Obama's Threat to Charities and Universities: His Budget and Taxes

By Michael Barone, Thomas Jefferson Street blog

In the 1830s Alexis de Tocqueville identified as one of this country's great strengths Americans' propensity to form voluntary associations. It remains one of America's great strengths today, one which distinguishes us from every other nation. But it is under attack from the Obama administration. As the Wall Street Journal reports:

The tax increases would raise an estimated $318 billion over 10 years by reducing the value of such longstanding deductions as mortgage interest and charitable contributions for people in the highest tax brackets. Households paying income taxes at the 33% and 35% rates can currently claim deductions at those rates. Under the Obama proposal, they could deduct only 28% of the value of those payments.

Reducing the value of the charitable deduction is a threat to voluntary associations. For worthy commentary, check out Jennifer Rubin of Commentary and, on videotape she links to, House Majority Leader Steny Hoyer, and this reaction in the Chronicle of Philanthropy.

This is an attempt to channel money away from voluntary associations and direct it to the state. Some of that money, in turn, would be directed to public employee unions, and much if not most of that would be directed to the Democratic Party. It would be interesting to know what White House counselor and former President of Harvard University Lawrence Summers thinks of this.

One of the strengths of American society is that we do not rely solely on the government to address social problems. Because of our vast network of voluntary associations, of charities and foundations and universities and nonprofits, we address social problems in a wide variety of ways. We can examine what works and what doesn't work; we have competition in the marketplace of ideas and good works. We have faith-based and proudly secular voluntary associations, market-oriented and statist-oriented voluntary associations, research-oriented and service-oriented voluntary associations.

Barack Obama evidently wants us to shift vast sums of money from the voluntary associations extolled by Alexis de Tocqueville to the bureaucratic networks described by Max Weber. This is a profoundly bad idea. I will be interested to see whether nonprofits dependent on major gifts, like our great universities, take this in stride or whether they see it, as I do, as a threat to their institutions. People who make their livings working for nonprofit institutions almost surely voted heavily for Barack Obama. Do they really think it's a good idea to siphon money away from their states in order to enrich the public employee unions? Is that a step forward for American society? Max Weber might have thought so. Alexis de Tocqueville surely would not have. 

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