Here\’s another eccentricity: if a basic-rate tax payer – ie 87% of the population – gives £1, the state adds another 25p in gift aid to the charity, but the donor gets no tax relief. Only 40% or 50% tax rate donors can claim a personal benefit and get their tax bills cut. Since those in the bottom 10% give a higher proportion of their income than those in the top 10%, that seems unfair.
No, the Treasury doesn\’t add anything nor does the higher rate donor claim a personal benefit.
It\’s all simply a mechanism of allowing charitable gifts to be made out of pre-tax income. We could do it another way. As indeed the US does in part (it\’s more complex than this but…). Everyone in the country has to file a tax return. When you calculate your taxable income you subtract from your gross income your charitable donations.
Put that way we can see that the Treasury isn\’t making any extra donations nor are higher rate payers getting any personal benefits. Everyone is one exactly the same level paying field: everyone gets to donate to charity out of pre-tax, not post-tax, income. The only way Polly\’s argument has any traction at all is because of the method we use to achieve this goal, rather than looking at the underlying effects of it.
As to this:
I had an email exchange with Stanley Fink after that breakfast, pointing out that big time charitable donors could do far more civic good by campaigning among their own kind against tax avoidance and in favour of a living wage.
That\’s really very strange indeed. For it\’s the bastard neoliberals like me who have, quite successfully actually, been campaigning for years or a living wage. We\’re actually getting there, slowly, under the coalition.
For as we all know, the difference between the current minimum wage and the living wage as determined by JRF and the like is the taxation that is applied to low incomes. No, really, if those on minimum wage did not have to pay NI and income tax then the current minimum wage is within pennies per hour of the living wage. Which is why the ASI has campaigned for years for a serious rise in the personal allowance (and a raising of the NI limits). Something which has made it into the Lib Dems policy book, UKIP\’s, heck, we\’ve even had Oxfam endorsing it nd the current coalition actually implenting it at least in part.
Want to make the poor richer? Stop taxing them so bloody much!
And tax avoidance instead of charity? Poll dear, there\’s a logical point to be made here. If we feed the money into the maw of government then it gets spent on what politicians want it to be spent upon. If we send it off to a charity there\’s at least a chance that it will get spent on what we want it spent upon. Which is rather the point: true democracy on offer, pound by pound by pound.
For example, I might want the drowing to be rescued from the sea in which case I will donate to the RNLI. And it\’s very dificult indeed to say that it is better to confiscate that same cash from me at gunpoint and insist that it be used to pay Vince Cable\’s SpAd. Giles is a nice bloke and all but preventing bloated corpses washing ashore seems a better use of my money to be honest.
I do recognise why you might not agree: you\’ve got great influence over how the tax money is spent what with that position as a national columnist and all. So of course you\’d rather it all went into one pot that you have influence over the spending of. You know, those years you argued for Sure Start for example: you got to campaign for our money to be spent as you wished. Which is rather the point really: we\’d like to spend our money the way we wish, not as you do. So charity, not government.