Patient Power

Cutting tax rates would fund charitable programs to replace government charities

From the Pacific Research Institute:

• In 2005, Americans contributed $48 billion to health and social services via individual donations, as well as through foundations and corporations.
• Philanthropic giving is insensitive to tax rates, constantly hovering around two percent of income for the last half century.
• However, income is extremely sensitive to tax rates, and the burden of taxation incurred largely by the welfare state has crippled America’s growth.
• If the government had not raised taxes in the 1960s to fund the welfare state, economic growth would have been so great that the increased charitable giving to health and human services would now fund about half of the public assistance currently provided by the federal, state, and local governments —eliminating the “need” for much government intervention.

The authors also note that non-government charity would be more efficient and effective than government charity, so the 50% figure noted above is on the low-end.   For example, effective charities would not punish recipients for becoming self-sufficient (low-wage trap), as Medicaid currently does.  Read the report here.

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