- The Washington Times - Saturday, January 27, 2007

As the year ended, my wife and I sat down to write checks to a few of our favorite charities. Several perspectives rushed at us, one after another.

View No. 1: there are so many deserving organizations. Take the STEP (Strategies to Elevate People) Foundation, for which my wife used to volunteer. It helps inner-city youth by instructing them in basic school subjects and providing mentors in hopes of changing (“elevating”) their lives. They have a good track record.

View No. 2: How nice that the federal government subsidizes our contributions. For example, since we’re in the top marginal tax bracket, our check of $1,000 to the STEP Foundation costs us only $650. The federal government pays $350.

View No. 3: this is unfair. One of our neighbors, who is in a much lower tax bracket, pays $750 for each $1,000 contributed. The U.S. government provides our neighbor only $250 in tax relief.

View No. 4: or is it? The flip side of the subsidy point is that our neighbor keeps 75 cents of each extra dollar he earns, whereas we get to keep only 65 cents. Did we not work just as hard and sacrifice just as much as our neighbor to earn that extra dollar? Why should we be discriminated against? This is not to say those who make more shouldn’t pay more in taxes. Even if we all faced the same tax rate those with higher incomes would pay more (25 percent of one sum is a larger amount than 25 percent of a smaller sum.) If we included deductions in such a flat tax scheme, those with higher incomes would not only pay more in tax, but their taxes would still be a higher portion of their incomes.

View No. 5: Why not harness the knowledge of individual taxpayers and empower them to choose where some of their tax monies go? President Reagan used to ask, incessantly, why it takes so many dollars in “overhead” to deliver just one dollar to the poor. Indeed, if you simply divided the mind-boggling amounts spent on various welfare and health support programs at the federal level by the number of recipients, you would be able to establish a whole new prosperous middle class.

Letting taxpayers decide for themselves has two advantages. First, taxpayers usually are better able to judge the purpose and effectiveness of programs than are federal officials working at a distance. And if given the opportunity to direct money themselves, taxpayers would pay even more attention to organizations that help the poor and infirm.

Second, it would be much more efficient. Much less of the money would go to overhead, as even the less-efficient organizations have lower overhead than the U.S. government. And to be the conduit for funds, charitable organizations would compete on efficiency of operations.

Of course, taxpayers could still just send their money to the federal government and fund existing programs. But I suspect most taxpayers would take things in their own hands and determine where their money should go. And that’s one reason anyone promoting such a program can expect howls of protest from politicians and government officials.

James C. Miller III is a senior adviser to Blackwell Sanders Peper Martin and was director of the Office of Management and Budget under President Reagan (1985-1988).

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