A weekly newsletter from the Institute for Policy Studies
Upon visiting the United States in 1831, the French writer Alexis de Tocqueville marveled at how Americans were coming together to help one another, financially and socially, in voluntary associations. Those Americans were paying, he believed, what amounted to a “self-tax for the common good.”
That observation still holds a good bit of truth, notes our co-editor Bella DeVaan. Americans remain among the most generous people on our planet, as measured by charitable donations. Our various giving platforms, from GoFundMe to mutual aid groups, demonstrate a civic culture that values philanthropic behavior.
Our tax system reflects that same spirit. We’ve made charitable donations largely tax-exempt. In effect, we’ve turned philanthropy into a kind of “self-tax,” a literal substitute for taxes in general. In the process, unfortunately, we’ve let the ultra wealthy come to dangerously dominate our charitable sector.
As a nation, we’ve never had more money earmarked for philanthropic purposes. But the bulk of this money sits beholden to the special interests of a powerful few.
With the Fourth of July approaching, let’s fight to protect America’s generous spirit and end the use of charitable vehicles for tax dodging or wealth warehousing. Let’s increase the flow of money that actually goes to working charities.
Most importantly, let’s ensure that charitable giving never becomes a substitute for robust public funding. More on how we can do all that and much more below.
for the Institute for Policy Studies' Inequality.org team
INEQUALITY BY THE NUMBERS
The Nonprofit Nerd With a Knack for Numbers
With a long background in researching nonprofit industry analytics, Helen Flannery has become a key member of our Inequality.org team. She directs our charity reform research that’s demystifying the inner workings of philanthropy and building a world where charity works for us all, not just those who mainly see charitable donations as a means to reduce their own personal tax bills.
Flannery’s work on the relationship between philanthropy and inequality focuses sharply on the policies and practices that have created our current world of charitable mega-donors, private foundations, and donor-advised funds. Just this past week, law professor Roger Colinvaux drew on her tax data to quantify how much donor restrictions on giving are limiting what nonprofits can do.
Organizations have become more dependent on big donors than ever before, and the resulting top-heavy philanthropy is diverting ever more money from working charities. Read Flannery’s latest deep-dive into the troubling new numbers at the link below. In her words: The numbers “reveal just how fragile we have allowed our philanthropic ecosystem to become.”
One Way CEOs Could Be Patriotic: Pay Their Fair Share of Social Security
The U.S. Constitution calls for the promotion of the “general welfare.” In 1935, FDR did just that when he created Social Security, one of the greatest advances towards the “general welfare” in our nation’s history.
Social Security remains today a vital shield against poverty for older Americans. But this shield has come under a steady barrage, most recently when Republican House Speaker Kevin McCarthy announced he’s launching a new commission to explore “uncomfortable” cuts to Social Security and other entitlements.
How should we respond? In a commentary for The Hill, Inequality.org co-editor Sarah Anderson calls for raising the cap on Social Security contributions so CEOs and other wealthy Americans pay their fair share. Anderson also makes a pitch for axing tax preferences for gilded CEO retirement accounts and using the revenue from that axing to expand retirement benefits for ordinary Americans.
Our July 4 Challenge: Getting Past Stars and Swipes Forever
Over ten generations have come and gone since 1776. Yet the giants of 1776 still fascinate us. Books about Thomas Jefferson and George Washington regularly dot our bestseller lists. What so attracts us to these “founding fathers,” these men of means who put their security, their considerable comfort, at risk for a greater good? Maybe the contrast with what we see all around us. Today’s men of means display precious little selfless behavior. Our CEOs and private equity kingpins remain totally fixated on their own personal bottom lines. They don’t lead the nation. They steal from it. Inequality.org’s Sam Pizzigati has more on why.
PETULANT PLUTOCRAT OF THE WEEK
This Deep Pocket Actually Reeled In a Supreme Court Justice!
This week’s dour deep pocket: Paul Singer, the hedge fund kingpin — pictured right above — who’s made billions gaming distressed government securities selling at a fraction of their original cost.
What has him sour: Singer has long objected to charges that he owes his billionaire status to “vulture” tactics that involve leveraging his cozy contacts with pols and judges. Back in 2014, for instance, he blasted Argentina for “posturing” a “commercial dispute” into “something about national dignity.”
Now Singer is stewing over attacks on his ample generosity toward Samuel Alito, the notoriously right-wing U.S. Supreme Court justice. In the years after the two went Alaska fishing together in 2008, ProPublica reports, cases involving Singer’s hedge fund came before the Supreme Court “at least 10 times,” including one key case that pitted Singer against Argentina. Alito didn’t recuse himself from that case. Singer’s hedge fund ended up collecting $2.4 billion.
The last word: In a deeply unequal nation, U.S. Senator Sheldon Whitehouse of Rhode Island believes, “the highest court in the land should not have the lowest ethical standards.”
This week on Inequality.org
Dedrick Asante-Muhammad, The Boldest Step to Close the Racial Wealth Divide in Generations. One state’s “Baby Bonds” program should be a model for the whole country.
Chuck Collins and Tope Folarin, The Power of Fiction in Social Change. These two Institute for Policy Studies stalwarts have both found inspiration in the fiction of Ursula K. LeGuin. Together they explore how fiction can shape new narratives for the future.
Elsewhere on the Web
Arwa Mahdawi, The Greek shipwreck was a horrific tragedy. Yet it didn’t get the attention of the Titanic story, Guardian. A sign of our incredibly unequal times: a frantic rush to save five wealthy people versus a shoulder shrug at the idea of 100 children dead at the bottom of the sea.
Wendell Potter, Health Insurers Are Boosting CEO Pay to Astronomical Heights While Their Customers Suffer, Jacobin. Health insurance companies are spending more and more money on stock buybacks, boosting their CEO pay to obscene levels even while insurer fine print is burying 100 million Americans under a mountain of medical debt.
Jessica Bateman, Last Generation climate activists target Germany's ‘super-rich’ island of Sylt, Clean Energy Wire. A German activist group this summer is targeting the private jets, golf courses, and luxury boutiques of the ultra rich.
Barry Ritholtz, Wealth Inequality Starts at the Top, The Big Picture. The 160,000 U.S. households in the nation’s richest 0.1 percent now hold nearly twice as much wealth as the 80 million households that make up the nation’s bottom economic half.
Anna Skinner, Inside The World of Ultra Wealthy Extreme Tourism, Newsweek. Ultra-luxurious vacations costing hundreds of thousands and even millions of dollars have increased in popularity since COVID-19 traveling restrictions have eased.
Julia Conley, Billionaire-Funded Group Attacking Direct Democracy Across US, Common Dreams. Illinois billionaire Richard Uihlein is bankrolling the Foundation for Government Accountability, a right-wing group that aims to make ballot initiatives harder to pass.
Koh Ewe, China’s Solution to Inequality? Cracking Down on Displays of Wealth and Poverty, Time. The latest crackdown on wealth-flaunting seems largely symbolic and avoids the needed move to more progressive taxation.
Adam Green, Why Are Archaeologists Unable to Find Evidence for a Ruling Class of the Indus Civilization? Resilience. In Mesopotamia and Egypt, much money and thought went to building magnificent palaces and tombs for kings and pharaohs. In the Indus Valley, by contrast, emerged the world’s most egalitarian early complex society.
Daniel Denvir, AI Hype Machine, The Dig. Meredith Whittaker, Edward Ongweso Jr., and Sarah Myers West weigh in on the mundane dystopia concealed beneath the AI hype machine.
Ezra Klein, Why This Economist Wants to Give Every Poor Child $50,000, The Ezra Klein Show. The economist Darrick Hamilton discusses how policy proposals like “baby bonds” could help the country move toward greater racial and economic equity.
In the decades right after WWII, CEOs would hold press conferences to boast about their contributions to American society through job creation. In those decades they also contributed a much larger share of the tax revenue needed to make vital public investments. Unpatriotic corporate leaders today brag about slashing jobs and using overseas tax havens to hide their wealth from the IRS. The percentage of total federal revenue from corporate tax receipts has dropped from 32.1 percent in 1952 to 8.6 percent in 2022.
Inequality.org | www.inequality.org | email@example.com
Managing Editor: Rebekah Entralgo
Co-Editors: Sarah Anderson, Chuck Collins, Sam Pizzigati, and Isabella DeVaan
Production: Isabella DeVaan