Gee, maybe the super-rich aren't the bastards the left thinks they are. New York Times
January 1, 2004
The Very Rich, It Now Appears, Give Their Share and Even More
By DAVID CAY JOHNSTON
The top 400 American earners in 2000 provided nearly 7 percent of all the charitable gifts reported on income tax returns for that year, well in excess of their roughly 1 percent share of overall income, according to data released yesterday by the NewTithing Group, a charity that tracks giving.
The 400 taxpayers with the highest reported incomes in 2000 made an average of $174 million and gave away, on average, $25.3 million that year. Their combined giving totaled $10.1 billion, or 6.9 percent, of the $146 billion in charitable donations that Americans deducted on their income tax returns in 2000.
Charitable giving by this wafer-thin yet deeply rich slice of Americans, the new Internal Revenue Service data showed, represented an average of more than 14 percent of their incomes, compared with overall charitable tax deductions equal to 2 percent of adjusted gross incomes. Only a fourth of taxpayers file returns that allow them to deduct charitable gifts.
Because tax returns are private, no names are connected with the reported statistical data. But one detail in the data suggests that some of the wealthiest individuals in the nation - Bill Gates, George Soros, Ted Turner and perhaps others who are known to have contributed large sums to charity - may have given even more than they could deduct on their tax returns.
The disproportionate share of giving by the top 400 - who reported 1.1 percent of the $6.3 trillion earned that year by all Americans - occurred against a backdrop of a major shift in government policies on taxing and spending. Beginning in 1997, Congress passed a series of tax cuts, the benefits of which have gone largely to the richest Americans. At the same time, governments at all levels have pared spending on social programs from education to health care to welfare.
Supporters of the tax cuts, led by President Bush, have urged a shift toward charity to support social programs, while opponents have said that private acts of charity are an unreliable substitute for government assistance.
The NewTithing Group, a San Francisco organization that encourages wealthy Americans to give more of their money to charity, paid the I.R.S. to pull more detailed data on charitable giving from tax returns filed by the top 400 in 2000, the most recent year for which such figures are available.
The group received a breakdown of how much was donated in cash and how much in assets. It showed that nearly all of the increase came from gifts of assets, which qualify for a bigger tax break than cash. The data, along with NewTithing's analysis and commentary, were posted Wednesday night at the group's Web site, www.newtithing.org.
Giving by the top 400 from 1997 to 2000 grew significantly faster than their incomes, which ballooned with the rise in the stock market and the increased generosity of their capital gains tax cuts. The top 400 garner most of their income from the sale of appreciated assets, particularly shares of stock.
Their average incomes rose 80 percent in those years, to $174 million from $93 million, while average giving from the stratum more than quadrupled to $25.3 million from $5.9 million.
Claude N. Rosenberg Jr., a wealthy retired money manager who founded NewTithing, said that the 400 top taxpayers, generous as they may have been, could have easily afforded 40 percent more, or an additional $4 billion, without diminishing their economic status. NewTithing offers a calculator, called PrudentPal, at its Web site to show wealthy Americans how to give more and get the maximum tax benefit.
That such a tiny number of Americans are responsible for such a large share of gifts surprised some charity experts and scholars who study these issues.
"Seven percent of all giving is an astounding figure," said Edward N. Wolff, a research scholar at the Russell Sage Foundation and editor of the Review of Income and Wealth, a scholarly journal. But Mr. Wolff, whose research has concentrated on documenting increased inequality in American society, cautioned that other research reports showed that little giving by wealthy Americans went to charities that directly benefited the poor.
He also contended that charitable giving by the superrich, measured against their assets, had been on a long-term decline.
Lewis M. Feldstein, president of the New Hampshire Charitable Foundation in Concord, N.H., which has commissioned studies of giving by the rich, said he was not surprised by the figures. But, he added, he was certain that the figures would make jaws drop "if given in a speech to any audience of wealthy Americans."
Mr. Feldstein agreed that it would be important to know where gifts by the wealthiest Americans were directed.
"For an organization to qualify as charitable doesn't mean it benefits the poor," he said. "People tend to care the most about institutions they are personally connected to, and those that benefit tend to be those connected to people of means like land charities, museums, colleges and hospitals.''
Until publication of the most recent data, which goes through the year 2000, the highest income category for which the I.R.S. reported was $1 million and up, a group that has now grown to more than a quarter-million households. It recently began slicing the top bracket even finer, reporting incomes separately for those with incomes above $10 million per year, a group with about 11,000 taxpayers.
The I.R.S. also issued a special report on the 400 Americans with the highest incomes each year since 1992. There were 2,211 taxpayers in the 3,600 tax returns examined over the nine-year period; just 21 taxpayers made the list every year.
Actual giving by the top 400 taxpayers may be even larger than the deductions reported on income tax returns.
Mr. Gates, the co-founder and chairman of Microsoft, announced in 1999 gifts totaling $15 billion to the Bill and Melinda Gates Foundation. Yet the I.R.S. data show total charitable giving by the top 400 of just $11 billion for that year.
The most logical explanation for the disparity is that only part of the gifts from the Gates family qualified for an income tax deduction. Mr. Gates announced that his gifts were in shares of Microsoft. Congress limits deductions for gifts of appreciated assets, such as stock, to 30 percent of the donor's adjusted gross income. To deduct the entire gift, Mr. and Mrs. Gates would have had to report income of $50 billion in 1999.
Gifts that cannot be deducted immediately, however, can be carried forward and used as deductions over the following five years.
Similarly, Ted Turner, the founder of CNN, which he sold in 1995 to Time Warner, promised to give a total of $1 billion over 10 years to charities for the United Nations. If such gifts were made in appreciated stock, Mr. Turner would have to report an annual income of at least $333 million to qualify for the full deduction.
Mr. Soros, who made his billions running a highly successful hedge fund, has also announced huge gifts that may have exceeded the maximum deduction, based on his public statements and the new I.R.S. data.
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