Tax Break

Who said tax is boring?

The Lord giveth and the Government taketh away

Luxembourg has won the Eurovision Song Contest an incredible 5 times - only twice less than regional superpower Ireland

In recent months, both the Obama Administration and Republican Congressional leaders have suggested that tax deductions for charitable donations should, in certain circumstances, be curbed in the future – although, in keeping with all things Campaign 2012,  the facts are  a bit thin on the ground.

Frankly, I did not give this particular tax break much thought until a wake up call last Tuesday morning.  Not literally – although I was in one of those ubiquitous hotel rooms that could be absolutely anywhere in the world if not for the single distinguishing feature of the shape of its  electrical sockets.  Having arrived late the previous night in Luxembourg – western Europe’s broom cupboard  that could probably be conquered by a posse of Belgian traffic wardens en route to a jolly in the French Alps – the only bright moment so far had been stumbling upon Mary Nightingale, the 21st century thinking man’s crumpet, anchoring ITV1’s News at Ten among a Babel of more than seventy  channels.

Who invited him?

Rising early – as is my custom – and with nothing else to do because this was Luxembourg, I decided to take a look out of the window at the city (for all I know, the horizon beyond the end of the car park was already Germany). As I opened the  curtain I was struck by the beauty of the sunrise and, indeed, stood rooted to the spot for some time. Then I got to thinking about the last time I had watched a sunrise and the result was rather depressing.

Here I was in a foreign country (well, not literally a country – but it was foreign), and my reality was that  I had just  rolled off an airplane (albeit propeller driven) into a taxi into a hotel lobby into a hotel bedroom into and out of a hotel bed; and what now awaited me was rolling into another taxi into an ubiquitous meeting room (the electrical sockets tend to be hidden so you are really lost) into yet another taxi into another aircraft seat.  I had done the same thing ten days earlier – for Luxembourg read Netherlands. You get the picture.

Meanwhile, back home, the sun rises, the sun sets, it rains, there is a heatwave and I don’t even notice – driving early to the office, sitting with the sun-blinds down because I seldom get round to rolling them up. In short, standing there, staring out of the window, I realized I was living in a bubble and had lost touch with the world.

But it is not only me who has a problem. Western society may have  lost touch with itself.

Keeping it personal

At the start of the financial crisis, in 2008, the soon-to-retire Archbishop of Canterbury Dr Rowan Williams wrote a remarkable article in the Spectator in which he pointed to the idolatrous qualities of the financial markets and bemoaned the loss of the face-to-face element of trust in a credit transaction. The financial world had become so complex with so many derivative elements between the lending and borrowing of funds that the markets were deemed to have a life of their own and individuals were isolated lacking control over their own social destiny. The corollary of this may be summarized in a quote of Michael Jordan  “There is no “I” in team but there is in win” – the individual is isolated and the collective is lost.

Which brings me to tax deductions on charitable donations.

Income taxes finance the collective requirements of the nation as a whole and governments cannot possibly personalize the destination of taxes paid. Although no right minded person in the twenty first century would suggest that we should go back to a welfare system based entirely on the generosity of individuals and tithes – governments are much better at collecting the amounts needed for collective social action- there is most definitely a place in modern society for charitable institutions. Governments the world over have proved inept at running most things (other than their chauffer driven cars). In recent years evermore public services in the western world  have been privatised or, while funded by the government, operated by private bodies. There is massive room for charitable institutions to play a part particularly in the area of social welfare and while they may be eligible for government funding, there is a twofold advantage in encouraging individual “investment” : the donors vote with their feet if they perceive a breach of trust; and the system encourages genuine empathy.

He preferred giving charity to paying taxes

Despite the rants of some American fundamentalists that taxes crowd out charity, the marginal propensity to donate is a function of many things and the argument is totally spurious. I believe that the tax deductibility of donations to “‘legitimate” causes – and all would agree that   President Obama or a President Romney should curb abuses – has more to do with the effect on society than economics. It reminds people, albeit inversely, that there is a connection between taxes and the social collective  –  by showing that the government is prepared to pass up on its legitimate right to revenue in favour of private funding.

At the end of this week the two great faiths that underpin western civilization celebrate (not coincidentally) major festivals. Each, in its own way, provides the chance to reconnect with the community. In increasingly sceptical societies participation in these festivals is just as much an opportunity to affirm Belief in Mankind as Belief in God.

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