'Tis the Season of Generosity and Good Will

By James Shott

For those of the Christian faith, Christmas is the raison d'être for their religion, the fulfilling of God’s promise to send His Son to Earth more than 2,000 years ago. Christmas now is celebrated around the world by both Christians and non-Christians through the tradition of gift-giving.  In America, we not only exchange gifts, but also freely give of our time and money to help those less fortunate or who are in trouble during this time of the year.

In every community there are organizations that provide tangible benefits to the public and help others in need through volunteering for service projects and monetary and other contributions. Civic clubs and religious organizations raise and give thousands of dollars in assistance every year for medical care, food pantries, weatherization and home heating in the winter, building and repairing homes for less fortunate people and families, student tutoring and scholarships, animal welfare and spay/neuter programs, arts and cultural programs, assisting disabled persons, assisting police and fire fighters to purchase needed equipment, among other forms of aid.

Americans are regarded as the most generous people in the world. We give unselfishly to religious and civic organizations that support our charitable interests to help people both at home and across the globe.

In 2010 Americans donated more than $290 billion to their favorite causes, and four out of every five dollars donated came from individuals and bequests. The breakdown of charitable giving is: individuals, $211.8 billion; foundations, $41 billion; bequests, $22.8 billion; and corporations, $15.3 billion.

Americans donated $23.7 billion in corporate stock; $7.6 billion in clothing, and land valued at $4 billion. Leading the list of recipients of this generosity by a wide margin were churches and religious organizations at $100.6 billion, followed by educational entities, $41.7 billion; foundations, $33 billion; human services, $26.5 billion; organizations benefitting public and societal needs, $24.2 billion; health organizations, $22.8 billion; international affairs, $15.8 billion; arts, culture and humanities, $13.3 billion; and environmental issues and animal welfare, $6.7 billion.

And when disaster strikes anywhere in the world, we respond. We stepped up when the tsunami struck Japan, when an earthquake rocked Haiti. At here at home when Hurricane Katrina struck the Gulf Coast in 2006, more than $4 billion was raised to assist victims. We are still giving to victims since super storm Sandy struck in October.

However, as generous as the American people are, the economic crisis has significantly affected charitable giving, which remains $12 billion less today than when the recession began in 2008, and is predicted not to improve anytime soon. That is a real problem for the country: The nonprofit sector generates nearly 6 percent of U.S. gross domestic product, and pays $668 billion in wages and benefits to its 13.5 million employees.

The fiscal cliff further threatens charitable giving, as lawmakers on Capitol Hill consider capping or eliminating deductions, and a change to the charitable deduction could severely damage non-profits and the charitable work that generates enormous goodwill locally and globally.

A 2009 study by the Center on Philanthropy showed that the proposal to raise the marginal tax rate to 39.6 percent on those earning $250,000 or more and cap the charitable tax deduction at 28 percent would precipitate a 2.1 percent decline in giving, which works out to a $5 billion decrease.

However, a proposal by the Bipartisan Policy Center’s Debt Reduction Task Force would be far worse. It proposes to eliminate the charitable deduction altogether and replace it with a credit like the one used in the United Kingdom. Applying this practice to the U.S. level of charitable giving would cost $260 billion, devastating charities across America.

The Charitable Giving Coalition urged both President Obama and House Speaker John Boehner to protect the charitable tax deduction as they deal with the fiscal cliff facing America. The charitable deduction encourages individuals to give to those in need, and to give more than they would otherwise give by allowing them to offset some of their tax obligation with charitable contributions. Data suggests that every dollar a donor claims in tax relief for charitable donations produces three dollars of public benefit.

The significance of the charitable work of American non-profits is one thing that sets us apart from less charitable nations. It is a reflection of the generous heart of America, and the charitable tax deduction helps to fuel that generosity. That is why it must be protected. If we fail to stop this thoughtless process, Americans will be substantially hampered in their financial support of people in need, and we will all be the worse for it.

To the extent that government continues replacing the work of charitable organizations with taxpayer funded government programs, or impedes the charitable impulses of the American people with short-sighted tax policies, those of us who give to charity lose the ability to decide which projects and causes receive our financial support.

And as the failure to control profligate government spending continues to be ignored in favor of political considerations, the likelihood increases that charitable deductions will be targeted to help raise revenue to feed the government’s spending addiction.

Cross-posted from Observations

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Looking at the United States of America by the numbers

By James Shott

As the end of 2012 draws near, here are some interesting and revealing statistics about our country.

The Gross Domestic Product Growth Rate has been anemic all year, but had its biggest increase in the 3rd quarter, rising 2.7 percent. That was double the 2nd quarter’s 1.3 percent, and beat the 1st quarter’s 1.9 percent. From 1947 until 2012, the United States GDP Growth Rate averaged 3.2 percent.

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In 2011 the population of the U.S. was 313.8 million and 153.6 million Americans were in the labor force. The nation produced total GDP of $15.1 trillion, roughly $49,000 in per capita GDP.

The U.S. Treasury collected tax revenue of a little more than $2.3 trillion and as a percent of GDP the economy is taxed at slightly more than 15 percent. However, the federal government spent about $3.8 trillion, creating a budget deficit of more than $1.3 trillion, or 8.63 percent of GDP. Each man woman and child citizen’s share of the cost of government is more than $12,000.

Currently, the national debt is roughly $16.3 trillion, which works out to about $51,000 per man, woman and child. This year’s federal budget deficit adds $3,500 or so of additional debt per citizen.

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The November jobs report listed 146,000 new jobs and a U-3 Unemployment Rate of 7.7 percent, two-tenths lower than the October figure. Unfortunately, this news is not as good as it appears. To have a truly meaningful effect on unemployment, more than 300,000 new jobs must be created each month. The Labor Department revised downward new job numbers in October from 171,000 to 138,000, and from September in 148,000 to 132,000.

The drop in the unemployment rate resulted not from lots of people going back to work, but because 350,000 people dropped out of the workforce.

The Labor Force Participation Rate dropped from 63.8 percent to 63.6 percent. The 146,000 new jobs have a much greater effect on a smaller labor force than on a larger labor force. If the labor force remained the same as it was in January 2009, U-3 unemployment would be 10.7 percent. The more accurate U-6 Unemployment Rate, which includes not only those working and those looking for work, but also those who have become discouraged and given up looking for jobs, is 14.6 percent for November.

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In June, a total of 142,415,000 people were employed in the U.S, according to the Bureau of Labor Statistics, including 19,938,000 who were employed by federal, state and local governments. By November, the total number of people employed had climbed to 143,262,000, an overall increase of 847,000 in the six months since June. In the same six-month period the number of people employed by government increased by 621,000 to 20,559,000. These 621,000 new government jobs equal 73.3 percent of the 847,000 new jobs created overall.

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Back in July of 2008 candidate Barack Obama said this about the $4 trillion in debt that we incurred under the Bush administration: “The problem is, is that the way Bush has done it over the last eight years is to take out a credit card from the Bank of China in the name of our children, driving up our national debt from $5 trillion for the first 42 presidents – #43 added $4 trillion by his lonesome, so that we now have over $9 trillion of debt that we are going to have to pay back — $30,000 for every man, woman and child. That’s irresponsible. It’s unpatriotic.”

According to the U.S. Treasury, on July 2, 2001, the national debt was approximately $5.7 trillion. On inauguration day 2009, the national debt stood at $10.6 trillion. Last Thursday, it stood at $16.3 trillion. That means the debt has increased $5.7 trillion during Mr. Obama’s first four years, and that is more than all presidents through Bill Clinton, and the first five months of George W. Bush’s tenure. In the name of U.S. taxpayers Mr. Obama has borrowed more than $49,500 per man, woman and child.

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Inflation in October was 2.2 percent, up from September at 2.0 percent, August at 1.7 percent and July at 1.4 percent. The highest level of inflation since 2000 was 5.6 percent in July of 2008.

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Are we drowning in regulations? Ayn Rand’s classic Atlas Shrugged in paperback has 1,088 pages. The 2011 Federal Register totals 82,419 pages, nearly 76 times more than Ms. Rand’s book. A popular estimate of the cost of regulations on the economy is $1.75 trillion annually, which is nearly 76 percent of total amount of tax revenue collected last year.

* * *

In 1913 the U.S. tax code was 400 pages. Today, it’s more than 73,000 pages, which means we added on average 730 new pages each year. It is estimated that U.S. taxpayers pay $431.1 billion annually, or 19 percent of total tax revenue collected last year, just to comply with and administer the U.S. tax system.

Cross-posted from Observations

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