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On Charity

A common point of disagreement in political discussions is about human nature. Some people say that men should make their own choices, and control their own money. And believe that only good will come of freedom. Others would retort that the rich will have more choices, and abuse them to gain more power. Or at least assert that some people will be left behind without help through sheer bad luck (or not having a level playing field). And that generosity is not natural, so the government must step in to help.

Roughly, right wing people take the first view, and favour free markets, small government, and people deciding for themselves how charitable to be. And, roughly, left wing people don't trust humans to be charitable or fair without being controlled by government.

So when a right winger says he isn't against helping people, he just wants to decide how best to do it, and make sure his charity is effective (the government, he will say, is wasteful and spends charity money badly), a left winger will likely scoff. The left winger will think this is just a trick to get out of giving any charity at all. Because the left winger trusts his government to do everything right, he will see any attempt to pay less taxes or avoid forced charity as, clearly, a selfish attempt to get out of paying one's fair share or to get out of helping other people.

So, who's right?

Well, I've got a way to find out. Despite high tax levels (paid by both left and right wing), it is commonplace to give additional money, by choice, to charities. Now, if the left is correct, we should observe that the greedy right wingers donate very little to charity. But if the right is telling the truth that they are happy to give money to charity, as long as they pick which charity, and give money in ways they feel are effective, then we will observe, despite taxes, that right wingers do choose to donate significant amounts of money to charity.

The following table ranks each state by how generous it is. This was determined by taking into account the amount of money donated to charitable organisations, and also how rich the people in that state are. In other words, one gets a high ranking by giving a large portion of what he has. The states are color-coded. Red states voted for Bush in the 2000 election (they're, to decent precision, right wing). Blue states voted for Gore. I believe the table speaks for itself. (Thanks to The Rantblogger for the table.)

  1. Mississippi
  2. Arkansas
  3. South Dakota
  4. Oklahoma
  5. Alabama
  6. Tennessee
  7. Louisiana
  8. Utah
  9. South Carolina
  10. Idaho
  11. North Dakota
  12. Wyoming
  13. Texas
  14. West Virginia
  15. Nebraska
  16. North Carolina
  17. Florida
  18. Kansas
  19. Missouri
  20. Georgia
  21. New Mexico
  22. Montana
  23. Kentucky
  24. Alaska
  25. New York
  1. Indiana
  2. Iowa
  3. Ohio
  4. California
  5. Washington
  6. Maine
  7. Maryland
  8. Hawaii
  9. Delaware
  10. Illinois
  11. Pennsylvania
  12. Connecticut
  13. Vermont
  14. Virginia
  15. Oregon
  16. Colorado
  17. Arizona
  18. Michigan
  19. Nevada
  20. Wisconsin
  21. Minnesota
  22. Massachusetts
  23. New Jersey
  24. Rhode Island
  25. New Hampshire

Elliot Temple on November 10, 2003

Comments (17)

I think there is one BIG misconception about richness, and this is the assumption that it is a zero-sum game.



Someone being rich does not stop another person being rich. Instead, through putting their money in the bank, or investing it, or spending it, all of that rich person's money is cycling through the economy, and creating more money and employment. The only money that isn't generating employment or potential wealth for others is the hundred dollars bills the rich person has stuffed under their mattress.



The whole left-wing mistrust of private ownership is based on a misunderstanding of this non-zero-sum game, I think.



One thing really struck me when I read "Eat the Rich" by PJ O'Rourke. He contrasted what happens when you:

spend your own money on yourself

spend your own money on others

spend other people's money on yourself

spend other people's money on other people.



Unsurprisingly, the quest for getting what you really want at the price you really want it is more likely to be successful when it is your own money you are spending, and on what you want to spend it on. But when someone else is spending a third party's money on your behalf... forget it.


emma at 5:06 AM on November 10, 2003 | #596

Emma,



You'd better hope Alice doesn't see your "on what you want to spend it on." She's still mad at Paul McCartney for "This ever changing world in which we live in."



Good point about zero-sum, though. I think there are A LOT of misconceptions about wealth, poverty, generosity, and how well, well-intentioned, bureaucracies will do at managing other people's resources.


Gil at 5:38 PM on November 10, 2003 | #597

David SJ told me:



"One thing. Right-wing states tend to have lower taxes. So, it may be that left-wingers don't donate voluntarily because most of the charity is handled by government."



Even if that's true, the thesis that right wingers are telling the truth about donating on their own if not taxed would still hold.


Elliot at 7:16 PM on November 10, 2003 | #598

Dear Gil,



What are you? The grammar police???



:)


emma at 1:24 AM on November 11, 2003 | #599

[(red states = lower taxed) Even if that's true, the thesis that right wingers are telling the truth about donating on their own if not taxed would still hold.]



This occurred to me, but then the following *also* occurred to me:



Maybe people tend to give charity mostly to lower their tax burden (i.e. writeoffs). (I don't know what's in the hearts of people who give charity, but a left-winger could certainly *claim* people "only" do it to reduce their tax burden.)



So without this (government-supplied) incentive to give charity, would the numbers still look as they do? In short, one could say that the higher giving of lower-taxed states is evidence of nothing more than the fact that the governments of those states make up for the lower taxes by (instead of dispensing charity themselves) farming out charity to the states' citizens, using/taking advantage of the incentive of tax bracket reductions to do it.



Doesn't this support the presumed "left-wing" viewpoint that people don't give charity *on their own*, without government inducement/coercion? *note* I don't necessarily subscribe to this theory, just looking for possible holes in your argument before I decide to steal it.... ;-)


Name: at 2:12 PM on November 11, 2003 | #600

well, suppose the tax rate (all the various taxes 2gether) amounted to 50% of your income. and suppose anything to charity was 100% tax deductible. if you had $100 you'd get to keep $50. or if you gave it all to charity you'd get to keep ...... nothing. giving to charity still loses money.



think of it this way. you have $50 and the gov has $50 but if you give urs away to charity, the government will match your donation (the matching thing changes to different numbers if the taxrate changes)



so it's still donating money one would have kept.


Elliot at 7:46 PM on November 11, 2003 | #601

also note if you want to keep money away from the government by giving it to charity, this is most effective in states with *high* taxes.


Elliot at 8:25 AM on November 12, 2003 | #602

If the sum total effect of our tax code were that we have an approximate "Flat Tax", I believe the rebuttal in your 7:46 post would be valid. I have my doubts about whether that is the case however. You seem to ignore the existence of brackets, "foundations", "blind trusts", etc. I'm not sure whether they can all be safely ignored.



I'm not sure what the point of your 8:25 post is. It seems to advance a point which applies only to that class of people which gives money to charity specifically because they don't want that money to get to the government, if there are any such people. I don't see how this relates to the original lefty-righty disagreement about whether people can be "trusted" to give charity if they have spare money. I suppose what one can conclude is that right-leaning government-hating folk living in left-leaning states would have the motivation you describe (keeping it away from government) for giving charity. This doesn't help the "people can be trusted" side any, and I can imagine ways to spin it as helping the "people can't be trusted" side.



I dunno.



Best,


Name: at 1:53 PM on November 12, 2003 | #603

I don't see why a flat tax or matters. if you donate money, you end up with less of it, not more. if you don't think that's the case can you explain?



if donations came from right-wing people trying to avoid taxes, then the largest donating group would be right-wing people in *blue* states. so this would lower the observed gap is how much blue vs red states donate. which would mean the difference btwn right-wing and left-wing donating levels is *larger* than the chart shows.



therefore i don't see any valid arguments against my thesis.


Elliot at 2:02 PM on November 12, 2003 | #604

[if you don't think that's the case can you explain?]



Sure. Imagine 2 brackets. (We're talking hypothetically now because I want to illustrate the principle.) If you make over 100K you pay 50% of your income. If you make 100K or under you pay 10% of your income. (see where this is going?)



Now suppose I make 100,001K per year. My tax bill is therefore $50,000.50.



Or maybe I give 1 dollar to my church, and deduct it. My taxable income is now 100K so I only owe $10,000. My savings is (50000.5 - 10001) = $39999.50. Seems like a good incentive to me.



Obviously the tax code in real life is not like this. The question is whether it's *enough* like this that the effect is present to some extent?



I'm looking at a tax table now. By my reading (which could be wrong?) it seems to imply that if you make (after the Standard Deduction and whatnot, this is your "taxable income" now) slightly less than 143,500 you owe 28% of it. If you make slightly more than 143,500 you owe 33% of it.



Now imagine it's january and you've run your tax software and inputted everything and see that your taxable income ends up 143,501. You'd owe 33% of this or $47355. But if you could retroactively give 2 deductible dollars to some Girl Scout (or whatever) that brings you down to 143,499. 28% of 143,499 comes to $40180. that's $7175 less or (counting the 2 dollars) a net savings of $7173 to you. for giving 2 dollars to someone.



Am I missing something? I could easily have messed up somewhere, if so lemme know.



[if donations came from right-wing people trying to avoid taxes, then the largest donating group would be right-wing people in *blue* states. so this would lower the observed gap is how much blue vs red states donate. which would mean the difference btwn right-wing and left-wing donating levels is *larger* than the chart shows.]



I see, but now you've switched "donating money to prevent the government from having it" (something I wasn't sure anyone ever did) to "donating money to avoid taxes" (which is of course what I was saying). As for the latter (since that's what we're now discussing), I don't see why right-wing people would necessarily donate money to avoid taxes at rates any higher than left-wing people. That seems to presuppose something I'm not willing to presuppose. Granted, you would expect higher-taxed states to induce people to seek more tax shelters (some of which will look like "charity"); on the other hand, people in higher-taxed states have less spare income, so...



And besides, even if there's a difference between right-wing donating levels and left-wing, that still doesn't get to the issue of whether people "can be trusted" to give charity, because there's still the objection I raised at the beginning, that there can be government incentives to give charity which is basically causing everything we're seeing here.


Name: at 3:41 PM on November 12, 2003 | #605

OOPS



duh, I see my problem. I'll correct myself so you don't have to. the percentages only apply to those dollar amounts within each bracket (probably). You don't pay 33% of it all, just 33% of the part in that bracket. And, so on. a piecewise linear (but continuous) function. sorry.



still, there remains the fact that rich people seem to put their money in "foundations" and "blind trusts" and various other legal creations which have charitable aftereffects. is there no financial incentive to do so? is it all out of the goodness of their hearts?


Name: at 3:45 PM on November 12, 2003 | #606

It is of interest that Delaware, in the list of charitable states is in the bottom part of the list, number 34, although it is maybe the easiest state in which to form a corporation. Does this say anything about corporate giving, corporate charity important to local communities? I don't know.

It is also interesting that the state where lots of libertarians want to move to, New Hampshire, is number 50 on the list, and to the right of center too. Only observations. I am interested in those occurences where the theory may seem to not hold true as well as those where it seems to hold true.


Unknown at 4:30 PM on November 12, 2003 | #607

I admit the charity table doesn't prove my explanation of anti-taxes people is right (namely that they rightly value freedom rather than just being greedy). But it makes finding a rival theory less feasible, and is thus a powerful bit of support.



PS criticising "greed" is somewhat misconceived, but that's another can of worms


Elliot at 4:31 PM on November 12, 2003 | #608

I will concede libertarians tend not to be into charity. (But they are different than right wingers.) I'm not convinced this is a significant criticism, though.


Elliot at 8:21 PM on November 12, 2003 | #609

"I believe it speaks for itself"? That is definately the one thing that a correlation does not do. Correlations can sometimes indicate causal effects, but often do not. Correlations are often misused in the media and wherever it suits an argument. You give one explanation on the site for these results while a comment poster puts up another explanation that comes to opposite conclusions. Theories about this table abound; but without an established causal relationship none of them can really be said to be more than hot air.


Unknown at 4:34 PM on November 15, 2003 | #610

The chart rules out many possible rivals to my explanation, so it is (indirect) support.



What coherent rival explanation with the opposite effects are you referring to? (I always find it very frustrating when people refer to some supposed counter-argument or refutation as if it worked when I don't recall conceding any such thing.)



If you want, we could change the thesis to be some significant parts of the right wing do charity (not necessarily all).



To give an example of another way to use that construction: some significant parts of the left wing aren't traitors.



(This parallel shows that the new thesis about the right wing is not damning, without even getting into whether charity is actually very good.)


Elliot at 10:22 PM on November 15, 2003 | #611

Give big ups to da ville yall know who yall are, and oh yeah, them haterz please stop hatin' because yall life will never go on so congraluate and stop hatin. u ain't bout what you be talkin bout.


Miss Thang at 9:10 AM on September 3, 2004 | #612

What do you think?

(This is a free speech zone!)