Last Of All

Friday, September 28, 2012

The Sacred Tax Deduction

Note: This and the previous post were originally on permanentfixes.com, this one in December, 2011, but may be of interest also to all of us who give to our churches and claim deductions for the same on our tax returns.
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Since early 2009 the Obama administration has been proposing tinkering with the charitable giving deduction as a way to increase taxes on high income folks and increase government revenues, primarily for health care spending. Here is one of the earliest of a torrent of objections, all protesting any reductions in incentives for giving. Just Google “charitable deduction news” for other similar pleas from beneficiaries of the rule. I too am staunchly opposed to any such tinkering with our outrageously complex and unfair income tax code, but I would love to see this and all other deductions, exemptions, exclusions, and credits die as part of a comprehensive reform that would significantly reduce marginal rates, thereby providing economic stimulation, while increasing current tax revenues and giving our budget crisis some immediate relief.

I have always taken advantage of the income tax deduction for charitable contributions and just figured that the government was willingly helping fund my favorite charities, mostly the church I happened to be a member of at any given time. That was when our national budget was pretty close to balanced and our debt was not too burdensome. With the financial crisis we are facing now, I have realized that it is not the government that is helping fund my charities. It is you, my fellow citizens, and I suspect quite a few of you are doing it unwillingly. I know I am not too happy helping fund some of yours.

Entities which qualify for tax-deductible contributions are known as 501(c)(3) organizations, named after the section of the Internal Revenue Code in which regulations for them are found. These organizations must have one of several qualified purposes, and the lists of those purposes and of the qualifying organizations have grown over the years and, without fundamental reform, will continue to do so under continuous pressure of lobbyists and special interests. Below is the current list available at the IRS web site.

The exempt purposes set forth in section 501(c)(3) are
religious,
educational,
scientific,
literary,
testing for public safety,
fostering national or international amateur sports competition,
preventing cruelty to children or animals.
charitable,
relief of the poor, the distressed, or the underprivileged;
advancement of religion;
advancement of education or science;
erecting or maintaining public buildings, monuments, or works;
lessening the burdens of government;
lessening neighborhood tensions;
eliminating prejudice and discrimination;
defending human and civil rights secured by law; and
combating community deterioration and juvenile delinquency.

You can probably tell right away why this list concerns me. The strangest idea is government funding of organizations with the purpose of “lessening the burdens of government.” Too many of these purposes sound like titles created to fit something somebody wanted to fund or raise money for. Did Consumer Reports have anything to do with lobbying for the special tax treatment of “testing for public safety?” And I wonder how the efficiency or effectiveness of an organization with the objective of “combating community deterioration” or “advancement of religion” or “lessening neighborhood tensions” will be measured. And while I have a great deal of interesting in promoting the Gospel of Jesus Christ, which involves a lot of giving, not to the government, but to our neighbors, I have no interest at all in the “advancement of religion” which, as the late Christopher Hitchins so eloquently argued, can be quite counterproductive. “Advancement of religion” even seems to me to be a goal inconsistent with our constitution. I’m especially concerned now that global warming seems to have taken on some of the characteristics of a religion.

There are some non-profits which participate in politics or lobbying and therefore cannot accept tax deductible contributions. I’m thinking that a lot of “religious” and "educational" organizations should fall in that category because, while they may not endorse specific candidates, many take positions on political issues that pretty much rule out all the candidates but one. It happens on both the left and the right so this is a non-partisan complaint.

Only taxpayers who itemize deductions and whose contributions plus other deductions fall within certain guidelines established by the IRS benefit from the charitable contribution deduction. In 2009, the most recent year for which such data are available, there were only 34M returns with deductible cash contributions, and they claimed total contributions of $130B. That is 24 % of the returns filed and a little over 10% of total deductions claimed.

The Obama administration proposals leave me with the feeling that the president believes that the purpose of this and other tax deductions is to help tax payers and that these higher-income folks don’t need any help and should therefore have less deduction. It seems to me that the theoretical underpinning of the charitable contribution deduction is not to help taxpayers but to incentivize them to give more. Of course the higher the marginal tax rates the more encouragement such a deduction gives. So the idea of eliminating this and other deductions in conjunction with significant lowering of marginal rates which makes the deductions less valuable seems to me to be a workable strategy for helping solve our debt and unemployment crises. And then we can all take full credit for our giving without depending on our fellow taxpayers to help fund our favorite charities.

And I promise that if such a plan is put in place and begins a steady long-term decrease in our debt as a percent of gdp, I will give away just as much without the charitable tax deduction as I have been giving away with it. If we can get the economy going so I can get a little more income, I’ll give even more. I hope you will all join me in that, regardless of how convoluted our tax code becomes as the tinkering continues.

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The Sacred Tax Deduction

Stinginess Not Only Alternative to Philanthropy

Note: The material below was posted originally on permanentfixes.com but seemed to be of interest also to all of us who give to and through our churches and take tax deductions for such gifts. I have come to believe that is not a good thing and should be given up, along with other "sacred" tax benefits such as the home mortgage deduction in favor of lower marginal tax rates across the board on all income, including inheritances, elimination of estate taxes, and much simpler tax returns. Bottom line is that the federal government should not be in the business of picking winners and losers, subsidizing some of us at the expense of others. More explanation of that here.
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In a September 19 WSJ article, Geoffrey A. Fowler reported that more billionaires are signing on to the idea, promoted by Bill Gates and Warren Buffett, of giving away large portions, at least half, of their money. Well, it is certainly more blessed to give than to receive (Acts 20:35), but whether such largess is a better idea than investing the funds in new GDP-generating, job-creating, and government funding enterprises depends, in my opinion, on what they give it to, how well the recipients manage it, and what other options the donors have for investing the money.

The article included a puzzling and blog-post-inspiring quote from Gordon Moore, 83 year old founder of Intel and author of the famous Moore’s Law: "…it's a good idea and has shaken loose a lot of money that otherwise would have been tied up for a long time." Well, only if somebody had it stuffed in a mattress somewhere or in a safety deposit box would it have been “tied up,” because otherwise the money was supporting some endeavor or enterprise already.

I have no first-hand information about this, but it is very likely that donations of Messrs. Moore, Gates, Buffett, and other billionaires are in the form of shares of appreciated stock, donated unsold to avoid capital gains taxes and estate taxes, to a foundation, which might continue to hold the shares and use the dividends from them to support its work. So, the money would still be “tied up” in those shares of stock. Or the foundation might sell the stock and use the proceeds from the sale in some new or existing charitable effort which might even involve hiring a lot of people. In that case, somebody else will have to come up with money to buy the stock so that equivalent amount of money would still be “tied up,” having previously been “tied up” in something else. Only if the overall transaction were so large as to result in a decline in the value of the stock would less money end up being “tied up,” and that would be a bad thing.

Don’t get me wrong. I believe we are stewards and not owners of our financial assets and responsible for using them wisely, voluntarily and systematically giving to worthy causes and people in need throughout our lives and, when possible, being personally involved in the work of the organizations and persons we give to and through. These billionaires are generous to want to give the money away and spend time managing the gifts, and generosity always trumps stinginess.

But, stinginess isn't the only option. If a wealthy person has a good idea for a new product or service that will be of benefit to humankind, investing money and time, hiring people, and taking risks to make it a reality, earning more money in the process, would not be less moral than giving away the money and would be better than irresponsible giving. Such business development is no less important to the future than, and is a prerequisite for, philanthropy…and for tax revenues too, by the way.

As an example of the point I am trying to make, think of George Vanderbilt, wealthy grandson of Cornelius, whom I wrote about in a July14, 2012 posting on this blog. Here is what I said:

One bit of residue of the Vanderbilt fortune is Biltmore Estate in Asheville, NC, built in the late 1800’s, the “gilded age,” by grandson George. To many it seems to have been an extravagant indulgence (Check out this recent column by Mona Charen.), but he built a town to support the project, pushed the limits on technology, and employed thousands in the design and construction of it, artists and craftsmen and laborers, thereby revolutionizing the Western North Carolina economy. One hundred and forty years later, Biltmore Estate, a working farm and resort, employs 1700 people and hosts a million visitors annually from all over the world. Now that was a real jobs program!

I’m not arguing that George was virtuous for building Biltmore but just that, while he didn't live long enough to enjoy it, it was a worthwhile endeavor that paid off big for other people. Had he just freely distributed the money to the citizens of Western North Carolina, he would have been widely celebrated and admired at the time but any positive effect would probably have long since disappeared.

Summing up the life of the infamously ruthless Commodore who made his fortune personally networking the nation with railroads and connecting its ports with steamships while driving down the cost of freight, I said this: "The Commodore lived into his eighties, rare for the time, but it’s too bad he couldn't have had an additional productive hundred years. If he had, the United States rather than Japan would have been the leader in high speed trains and Amtrak would never have been created."

A modern day Vanderbilt, smaller scale of course, recently introduced to me by a David Brooks column, is Elon Musk, entrepreneur extraordinaire, founder of Zip2, SpaceX, Tesla Motors, and PayPal and a philanthropist who has signed on to the pledge to give away at least half his fortune. I just hope he doesn't give it all away before he runs out of ideas because he is a serious job creator and GDP generator.

Bill and Melinda Gates are apparently doing great work around the world in the fields of health and education. Mr. Buffett is apparently giving much of his money to the Gates foundation. If they all bring along their personal management skills with their money, I have no doubt that much good will be accomplished, many problems solved, and countless lives improved. I thank and congratulate them. But I would also be happy and offering congratulations if they had come up with another economy building, paradigm changing, job creating, idea such as MSDOS which launched the personal computer business and lifted far more people out of poverty than will ever be possible with charitable giving from their personal fortunes.

And here is another option to stinginess. One curmudgeon billionaire quoted in the Fowler article, German shipping magnate Peter Krämer, said that individuals should not have the right to determine use of such large sums of money, that it should instead be taxed away and its use determined by the government. I don’t like that idea either, nor apparently does Mr. Buffett since, although he has publicly announced support for a trivial increase in his income taxes, he is responsibly doing whatever he can to keep his vast personal fortune out of government hands which would disperse it completely in just a tad over one day.

Follow @dkw2020

Stinginess Not Only Alternative to Philanthropy

As an example of the point I am trying to make, think of George Vanderbilt, wealthy grandson of Cornelius, whom I wrote about in a July14, 2012 posting on this blog. Here is what I said:

One bit of residue of the Vanderbilt fortune is Biltmore Estate in Asheville, NC, built in the late 1800’s, the “gilded age,” by grandson George. To many it seems to have been an extravagant indulgence (Check out this recent column by Mona Charen.), but he built a town to support the project, pushed the limits on technology, and employed thousands in the design and construction of it, artists and craftsmen and laborers, thereby revolutionizing the Western North Carolina economy. One hundred and forty years later, Biltmore Estate, a working farm and resort, employs 1700 people and hosts a million visitors annually from all over the world. Now that was a real jobs program!

Follow @dkw2020

Friday, August 31, 2012

Comment on Ross Douthat's "Bad Religion"

Maybe it is the journey beginning in the Southern Baptist Church of my youth and early adulthood, progressing through middle age commitments to a couple of “mainline” churches, and recently moving to the Catholic Church, hopefully for my remaining senior years, that caused me to enjoy so much Ross Douthat’s Bad Religion: How We Became a Nation of Heretics. Or maybe it is just that I lived through and have some familiarity with almost everything he discusses in the book but have never knit all the pieces together in a continuous narrative, explaining the development of theological liberalism as he does.

Douthat is a magna cum laud Harvard graduate, a Pentecostal turned Catholic, and a lonely conservative columnist, the youngest ever, at the New York Times. Don’t worry about him though, because, when it comes to the written word, he can hold his own with anybody. In Bad Religion, he has provided a well documented history of the US Christian Church from the 1940’s to today, producing a volume that should qualify as a textbook for a course in any Christian seminary and deserves a permanent place in the library of any person of faith.

His story begins in the post WWII glory days for the Christian Church in America, attendance, membership, and giving all increasing, Protestant evangelist Billy Graham, Catholic Bishop Fulton Sheen, and Reverend Martin Luther King, Jr., all receiving general respect and approval of the public and little criticism, except from segregationists, and none of them waffling on the traditional orthodox Apostles and Nicene Creed truths held by Christians since the early centuries of the Church. It was a time when thirty seven mainline denominations could cooperate to establish a protestant presence in New York City, the National Council of Churches, have the cornerstone for their new nineteen story skyscraper laid by President Eisenhower, and get favorable comment and support from both the President of the United States and The New York Times.

But then the 1960’s brought the Vietnam War, the Pill and subsequent sexual revolution, increasing wealth, mobility, consumerism and suburban sprawl, globalization, theological relativism, and individualism. And political polarization began to divide Christians and even complicate joint worship and prayer by “liberals” and “conservatives.” Inclusion and accommodation became the bywords for mainline Protestant churches, and many formerly faithful members lost track of the reasons they had joined and worshiped there. On the Catholic side, The American Catholic Church influence waned as Vatican II was miss-interpreted, liturgical practices suffered, and seminary discipline broke down. And many formerly faithful Catholics and Protestants stayed home Sunday mornings and zipped up their pocketbooks.

And from that turmoil, according to Douthat, came Bad Religion, abandonment of the orthodox fundamentals of the Christian faith and adoption of heresies focusing on prosperity (Joel Osteen e.g.), narcissism and self actualization (Eat, Pray, Love e.g.), and nationalism (Glen Beck e.g.).

You may be wondering how I can, with all that bad news about the Church, claim, as I did in the first paragraph, to have enjoyed Douthat’s book. I take comfort, first of all, in the promise Jesus made that he would establish his Church and that the gates of Hell would not prevail against it so I am not too stressed about the current state of affairs. I see the Church not as a civic or social or political or self-help or even a social justice organization but a “place” of divine mystery and miracles, the embassy of Heaven on Earth, a place to be comforted and fed but also a place to be reminded that Jesus said that if we love him, we are to keep his commandments.

Douthat makes it clear at the end of his book that his objective was to make a “…case for Christian orthodoxy - defending its exacting moralism as a curb against worldly excess and corruption, praising its paradoxes and mysteries for respecting the complexities of human affairs in ways that more streamlined theologies do not, celebrating the role of its institutions in assimilating immigrants, sustaining families, and forging strong communities.” He closes by inviting his readers to Church. I thought that was a positive note and one I can endorse and second.

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Other interesting articles on Douthat's book.
Interview with him.
A critical response to Douthat's book.
A Douthat defense of the book.
Discussion and critiques of Douthat's book.
An expert commentary by Fr. Robert Barron

It is obviously a book that has stirred up considerable interest and commentary. Get it and read it.

Comment on Ross Douthat's "Bad Religion"

Monday, August 13, 2012

Returning Thanks

If our power grids were to fail and our fuel supply chains were to be destroyed, we would, in just a few days, become a hunter gatherer society, foraging for food and drink, probably even without cash since the bank computers and ATM’s would be out of commission. We would stop obsessing about obesity, and we would learn what hunger really is, all due to failure of the fragile infrastructure we have created and come to depend upon to feed more than 300 million people. For a hint of what it would be like, just pay attention, next time there is a hurricane warning, to the speed with which store shelves are emptied of bread, milk, toilet paper, and wine, the essentials of American life.

Of course a few would have followed Glen Beck’s advice and stockpiled sealed containers of wheat or other such staples and would sit at home behind locked doors, blinds closed, armed, locked, and loaded, feeling smug and trying not to let their neighbors see how healthy they are, but that would not be sustainable. The supplies would run out or “cabin fever” would set in or thieves would break in and steal and all but employees of US Government Health and Human Services, which would be charged with confiscation and distribution of all available food and water, would end up hungry, though hopefully not starving. Expect lots of peanut butter.

All of which makes me think of the simple acts of giving thanks for or asking for blessing of our food.

I don’t recall our family, during my youth, having a consistent tradition of prayer before meals, but my maternal grandfather, Oscar Shelly, at family gatherings, always called on Uncle Andy, his pastor son-in-law, to “return thanks.” I don’t remember anything about Uncle Andy’s prayers except that he had a preacher’s voice and prayed with confidence, but that phrase, “return thanks,” has stuck with me.

The basis for our Christian tradition of giving thanks for our food is two instances in the New Testament, Jesus feeding the 5000 and the Last Supper at both of which, scripture tells us, Jesus gave thanks before serving (See verses below). There is also an instance of St. Paul, suffering shipwreck, encouraging the crew members to eat. After urging them to eat, “he took bread; and giving thanks to God in the presence of all, he broke it and began to eat.” I assume the others eventually helped themselves. They probably even gave thanks to their gods, considering their precarious positions.

There are two instances also of Jesus “blessing” bread or food before serving, at an earlier crowd feeding and at the feeding of his disciples on the road to Emmaus where Jesus was “made known to them in the breaking of the bread.” I didn't find accounts of Jesus giving thanks or blessing the food when he ate with Pharisees or when he received water from the Samaritan woman at the well, though he may well have done so.

I’ve never been comfortable initiating giving thanks publicly in restaurants and other public venues since I tend to be self conscious and it always makes me think of Jesus’ warning about making a show of praying in public. Meaningful prayer to God seems to demand losing consciousness of one’s surroundings and one’s self and focusing only on God, a difficult task for me in noisy and crowded restaurants and mixed company. But, I can handle it just with immediate family at our own table.

Of course I am always ready to pray when asked to do so and will bow and listen respectfully when others pray, even if I find myself somewhat out of tune with the prayer. And, if you see me staring down at a plate of food in some public place, don’t assume I am trying to figure out what it is and whether to eat it. I am probably saying, “Thank you Heavenly Father for this food,” trying to be mindful that Jesus, and not that wonderful stuff on the plate, is the “Bread of Life.”

I am truly thankful for the abundance of food in so much of the world and pray for those who do not enjoy such bounty. And, I am thankful for our incredibly complex infrastructure which serves us so well, and a bit worried about it.

To end on a humorous note, take a look at this old clip ofJimmy Stewart as Charlie Anderson giving thanks before a family dinner in the movie Shenandoah, a depiction of pre-infrastructure days. It is probably a pretty accurate glimpse of the culture of the Scotch-Irish ancestors of a good part of today’s US population. Had President Obama been at the table, he might have said, “Charlie, you didn't do that. The US Government let you settle here, and God provided that soil and rain and sunshine.” And they both would have been partly right.

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Theological Note: Many Christians see a clear link between the mass feedings by Jesus, the offering of his own body and blood at the Last Supper, Eucharist or Thanksgiving, and his claim to be the “bread of life” and then, after the resurrection, his disciples recognizing him on the road to Emmaus “in the breaking of the bread.” The whole story, even back to the feeding of manna to the crowds in Exodus, is pulled together in John 6.

Matthew 14:19 Then he ordered the crowds to sit down on the grass. Taking the five loaves and the two fish, he looked up to heaven, and blessed and broke the loaves, and gave them to the disciples, and the disciples gave them to the crowds.

Matthew 15:35-36 Then ordering the crowd to sit down on the ground, ³⁶ he took the seven loaves and the fish; and after giving thanks he broke them and gave them to the disciples, and the disciples gave them to the crowds.

Matthew 26:27-28 Then he took a cup, and after giving thanks he gave it to them, saying, "Drink from it, all of you; ²⁸ for this is my blood of the covenant, which is poured out for many for the forgiveness of sins.

Mark 6:41 Taking the five loaves and the two fish, he looked up to heaven, and blessed and broke the loaves, and gave them to his disciples to set before the people; and he divided the two fish among them all.

Mark 8:6 Then he ordered the crowd to sit down on the ground; and he took the seven loaves, and after giving thanks he broke them and gave them to his disciples to distribute; and they distributed them to the crowd.

Mark 14:22-24 While they were eating, he took a loaf of bread, and after blessing it he broke it, gave it to them, and said, "Take; this is my body." ²³ Then he took a cup, and after giving thanks he gave it to them, and all of them drank from it. ²⁴ He said to them, "This is my blood of the covenant, which is poured out for many.

Luke 22:17-20 Then he took a cup, and after giving thanks he said, "Take this and divide it among yourselves; ¹⁸ for I tell you that from now on I will not drink of the fruit of the vine until the kingdom of God comes." ¹⁹ Then he took a loaf of bread, and when he had given thanks, he broke it and gave it to them, saying, "This is my body, which is given for you. Do this in remembrance of me." ²⁰ And he did the same with the cup after supper, saying, "This cup that is poured out for you is the new covenant in my blood.

Luke 24:30-31 When he was at the table with them, he took bread, blessed and broke it, and gave it to them. ³¹ Then their eyes were opened, and they recognized him; and he vanished from their sight.

John 6:11 Then Jesus took the loaves, and when he had given thanks, he distributed them to those who were seated; so also the fish, as much as they wanted.

John 6:53-56 So Jesus said to them, "Very truly, I tell you, unless you eat the flesh of the Son of Man and drink his blood, you have no life in you. ⁵⁴ Those who eat my flesh and drink my blood have eternal life, and I will raise them up on the last day; ⁵⁵ for my flesh is true food and my blood is true drink. ⁵⁶ Those who eat my flesh and drink my blood abide in me, and I in them.

Acts 27:33-35 Just before daybreak, Paul urged all of them to take some food, saying, "Today is the fourteenth day that you have been in suspense and remaining without food, having eaten nothing. ³⁴ Therefore I urge you to take some food, for it will help you survive; for none of you will lose a hair from your heads." ³⁵ After he had said this, he took bread; and giving thanks to God in the presence of all, he broke it and began to eat.

1 Corinthians 11:23-24 For I received from the Lord what I also handed on to you, that the Lord Jesus on the night when he was betrayed took a loaf of bread, ²⁴ and when he had given thanks, he broke it and said, "This is my body that is for you. Do this in remembrance of me."