YES and Tax Credits

A digitalBurg.com article on 8/11 reports that Youth Excited about Sports (YES) received a $190,000 check from a construction firm working on their new youth activity center. Private donations to support privately-run good work are good. Actually, the growth of the YES organization shows that youth sports can be provided without direct support of local taxpayers, something that I find commendable. So what's my beef?

Take a look back a few months at a November 21 digitalBurg.com article - YES has received tax credits in the amount of $1.3 million, leading to a potential direct reduction in taxes of $650,000 for the various donors. In other words, the donor of this $190,000 will reduce its state income taxes by $95,000 - at Missouri's 6% top bracket, that would be worth only $11,400 as a regular deduction. The remaining $83,600 comes from taxpayers across the state. Pretty good deal for the donor-taxpayer and for the qualifying charity. Not so good for the people whose favorite charities don't qualify.

What's wrong with this system? It allows government to pick which charities get its official blessing and which don't, which makes government a player rather than a referee. It favors large donors over small ones - the people who give the most in comparison to their incomes can't even itemize deductions, so get nothing at all. Back in November I commented on the intitial announcement of the credits (see archives), saying
"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." I stand by those comments.

In Liberty