Giving -- A Less Taxing Alternative? (Part 2)

No, I do not believe that people give to avoid taxes. I hear donors in their 80’s and 90’s say that their children are well established, and that they want to give something back to their community. I hear donors say they want their children to learn the value of hard work, and they decline to make them independently wealthy. I hear donors talk about tithing.

Yes, people are tax-wise in the way they give. Why not let Uncle Sam make part of your gift through tax savings? Donors give appreciated securities to avoid the capital gains tax. They make a variety of planned gifts to receive income during their lifetimes, after which the remainder value passes to charity free of estate tax. Donors make charities the beneficiary of their IRA, which will be heavily taxed (up to 80%) if left to heirs.

However, if people give to avoid taxes, then why has giving exploded in recent years, despite lower tax rates?

While we are challenging the consensus, why not take on the popular press which loves to bash our local governmental leaders? Have they really been such bad partners? Consider Virginia’s investments in our state agency museums - the Virginia Museum of Fine Arts and the Science Museum of Virginia - and our state university, Virginia Commonwealth University. Consider the investment of the City of Richmond and surrounding counties in Maymont. And, yes, consider the City of Richmond’s and the State’s investments in the Virginia Center for the Performing Arts.

To be sure, many cultural opportunities go unfunded and those which are funded require a lot of effort. However, the net result of our private and public investment in cultural institutions is astounding for a city our size. We have two well endowed universities, a phenomenal array of cultural attractions and a community foundation that ranks19th in asset size nationally.

Critics will undoubtedly continue to rationalize their view that raising taxes will increase both government revenues and charitable giving. At least in the latter case, and arguably in the former as well, it is simply not true.

(part 2 of 2)

Robert Thalhimer