While leafing through The Politically Incorrect Guide to Capitalism by Robert P. Murphy, I came across this great historical reminder about the power of returing money to the taxpayer. From page 122 of the book:
Those who criticize federal anti-poverty programs are often dismissed as heartless cynics who care nothing for the poor. Yet how could any genuine advocate for the downtrodden endorse the dehumanizing Welfare State? Private philanthropy not only respects property rights, but it also treats recipients with more dignity and squanders fewer funds on overhead and fraud. When the government returns money to the taxpayers, they in turn give more to the poor. Spurred in part by Reagan’s slashing of marginal tax rates in 1981, during the so-called Decade of Greed:
* Total giving grew by 56 percent in real dollars
* Charitable giving grew at a rate 55 percent higher than in the previous twenty-five years
* The increase in giving exceeded the increase in total outstanding consumer credit
* Relying on correlations established between charitable giving and GDP, tax rates, and other factors during the 1955-1980 period, actual giving exceeded the “predicted” giving in every year of the 1980s, on average by $16 billion per year.
Let’s hope someone on the President-Elect’s economic team understands this lesson. We should, and do, make helping the poor a priority in this country. But how we go about it is key.
