It's a funny day when you're feeling charitable, but go out of your way to avoid helping the entity that should be the ideal charitable recipient.
Let's say you just won the startup lottery and you've got a significant amount of now tradable stock. Some of which was early exercised and the cost basis is effectively zero. Some of which was RSUs or non-qualified options and you owe ordinary income. And that you're way over into the top tax brackets.
If your zero cost basis stock is Qualified Small Business Stock (QSBS), there's a very nice discount on federal capital gains, so you might not need to do the rest of the stuff.
Otherwise, if you donate your apprechiated zero basis stock, you get to save federal capital gains of 20% + 3.8% net investment income. Plus it offsets against your ordinary income that's 37%. So that's a 60.8% discount on being charitable for the feds. If you live in California, capital gains are regular income, so you're saving 13.3% because the capital gains go away and offsetting 13.3% on your ordinary income, so your total discount is 87.4%. In other words, your difference in cash after taxes for selling $1M of zero basis stock or donating $1M of zero basis stock is $126k.
When the government is telling you it only costs $126k to give a charity $1M, it's pretty compelling. The math used to be different, when you'd get credit for state taxes on the federal return, but that was many years ago now.
People with lots of money and power get their representatives to pass laws that reduce their taxes.
You lowering your tax rate and giving that money to charity isn't magicking more money into the world, it is just a different allocation.
The government's tax income is allocated by the masses (in theory anyway). It is fair and dispassionate.
Philanthropy / charity is picking winners and losers based on your personal whims, and for many it is about gaining social capital.
In order to improve global health or address other issues that impact countries beyond where you live, the government (even an idealized version without waste, corruption, or political games) might not be the most effective way to accomplish this.
This is only ever true if you assume that government tax spending is 100% efficient, with nary a fraction of a cent being wasted. I don't think that's a safe assumption.
We're doing better now than we were 50 years ago, but the Nords are light years ahead.
Or a school admin system built for 100 million dollars and crap. They even spent a lot of money trying to prevent a open source client that solved a lot of the issues they had.
Maybe in absolute money it is less than the US. But remember US also have a lot more people.
The waste, fraud, and abuse that runs rampant throughout the government tells us that the powerful often use taxpayer dollars as their own slush fund.
Sure the government does much to relieve the suffering of people around the globe; but it could do far more with substantially less.
I don't know that it's worse than any other institution? At least voters can remove the corrupt, and they are prosecuted. Are you saying these uber-wealthy and CEOs aren't just as corrupt or worse?
More often than not, corruption in government does not result in the perpetrator being prosecuted or even removed from office.
I am amazed at all the people who are so sure that corporations and/or wealthy investors are corrupt, but give big government a pass. As if the same types of people don't run both.
If we're talking specifically about the U.S. government, I suspect its decisions cause more suffering globally than they alleviate, though of course there are open philosophical questions inherent in any attempt to quantify suffering.
I think there is value to letting people allocate some percentage of their income directly to causes they are passionate about. Even if you assume the government is efficient and not bloated, and benevolent, this lets people contribute to causes without waiting for political consensus, or to smaller causes that would not be on the government's radar (yet) or ever. It's more pluralistic. It lets smaller causes bloom. It keeps me civically engaged.
On a personal note, I do take issue with the amounts spent on "defense" (which is often bombing people or threatening to directly or indirectly), and would rather help folks than bomb other folks.
Of course, you wouldn't expect them to be the ideal charity; they are explicitly not a charity. Anyone who is actually trying to be a charity should have little trouble using funds more charitably than any government in the world.
But guess what? If you give too much power to a position, people who want to abuse the power will try to get themselves there.
I wasn't upset that Obama was consolidating power because I thought Obama would abuse it. I'm upset that he consolidated power and then left it to whoever would come next, and then has the gall to be surprised that consolidating power under the Executive would undermine the power of the Legislature the moment a President who was willing to abuse said power was sworn in.
We're cooked because of the fucking team sports. Both parties have had the chance to reign in the Executive and neither has the balls to use it against their own guy
The problem with leaving everything to private charity is that only the wealthy people and churches doing the donating dictate what counts as "public good" without you and I having any say over it. We luck out when the donor has good intentions and chooses to donate to an organization doing good, and we have no say when the donor has evil intentions and chooses to donate elsewhere. Allowing a small handful of rich donors to decide what counts as a good cause is not ideal.
It is problematic even with good intentions.
People don't have time, expertise or usually even the motive to systematically examine ROI. They or someone they know has a 'good cause' and they support it. For example, endowments at their alma mater - likely a school for wealthy kids, new buildings for the hospital (that serves wealthy people), new research in diseases that are problems for the wealthy, etc.
They can't know without talking to people who have experience with poverty, for example, and those aren't the people coming to dinner tonight.
The thing about public goods is that people tend to agree pretty closely about what they are. The wealthiest person in the world benefits from, e.g. clean air just as much as you do. You should be a lot more worried about wealthy folks who don't donate to charity and just spend the money on big luxury yachts and the like, because these folks are essentially free-riding on everyone else.
Supporting government programs at the same time as you insist money could be better used elsewhere (at charities) is somewhat amusing.
