Old Drum

Commentary on Warrensburg, Johnson County and Missouri issues from a Libertarian perspective. View my earlier commentary at www.olddrum.net.

Tuesday, November 22, 2005

Tax credits for YES

Youth Excited About Sports (Y.E.S) has ambitious plans. According to their website, "Y.E.S. exists to teach the fundamentals of life to youth incorporating Christian values such as sportsmanship, teamwork, cooperation, fair-play, and character- building while having fun." Y.E.S. is building a major recreational complex just outside the city limits, and, according to the dB article, has secured major tax credits from a state board. And there's the rub.

The state website description of the tax credit program is confusing as to exactly how things are done. It appears, though, that if someone donates $1000 to the program, they get a $500 tax credit (50%). Tax credits are "better" than tax deductions, since they directly reduce income taxes; Missouri's highest marginal rate for individual income tax is only 6%. In other words, Missouri's taxpayers are subsidizing those who donate to Y.E.S.

Taking this another step, Y.E.S. is a faith-based organization. While Y.E.S. very well may be able to deliver services more efficiently than government agencies, there is still a problem with giving public funds (directly or indirectly) to private organizations, especially those that appear to have a proselytizing aspect.

It is unfortunate that government and charities have reached the conclusion that people must receive incentives to donate, yet those citizens who are most generous in comparison to their incomes do not get any tax benefits. Only those who itemize deductions or who can donate enough to gain special tax creits receive these incentives.

Perhaps if we'd do away with the income tax and replace it with a consumption-based tax (the Fair Tax), we could let people make their charitable decisions without tax policy skewing the decision process.

In Liberty


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