Harness compassion with a tax credit


BOSTON -- This is the season when charity and compassion go public. Charity is practiced year-round, of course, but the weeks from Thanksgiving to Christmas are when the spirit of giving comes out into the open. From food drives for the homeless to Salvation Army bell-ringers, vast numbers of us will be opening our hearts and our hands in answer to pleas for help.

Why do we bother?

After all, isn't it the government's job to take care of the poor? Haven't we built a Great Society, labyrinthine with poverty programs, to make sure no one goes hungry or cold? Don't we already fund a huge bureaucracy to ensure that the needy aren't forgotten? Why isn't that enough?

Because it isn't.

We spend more than $350 billion annually on government programs for the poor -- about $9,000 per year for every man, woman and child below the poverty line. Yet poverty and misery are everywhere.

The incompetent state

The welfare state, however well its architects meant, is incompetent and wasteful. It lavishes money on those who aren't needy (more than 50 percent of families receiving a means-tested benefit are not poor), and overlooks those who are (41 percent of poor families receive no benefit of any kind). The War on Poverty feeds a lot of government workers. But it hasn't ended poverty.

Almost everyone now acknowledges that three decades of government welfare have fed an accelerating social breakdown. By making public charity an entitlement, payable to the deserving and undeserving alike, the Great Society has rewarded self-destructive and anti-social behavior.

The results are broken families, blasted neighborhoods, corroded values. The traditional struts of restraint and responsibility that hold communities upright have been kicked out. Five trillion dollars later, government "compassion" has made poverty in America more hopeless and toxic than ever.

The contrast with private charity could hardly be more dramatic.

"By any objective measure," writes Indiana Sen. Dan Coats, "most private and religious organizations are more effective, efficient and compassionate than government programs."

Unlike welfare agencies, private charities can require a recipient to change his behavior in exchange for help. Private institutions can offer relief without breeding dependence; they can tie monetary support to moral support.

All the government can do is write a check.

"Real hope in defeating poverty," Senator Coats says, "is found among those people and institutions that not only feed the body, but touch the soul."

Good intentions

For all the good intentions of state welfare, it is private charity that does the most good.

No one takes joy in paying taxes; but most of us feel a deep satisfaction when we give money (or time) to a local food pantry, or the Red Cross, or a hospice for the dying. We sense -- rightly -- that the dollars we pay for welfare are largely wasted, but that those we send to charities we know and trust are well spent.

So why not put those charities in charge of the War on Poverty?

Senator Coats is one of a growing band of conservatives who want to let taxpayers decide what charitable activities their tax payments will subsidize. Others include William J. Bennett, co-director of Empower America; John Goodman of the Texas-based National Center for Policy Analysis, and Massachusetts philanthropist Ray Shamie, founder of the Beacon Hill Institute at Suffolk University.

Their idea is not to end welfare, but to end the bureaucratic monopoly that has made welfare a disaster. How?

Through a tax credit for donations to recognized charities. The schemes differ in detail, but all would give taxpayers a choice: Pay your taxes as usual and let the government decide what to spend it on -- or donate personally to a worthy charity, and deduct the amount from your tax bill.

Next month, the Beacon Hill Institute will release the first detailed proposal for such a "compassion tax credit." It would allow taxpayers a dollar-for-dollar credit for giving to the poor, up to 25 percent of their federal tax liability.

The donations would have to go to charities that: (1) are recognized by the IRS; (2) are directly involved in caring for the needy,and (3) spend less than 30 percent of their income on fund-raising or overhead.

Redirecting the dollars

The Beacon Hill study runs to nearly 200 pages, but the bottom line is dramatic: Without reducing spending on the poor by a penny, tens of billions of dollars would flow away from government agencies and into local private charities.

Thousands of new nonprofits would come into existence to put the newly-available funds to good use. As charities competed for donor dollars, they would strive to outperform each other in caring for the disadvantaged. The more compassionate and successful a charity proved to be, the more support it would attract from donors -- and the more people would be helped.

"Welfare reform" has to mean more than merely block-granting spending and devolving it to the states. The goal should be to replace distant bureaucracy with individual commitment, to give every taxpayer a personal stake in weaving society's safety net.

The love and charity so evident at this season shouldn't be an adjunct to the welfare system. It should become the welfare system. A compassion tax credit can make that happen.

Jeff Jacoby is a columnist for the Boston Globe.

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