not to mention arts and cultural programs, at the state level.

Is the answer “taxes”?

Tuesday, August 24th, 2010

Interesting article in the NYT about giving patterns at different income levels. As has been known for a while, the poor give more as a proportion of their income. Lots to dig into in future posts:

  • What really motivates people to give? Maybe the rich don’t give as much because the tax deductibility isn’t as much of an incentive as we think. What would be a better motivation given the “compassion gap” the article talks about?
  • The article is framed in terms of the upcoming debate over extending Bush’s tax cuts for the very wealthy, setting up a dichotomy between charitable giving and taxes. Is the answer to the question framed in the title of this blog, “democratizing philanthropy?,” just…taxes? Do more taxes = more democratized philanthropy, because the decision-making is put in the hands of democratically elected leaders? Is that the right premise? How much of that decision-making is actually in the hands of democratically elected leaders vs. the hands of appointees in what the Brits call “the civil service” who have less (if any) accountability to the public?
  • “Americans pride themselves on their philanthropic tradition,” the article observes, “and on the role of private charity, which is much more developed here than it is in Europe, where the expectation is that the government will care for the poor.” This speaks to varieties of capitalism, a topic I’ve considered at length on this blog. Motivations for giving in each type of system might be an interesting new angle on that topic.