On January 12, a massive earthquake struck Haiti. The earthquake measured 7.0 on the Richter Scale. Devastating aftershocks followed. The confirmed death toll is 150,000 people and the Red Cross estimates that nearly 3 million people will be affected by the disaster.
By comparison, Hurricane Katrina, considered to be the largest natural disaster in the history of the United States left 1,836 people dead.
Less than two weeks after the earthquake, on January 22, 2010, Congress pushed through a provision to benefit those that donate to Haiti relief efforts. The provision would allow taxpayers who itemize deductions to deduct charitable donations to qualified Haiti relief organizations on their 2009 tax returns. The donations must be in cash or cash equivalent. This means cash, check, credit card or debit card contributions – as well as text message donations. In kind donations, such as donations of water or medical supplies, won’t count for purposes of the accelerated deduction; those deductions will have to be claimed as they normally would, on a taxpayer’s 2010 return. To qualify, contributions must be made after January 11, 2010, and before March 1, 2010.
The new law is modeled after a 2005 law that allowed taxpayers to take deductions for donations made to charitable organizations providing Indian Ocean tsunami relief on their 2004 or 2005 tax returns. The death toll from the tsunami was said to be nearly 170,000 with more than 100,000 additional people listed as missing.
As with Haiti, the infrastructure and poverty contributed to much of the devastation in the Indian Ocean. In both cases, much of the tragedy had happened before the first winds blew or the first tremors started. And that made recovery so much more difficult – and important.
So maybe the rationale behind these tweaks in the law is that it’s okay to create an incentive to support certain charitable causes over others because the need is so great? Greater than what? Every other cause?
Don’t get me wrong. I’m all for charity. I donated for Haiti. I donated for the tsunami. And I donated for Katrina. In fact, I support a lot of charities. This isn’t tooting my own horn – I happen to think that I’m like most Americans. We are, as a rule, a pretty generous people. In fact, the Giving USA Foundation estimates total charitable contributions given by Americans in 2007 to be $306.39 billion; about 75% of those contributions were given by individual donors.
But I don’t think that changing the rules for Haiti make sense – anymore than they did for the tsunami. And not because Haiti isn’t important. I *get* that it is. But more because I think it sends a weird message about our tax policy. It says that today, we value those donations more than we value others.
Here’s some food for thought:
- 3.1 million people die of AIDS every year; 20,000 of those are in North America.
- This year, about 562,340 Americans are expected to die of cancer, at a rate of more than 1,500 people a day. Of particular interest to me since my grandmother died of breast cancer, an estimated 40,610 breast cancer deaths (40,170 women, 440 men) were expected in 2009.
- In 2008, an estimated 11,773 people died in drunk driving crashes.
- And an estimated 100,000 children in the US go to bed hungry on a typical day.
I think that’s part of it. I think folks are willing to help out after tornadoes, hurricanes and natural disasters because those events are so big and terrible and singular. And except for Pat Robertson, most people believe that the victims of those disasters had nothing to do with them.
But you don’t see these dramatic telethons for drunk driving. Or the Coast Guard mobilizing for AIDS relief. And you definitely don’t see Congress saying, “Let’s change the rules” for any of those causes. Why is that?
What does it take to make Congress blink? Is it a body count? A dollar amount? The number of cameras that are rolling?
Whatever it is, I don’t get it.
Congress uses tax policy to affect behavior all of the time. It’s why we have a home mortgage interest deduction (to encourage us to buy homes), a new car sales tax deduction (to get us to buy new cars) and a tobacco tax (to punish us for smoking). Social engineering through tax policy isn’t new.
But I’m a little stymied as to what the tax policy is behind the Haiti vote.
On January 18, the Red Cross reported that they had received donations of $112 million for relief related to Haiti. By Tuesday, charitable organizations were reporting donations in excess of $220 million targeted for Haiti relief. The new law was passed on Friday, days after those numbers were spiking because… why exactly? Taxpayers weren’t giving enough? That clearly wasn’t the case.
In fact, in the middle of a recession, taxpayers have proven that they didn’t need an extra incentive. They were opening their hearts and their wallets to the people of Haiti because they cared. Prioritizing Haiti in this way – saying that we’re willing to make an exception in this case – isn’t doing anyone any favors.
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