No Right Turn on tax deductible donations

No Right Turn labels National’s announcement of removing limits on tax deductible charitable donation as “a policy aimed more at the rich than the poor, the primary impact of which will be to help them dodge on their taxes”.

I think NRT’s attitude is probably reflective of much of the left on this issue. They don’t like private charity much, or “Tory charity” as Steve Maharey labels it.

But let’s look at who wins and loses from increasing the limits on tax deductibility. Let’s use an example of Rich Bastard A, Charity B and Government C.

Rich Bastard A decides to give $10,000 to Charity B. For this his tax bill is reduced by $3,333. This means he is left $6,667 out of pocket.

Charity B has $10,000 more money which it can now spend on charitable purposes, which in the case of the Wellington City Mission where the policy was announced, is helping the poor and homeless.

Government C has $3,333 less tax revenue.

So Rich Bastard A loses the most money and Charity B gains the most.

And this is what No Right Turn calls aimed at the rich, not the poor.

As someone who spent four years working for a charity, let me tell you that they will be delighted with this policy. Removing the cap on corporate donations especially will help as this often proved a barrier to corporate fund-raising.

Also worth remembering that to gain tax deductability as a charity, you need to both be registered with the new Charities Commission and approved by the IRD.