I have an article in the September edition of Alliance magazine - which is targeted at 'philanthropy and social investment worldwide'. In it I discuss tax, power and philanthropy. Unfortunately the article is behind a paywall, but it begins saying:
No one can be neutral on the issue of wealth. You have it, or you don't. You applaud it, or you don't. You aspire to it, or maybe not. It is, and always has been, a divisive issue. That division does, of course, extend to philanthropy, which is a direct by-product of wealth accumulation.
And I proceed to challenge the role of tax in that wealth accumulation process and the need for charitable foundations to monitor their policy in this area.
It's an area of governance that has been little discussed to date. Let the debate begin.
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What i find so disturbing is how little the wealthy give to charitable causes compared to the less well-off:
http://www.theatlantic.com/magazine/archive/2013/04/why-the-rich-dont-give/309254/
What is the psychology behind this unreasonable level of white knuckling?
As the article states, the rich are ” “more likely to exhibit characteristics that we would stereotypically associate with, say, assholes.”
hi Rihard if you have a friend who speak greek send him this link and demanded to translate this artile. http://www.parapolitiki.com/2013/08/ena-megalo-prostimo-mia-egkyklios-ki-ena-reportaz-tou-alpha-video.html Until now greek ministry of finance has not made an announcement.
Could you also comment on the tax loophole whereby certain gifts can be tax deductible, thereby allowing rich individuals to avoid tax by making huge donations to charity?
I have already – many times
I oppose such laws
I oppose higher rate tax relief on gifts to charities
I thought all the higher rate tax relief did was make sure higher rate tax payers could give to charities (assuming under gift aid) on the same terms as a basic rate tax payer. The effect is supposed to be that we can all effectively give a proportion of our gross earnings to charity. So from the Christian aid website:
Gift Aid Basics
If you earn £1,000 in salary, and are taxed at the basic rate of 20%, you receive £800 net pay (ignoring National Insurance). The aim of gift aid is that if you give £800 to a charity, the government will make it back up to the £1,000 you earned – giving to the charity all the tax paid on that part of your earnings. To get from the net donation of £800 to the gross of £1,000 we add 25%.
Higher rate tax
A higher rate tax payer (40%) earning £1,000 will receive only £600 pay. Again assume an £800 donation to charity. £200 is added through gift aid as in the basic rate tax example.
The tax payer can then reclaim further relief through the tax return:
– Relief at 20% has already been granted & paid to the charity – so the gross contribution is £1,000
– Another 20% can be claimed through tax return – £1,000 x 20% = £200. £800 donated – £200 higher rate relief = £600 net cost.
If you are considering gifting shares to Christian Aid instead of cash, please ask for our Share Giving Fact Sheet.
That seems fair to me. In theory it takes tax out of the decision to donate.
And I think that if you don’t put all your gift aid donations on your tax return then as a higehr rate tax payer you effectively don’t get the £200 back mentioned in the Christian aid example. And I suspect not everyone remembers every gift aid donation they make especially e.g. the charity fun run donations etc. that come round the office from time to time.
In practice that would only be true if the charity got the higher rate tax relief
It doesn’t