Obama sold his stimulus as a way to inject cash into a faltering economy.  While conservatives were very worried about the amount of wasteful and unncessary spending, I don’t think that the package, as originally sold, presented many threats to our freedom.  After all, this money was supposed to be being spent on roads and bridges and “infastructure”–those things, that most people agree the government should provide (I’m assuming that such expenditures are popular because Obama uses that word in every other sentence).  It’s difficult to say that our fundamental liberties and the balance of individual rights versus collective action through government control are upset because the government repaves a road (or in the case of MPS, builds an empty school). 

But there is no doubt that some of that stimulus included long-term government programs that will allow the government to organize a larger portion of American life that previously it did not organize.  We are just now starting to understand exactly what sort of inroads the new-look federal government will make beyond a simple one-time stimulus.

In the budget Obama released recently, we also found out that taxes are going up and are going to be more complicated.  In a complicated provision, Obama is planning to phase-out the charitable deduction for high-income taxpayers.  There are many tax policy reasons to oppose what exactly Obama is doing, but I won’t discuss those here. 

But is what is far more troublesome, and this gets to the all-important balance of individual choice versus government control of our lives and our society, is that  the combination of these provisions seem to put a substantial portion of services that were once provided by private charities under direct governmental control.  It doesn’t do it directly (no non-profit organization will be nationalized), but the combination of extra federal government spending and the inevitable decrease in non-profit donations will produce  a similar result nonetheless.

There are a number of problems with the charitable deduction.  But one of its best traits is that it allows donors to have a choice and it produces plurality in civil society.  It’s arguable if when you make a charitable donation and then deduct the amount, you’ve really given some of the government’s money (after all, difficult to distinguish why you should have a deduction for charity when you don’t get a deduction for other things that you like to do).

But the incentive the government provides for you to give money supports the great democratic virtue of plurality.  The taxpayer makes a gift where he chooses, as long as it is a broadly defined social good, and the government kicks in a little extra.  Taxpayers choose what specific cause to support.  We don’t all have to decide to support the same charity–we don’t all have to agree or have an legal obligation to support someone else’s charity (like we do when the government decides to fund something–we vote and then we are bound by the majority).  There is a plurality of organizations and solutions out there competing for our dollars and our volunteer time–and even an organization supported by a small minority can still exist. 

It allows a taxpayer the freedom to direct his charity wherever he chooses.  But all of us get the benefit of a donation that went to an organization that lessens the burden of government.  There are other trade-offs, but there are some significant advantages to this method.

Alexis de Tocqueville adored the caucaphony generated by a thousand American voices, each with their own ideas and their own plans on how to improve and to solve and to make this country a better place.  De Tocqueville found it to be a distinctly American virtue.  He thought this plurality was vital to the fabric of America and to the survival of its democracy.

Politics is generally about making collective decisions that we all have to abide by.   But a democracy can also become a tyranny when the decisions, even when made by a perfect majoritarian process, encompass too much control of our lives and how civil society is organized.

It’s good to have benevolent organizations that are not under the control of the government that help organize our collective actions as well because they provide voluntary opportunities for service and a plurality of views on how to obtain a solution.  Too much government intervention, de Tocqueville argued, crushes individualism and the even the voluntary communal aspect of a society.

A federal budget provision will not end the non-profit sector.  A federal budget (no matter how much is spent) cannot change the virtues (and probably not the excesses, either) of the American people.  Most of the donations will still come in.  The charitable deduction needs reforming (even though this is not the answer). And may be if there wasn’t trillions of government dollars looking for a place to stick, this would not be unsettling.  But I fear this sort of provision tramples on an important, if overlooked, principle to collect a few dollars.

h/t www.taxprof.blog.com