E-Newsletter No. 38______February 2017
In the document on our Foundation’s website entitled The 2020 Initiative, we recommend that changes be made to the federal income tax code for personal income taxes, whereby individuals who make charitable contributions would receive a credit against their federal income tax obligation (rather than merely get an itemized deduction against their taxable income, which marginally reduces the amount of taxes they pay to the IRS). This will allow the taxpayer to self-direct a portion of their tax obligation to the organizations of their choice, and take these funds out of the hands of the federal government.
The primary reason for this recommendation is to reduce the size and scope of the federal government. As we have noted on our website, Article 1 Section 8 of the Constitution lists the very important (and very limited) responsibilities of the federal government. Unfortunately, over the course of the past century, our federal government has lost its focus in regards to its core responsibilities and has introduced innumerable “non-Constitutional” programs that attempt to either socially engineer the country’s citizens or “solve” a person’s problems (which the government will never be able to accomplish). And unfortunately, many of these “progressive” programs have created significant negative unintended consequences.
Some of the worst unintended consequences include creating a sense of entitlement among a large portion of our country’s citizens, which has led to increasing amounts of taxes and skyrocketing unsustainable federal debt that is being pushed onto future generations. But one of the worst consequences has been creating a sense of dependency on the federal government (for food, housing, medical care, “free” education, etc., etc.) at the expense of encouraging individuals to assume personal responsibility for their own needs and wants.
And another unintended consequence is the long history of economic distortions that these programs have caused within the marketplace. Federal money has been the source of “much-higher-than-inflation” increases in the cost of education and healthcare. Federal money and innumerable federal housing programs have also served to distort the housing market and contributed to the housing bubble that led to the Great Recession. Once the federal government has been transformed (whereby it only receives enough funds to carry out its very important, limited responsibilities) it should no longer attempt to manage any other activity beyond its stated responsibilities (please refer to the Tenth Amendment), and the negative consequences listed above will begin to subside.
The other primary reason for these recommended changes is to shift funds from the federal government and redirect those funds to “civil society”, which consists of a variety of effective and innovative Not For Profit charitable organizations. Given the choice between continuing to send their money to the Washington cartel versus a favored charity, people will send their money directly to those organizations they want to support. Another benefit is that these charities will need to compete for these contributions, which will encourage them to operate more efficiently and show more effective outcomes, or bear the consequence of a decrease in the funds they receive from the public. These free market principles are applicable to each of the types of operations mentioned above, including Education, which is the topic of next month’s newsletter.
US Debt Clock – – January 1st – $61,326 per citizen / February 1st – $61,547