Taxing Shelters
By Amit Singh | Tuesday, May 25th, 2010 | PolicyIt takes a true bureaucrat to come up with the idea to charge taxes to charitable and non-profit organizations in an environment of high-employment where the need for their services is higher and individual donations are down concurrently with an economy forcing corporate donations down as well. But of course, that is exactly what some localities and states are trying to get charities to do voluntarily without much success.
I understand that many charities and non-profits are as inefficient as the govt in delivering services but many are very good at what they do and the govt could never match their quality and speed. My personal favorite is the American Red Cross which isn’t necessarily the poster child for low overhead but is an organization I trust will be the first on the ground in any disaster whether it be Katrina or September 11th.
Taxing these organizations will strike at the very heart of American culture and is without a doubt one of the worst ideas I have heard in quite some time.
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6 Responses to "Taxing Shelters"
OK Amit, you provided many links in your article but none of them links to this proposal to tax non-profits. Perhaps you are talking about the Fair Tax? The Fair Tax would indeed tax non-profits at about 23% or 30% depending on how you want to look at it.
Go read Neil Boortz’s book on the Fair Tax and join me in laughing. Everyone needs a real hoot every now and then. Get this, in Neil’s book everyone pays the Fair Tax and everyone lives happily ever after.
@LD, no I’m not talking about the Fair Tax. its based off this story from NPR:
http://www.npr.org/templates/story/story.php?storyId=127092795
different localities are considering it and some are trying to get non-profits to pay taxes voluntarily
Little David,
Don’t laugh. If you had actually read and digested the Fair Tax information, you would know that it eliminates all other Federal personal & corporate income taxes, including payroll taxes. You might also review all of the white papers and at least 20 million dollars spent in research on the effects to the economy.
Not sure if you actually work for a paycheck, but I do. Think how people would react to having their entire paycheck. For me, this would mean an extra $500.00 every 2 weeks. I could choose how much tax I pay based on my consumer spending. This is true economic power. If federal withholding were ended, Americans experienced having all of their earnings, and then had to write a check to the IRS–there would be a tax revolt.
Talk about “stimulus” for the economy. Think what might happen, if the US becomes the biggest corporate tax haven (with the Fair Tax) in the world…where would all of the offshore companies and jobs come back to?
http://www.fairtax.org
Amit,
Thanks for the link. However it identifies those who requested non-profits to pay not some change in tax law that would force them to pay.
Unlike the Fair Tax which would tax non-profits like everyone else. State and local governments would also have to pay the Fair Tax too by the way.
Pam,
I am self employed so I am not subject to with-holding. However I do write a check every quarter for estimated taxes owed and I estimate that under the Fair Tax I would owe about $5K additional every year so that Paris Hilton gets a tax cut.
To anyone interested, please read Neil Boortz’s book. In it he explains that by removing the embedded 22% cost of complying with the tax system (and paying the taxes) borne by American businesses the cost of everything you buy will go down by 22% so the 23% tax would be made up by cost reductions. What a hoot. First off, the increase will actually be 30% although the shared resulting cost will then be 23%. Second, most consumer goods are produced overseas and the costs other then the costs of transportation within our borders will not be impacted other then with the 30% increase in price.
If you want to explore the Fair Tax issue Neil’s book is a good place to start but please be forewarned that Neil has a gift with words and he uses this gift to twist the facts to support his point of view. I am sure that Neil’s personal income is high enough that he would personally benefit from shifting some of the tax burden off the wealthy and onto the backs of the middle class.
Little David,
How would the Fair Tax give only Paris Hilton a tax cut? The rich spend way more in consumer goods, so they would pay more in the Fair Tax. I don’t understand your assertion. Please explain.
I have a self employed spouse and know all about writing checks to the IRS. That is probably why I support the Fair Tax.
Paris Hilton would not be the only recipient of the tax cut, everyone who is wealthy like her would receive the same.
You do understand the Fair Tax is supposed to be revenue neutral don’t you? The Fair Tax would only tax expenditures by the wealthy and not the amount they saved. Who else other then the wealthy can afford to save anything.
More basically, I did the taxes for an average citizen who earned $43K, married with two children. Doing up a 1040EZ for the the “average citizen”, who only took the standard deductions because he was renting and not paying interest on a new home, he paid $2K more in taxes. This allows for the prebate and takes into account that someone only making $43K is probably spending every dime on keeping a roof over the heads of his kids and food on the table.
To answer your next question, yes I considered Social Security/Payroll taxes. Go do the math for yourself.
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