Charitable donations backed by tax exemptions make helping the worse-off at the whim of the rich. As you can guess, it does not work very well. It leaves the decision on who gets what in help to the rich individual and not a democratic government, while at the same time letting the rich pay lower taxes, so many of these rich people are not make any net contribution at all!
Indeed we know from surveys that the rich pay less as a share of the annual incomes that the average income earner. On the whole, the poor help the poor and the rich don’t. And yet they are feted in the media and by politicians etc as great ‘philanthropists’. So they pay less proportionately, but get all the praise for being great people! Such is the charity business.
The American author, Stephen King, summed it well in a recent expletive ridden article: Tax Me, for F@%&’s Sake!. The writer scolded the super rich (which includes himself) for Scrooge-like attitudes. “In February, while discussing New Jersey’s newly amended income-tax law, which allows the rich to pay less (proportionally) than the middle class, Chris Christie (the Governor of New Jersey) was asked about Warren Buffett’s observation that he paid less federal income taxes than his personal secretary, and that wasn’t fair. “He should just write a check and shut up,” Christie responded, with his typical verve. “I’m tired of hearing about it. If he wants to give the government more money, he’s got the ability to write a check—go ahead and write it.”
King goes on: “Heard it all before. Cut a check and shut up, they said. If you want to pay more, pay more, they said. Tired of hearing about it, they said. Tough shit for you guys, because I’m not tired of talking about it. I’ve known rich people, and why not, since I’m one of them? The majority would rather douse their dicks with lighter fluid, strike a match, and dance around singing “Disco Inferno” than pay one more cent in taxes to Uncle Sugar. It’s true that some rich folks put at least some of their tax savings into charitable contributions. My wife and I give away roughly $4 million a year to libraries, local fire departments that need updated lifesaving equipment (Jaws of Life tools are always a popular request), schools, and a scattering of organizations that underwrite the arts. Warren Buffett does the same; so does Bill Gates; so does Steven Spielberg; so do the Koch brothers; so did the late Steve Jobs. All fine as far as it goes, but it doesn’t go far enough.”
King then commented about the role of charity versus social spending “What charitable 1 percenters can’t do is assume responsibility—America’s national responsibilities: the care of its sick and its poor, the education of its young, the repair of its failing infrastructure, the repayment of its staggering war debts. Charity from the rich can’t fix global warming or lower the price of gasoline by one single red penny. And hey, why don’t we get real about this? Most rich folks paying 28 percent taxes do not give out another 28 percent of their income to charity. Most rich folks like to keep their dough. They don’t strip their bank accounts and investment portfolios. They keep them and then pass them on to their children, their children’s children. And what they do give away is—like the monies my wife and I donate—totally at their own discretion. That’s the rich-guy philosophy in a nutshell: don’t tell us how to use our money; we’ll tell you.”
And as for arguing that rich people getting richer helps the economy with the usual story that rich people’s incomes ‘trickle down’ to the rest of us, King retorts “Here’s another crock of fresh bullshit delivered by the right wing of the Republican Party (which has become, so far as I can see, the only wing of the Republican Party): the richer rich people get, the more jobs they create. Really? I have a total payroll of about 60 people, most of them working for the two radio stations I own in Bangor, Maine. If I hit the movie jackpot—as I have, from time to time—and own a piece of a film that grosses $200 million, what am I going to do with it? Buy another radio station? I don’t think so, since I’m losing my shirt on the ones I own already. But suppose I did, and hired on an additional dozen folks. Good for them. Whoopee-ding for the rest of the economy.”
As King says, it is the other way round. The rich are rich because the poor helped them to get rich. “What some of us want—those who aren’t blinded by a lot of bullshit persiflage thrown up to mask the idea that rich folks want to keep their damn money—is for you to acknowledge that you couldn’t have made it in America without America. That it’s not fair to ask the middle class to assume a disproportionate amount of the tax burden. Not fair? It’s un-fucking-American is what it is. I don’t want you to apologize for being rich; I want you to acknowledge that in America, we all should have to pay our fair share.”
King’s points are brilliantly clear. The rich are rich not because they are wildly clever but because millions have worked for them to deliver their wealth and yet the rich moan if they have to make even an equal contribution to society through taxation. And as we know, multi millionaires like US Republican presidential candidate Mitt Romney paid only 13% of his income in tax last year, or less than 40% of the burden for the average American.
And the Great Recession has not led to the rich losing their wealth. The Sunday Times Rich List reveals who are the richest people in the UK. The report shows that the 1,000 richest persons in the UK have increased their wealth by so much in the last 3 years – £155bn – that they themselves alone could pay off the entire UK budget deficit and still leave themselves with £30bn to spare which should be enough to keep the wolf from the door. The ultra-rich are now sitting on wealth even greater than what they had amassed at the height of the boom just before the crash. Their combined wealth is now estimated at more than £414bn, equivalent to more than a third of Britain’s entire GDP. They include 77 billionaires and 23 others whose wealth exceeds £750m. And these are some of the very people to whom UK chancellor George Osborne gifted £3bn in his recent budget by cutting the 50p tax rate. That measure alone gave 40,000 UK millionaires an extra average £14,000 a week, at the same time as those on very low incomes in receipt of working tax credits who couldn’t find an employer to increase their hours of work from 16 to 24 a week were being deprived in the same budget of £77 a week, around a third of their income, through their tax credits being withdrawn. In 1997 the wealth of the richest 1,000 amounted to £99bn. The increase in their wealth over the last 15 years has therefore been £315bn. If this increase in wealth were subject to capital gains tax at the current 28% rate, it would yield £88bn, and that alone would pay off more than 70% of the total budget deficit.
A proper democratic society (socialist?) would have a progressive tax system that built on the principle that the rich should pay more proportionately for the public good if they get richer. This is so much better a system than charitable donations. The poor, the disabled, the deprived and the sick and dying would not have to depend on the whims of rich benefactors but on the power of the whole of society. It would be from each according to their abilities and each according to their needs. Where have I heard that before?